Tackling Informal Entrepreneurship in Latin America: A Critical Evaluation of the Neo-Liberal Policy Approach
- *Corresponding Author:
- Youssef Youssef
Humber Institute of Technology and Applied Learning
H215/ 3199, Lake Shore Boulevard West
Toronto, Ontario, M8V 1K8, Canada
E-mail: [email protected]
Received Date: May 12, 2014; Accepted Date: May 26, 2014; Published Date: June 06, 2014
Citation: Williams CC, Youseff Y (2014) Tackling Informal Entrepreneurship in Latin America: A Critical Evaluation of the Neo-Liberal Policy Approach. J Entrepren Organiz Manag 3: 112. doi: 10.4172/2169-026X.1000112
Copyright: © 2014 Williams et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Since the turn of the millennium, there has been widespread recognition that a sizeable and growing share of the global workforce is in the informal sector. To explain this, neo-liberals contend that enterprises operate in the informal sector due to high taxes, public sector corruption and too much state interference in the free market and that the consequent remedy is to reduce taxes, public sector corruption and the regulatory burden via minimal state intervention. This paper evaluates critically this neo-liberal policy approach. To do this, International Labor Organization data from 16 Latin American countries on the share of the workforce in informal sector enterprises is compared with cross-national variations in tax rates, corruption and levels of state interference using World Bank development indicators. Revealing that one in three non-agricultural workers in Latin America are employed in
informal sector enterprises and analyzing the economic and social conditions in different countries, no support is found for the neo-liberal tenets that higher tax rates, greater levels of corruption and state interference are correlated with larger informal sectors. Instead, higher levels of regulation and state intervention are associated with smaller (not larger) informal economies resulting in a tentative call for more, rather than less, regulation of the economy and state intervention to protect workers.