Factors Determining Growth and Productivity of the Informal Sector: The Case of Addis Ababa.

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The purpose of this study is to explore the determinants of income as well as policy which potentially affect the performance of the informal sector in Addis Ababa. The case study approach is fo llowed and attempt is made to make policy recommendations based on the study results. The primary data was collected from 150 operators of the association using structured questionnaire. In addition, brief survey of the literature was conducted regarding institutional, legislative and other capacity bui lding efforts made for the development of the informal sector. To carry out estimations, a standard earning equation was employed. The result indicates that labor market expenence, marital status and family SIzes signi fic antly influence earnings of metal recyc lers and traders of recyclable metal, plastic and glass items. For recyclable items traders the principal determinants of income are education and own-capital. Informal metal recyclers, on the other hand, tend to invest higher capital and responded better to the contemporary micro and small scale policy. The study also shows that in general most informal sector operators lack tuned and essential supports like access to finance, working premise and market linkage for business development. It is also noted that government lacked the commitment and institutional capacity to provide continuous support and guidance to the sector.



Determining Growth and Productivity