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Economic Sectors (1.why is the shift from agriculture to manufacturing
…
Economic Sectors
1.why is the shift from agriculture to manufacturing
particularly positive for overall economic growth according to Szirmai?
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- example of an informal sector activity in your home country
Tutoring
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cons
Since we are talking about a sector that avoids taxation and or regulation, we do not give an opportunity for the Government to redistribute the wealth generated by the informal sector
Without data there cannot be performance evaluations and, consequently, there will be no chance for the secor to expand
Portugal está abaixo da média europeia, com 12,1% de emprego informal,
Legalist School
Micro-entrepreneurs choose to operate informally in order to avoid the disadvantages of formal registration.
A hostile legal and institutional system leads the self-employed to operate informally with their own informal extra-legal norms.
Governments should introduce simplified bureaucratic procedures to encourage informal enterprises to register and extend legal property rights for the assets.
Voluntarist school
Informal entrepreneurs deliberately seek to avoid regulations and taxation but, not because of the complex registration procedures, but after weighing the costs-benefits of informality relative to formality.
Informal enterprises create unfair competition for formal enterprises because they avoid formal regulations, taxes, and other costs of production.
Informal enterprises should be brought under the formal regulatory environment in order to increase the tax base and reduce the unfair competition to formal businesses.
- What is different about the SMEs sector in developing countries compared the SME
sector in developed countries.
Developing Countries
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they are less affected from economic crises due to its flexibility and abilities which keep up with changed conditions
There are probably two main reasons for this. One is the belief that SME development may prove to be an effective antipoverty programme. The second is the belief that SME development is one of the building blocks of innovation and sustainable growth
Developing countries without substantial SME sectors (hence often described as having a ―missing middle‖ in their firm size structure) tend not only to have capital and the income from it concentrated in the larger firms but also to have a ―labour elite‖ in that sector, able to bargain for wages much higher than elsewhere in the economy.
Developed Countries
The global economy has become increasingly reliant on Information and Communication Technology (ICT) toolsand systems to process and exchange information. The Small and Medium Enterprises (SMEs) are yet to reap these benefits as obtaining such opportunities rests on their ability to integrate ICT into business tasks and processes.
Definition of SME
In European Union, the new definition of SME includes those with fewer than 250 employees
- definition of the informal sector.
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The informal sector covers a wide range of labor market activities that combine two groups of different nature. On the one hand, the informal sector is formed by the coping behavior of individuals and families in economic environment where earning opportunities are scarce. On the other hand, the informal sector is a product of rational behavior of entrepreneurs that desire to escape state regulations.
- Maloney (2004) argues that Lewis “was wrong", what was the basis of his argument?
Lewis
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The informal sector will dissappear eventually because the expanding urban capitals would absorb the surplus labor of the rural low-income
Maloney
"I argue that as a first approximation we should think of the informal sector as the unregulated, developing country analogue of the voluntary entrepreneurial small firm sector found in advanced countries, rather than a residual comprised of disadvantaged, workers rationed out of good jobs"
Maloney (2004) views the informal sector as an unregulated micro-entrepreneurial sector and not as a disadvantaged residual of segmented labor markets.
- Why is a
subsequent shift to the services sector less healthy for the overall economic growth?
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Data
A presença de trabalho informal é maior em África (71,9%), Ásia e Pacífico (60%) e nas Américas (40%)