Factors Determining Growth and Productivity of the Informal Sector: The Case of Addis Ababa.
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Date
2008-07
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A.A.U
Abstract
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.
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Keywords
Determining Growth and Productivity