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Does Competition from Informal Firms Encourage the Formal Firms to Obtain Quality Certificates?

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dc.contributor.authorAmin, Mohammad
dc.contributor.authorNogueira, Caroline
dc.date.accessioned2025-01-09T21:43:40Z
dc.date.available2025-01-09T21:43:40Z
dc.date.issued2025-01-09
dc.description.abstractThis study investigates the impact of competition from informal or unregistered firms on the likelihood of formal manufacturing small and medium-size enterprises obtaining internationally recognized quality certificates. The sample includes 16 countries in Latin America and the Caribbean, one of the regions with the highest levels of informality in the world. The study uncovers a positive impact, with a one standard deviation increase in informal competition leading to an increase in the probability of having a quality certificate by 2.9 to 3.6 percentage points across the different specifications. This effect is large, given that only 10.4 percent of small and medium-size enterprises have a quality certificate. These findings are consistent with the “legalist” model of informality, whereby the positive impact of informal competition on the likelihood of having a quality certificate is significantly larger in countries where the business environment is less favorable to operating in the formal versus informal sector due to factors such as the weaker rule of law and greater regulatory burden on formal firms. The paper provides several layers of checks against omitted variable bias, reverse causality, and measurement errors. The findings also show that, as expected, there is no statistically significant impact of informal competition on the likelihood of having a quality certificate among large manufacturing firms.en
dc.identifierhttp://documents.worldbank.org/curated/en/099414301082513625/IDU1168343531946214b3e1b89c1d5c2b4bbe572
dc.identifier.doi10.1596/1813-9450-11023
dc.identifier.urihttps://hdl.handle.net/10986/42652
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 11023
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectINFORMAL COMPETITION
dc.subjectCERTIFICATION
dc.subjectQUALITY CERTIFICATES
dc.subjectLATIN AMERICA
dc.titleDoes Competition from Informal Firms Encourage the Formal Firms to Obtain Quality Certificates?en
dc.typeWorking Paper
dspace.entity.typePublication
okr.date.disclosure2025-01-09
okr.date.doiregistration2025-04-14T11:58:25.431599Z
okr.date.lastmodified2025-01-08T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099414301082513625/IDU1168343531946214b3e1b89c1d5c2b4bbe572
okr.guid099414301082513625
okr.identifier.docmidIDU-16834353-9462-4b3e-b89c-d5c2b4bbe572
okr.identifier.doi10.1596/1813-9450-11023
okr.identifier.externaldocumentum34443909
okr.identifier.internaldocumentum34443909
okr.identifier.reportWPS11023
okr.import.id6261
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099414301082513625/pdf/IDU1168343531946214b3e1b89c1d5c2b4bbe572.pdfen
okr.region.geographicalCaribbean
okr.region.geographicalLatin America
okr.topicIndustry::Industrial and Market Data and Reporting
okr.topicInformation and Communication Technologies::Information and Records Management
okr.topicPrivate Sector Development::Competitiveness and Competition Policy
okr.unitEnterprise Analysis-WB (DECEA)
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