Round table, Sofia, April 18-19, 2002
Within the framework
of the network "Towards European Integration", including public
policy institutes and think-tanks from the EU accession countries,
a round table devoted to the issue of informal economy was
organized by the World Bank Washington, D. C. (link -
www.worldbank.org), the Bertelsmann Foundation, Guetersloh (link -
www.bertelsmann-stiftung.de) and the Center for the Study of
Democracy (link - www.csd.bg). Experts involved in research and
policy work related to the subject coming from EU member states
(Austria, Germany, Italy, the United Kingdom), accession countries
(Bulgaria, the Czech Republic, Hungary, Lithuania, Poland, Romania
and Slovenia), states participating in the Stability Pact for
Southeast Europe (Albania, Bosnia, Croatia, Moldova and Serbia) and
other countries (Canada and Russia) as well as representatives of
the international organizations, multilateral and bilateral donor
agencies, took part in this event.
The discussion at the round table focused on the
following topics: size and scope of the informal economy, methods
of assessment, general views and cross-country comparisons, case
studies from Central Europe, the Baltic republics and the Balkans.
A special panel was devoted to a related issue - risk reporting and
early warning for good governance and against corruption. About 100
persons attended the round table, 50 of which were from the host
country - Bulgaria. The papers presented by the speakers as well as
the written comments submitted by the discussants will be published
later thanks to a grants from the World Bank. The available draft presentations are posted on
CSD's web.
The discussed
in Sofia focused on the following major issues:
1) There are multiple definition of "the informal
economy", also called "grey", "underground", "criminal", etc. The
participants accepted the plurality in the conceptualization of the
phenomenon and tried to address it as a whole without limiting
their attention to the "criminal" sector or the "subsistence"
economy.
2) There was a consensus that the informal economy
is not a particular feature of countries outside the European
Union: not only it exists in the EU member-states and the OECD
countries but it has a very dynamic nature in these countries. The
informal economy in the EU accession countries as well as the
countries of the Stability Pact for Southeast Europe does not
recognize national boundaries: it is more organically related to
that in the EU member-states than to the domestic formal economy.
To a large extent. the EU member states are the consumers of the
products and services coming from the informal economy of the
candidate countries; in a sense, the informal economy has already
achieved a certain degree of European integration.
3) This should be taken into account in further work
aiming at better understanding of the nature and implications of
the phenomenon as well as efforts to bring it to a manageable
proportion with regard to the formal sector. The scope of research
as well as related policy initiatives should therefore go beyond
national boundaries.
4) It was noted that the key factors for people to
go "informal" are the inappropriate state involvement in the
economy and society, often epitomized in excessive taxation and
regulation. Most often, going "informal" is the easiest form of
the "exit" option for a businessman or an wage laborer; it is an
alternative to a total "exit" which could have less predictable
consequences.
5) The informal sector often hosts illegal and
criminal activities, such as money laundering, drug trafficking,
prostitution, etc. Their goal is totally different from other
activities, some of which, for instance, have subsistence purposes.
That is why there is a need for increased attention to the
phenomenon in general and its elements in particular in order to be
able to come up with adequate and differentiated policy responses
in the state's efforts to control it. The costs of forcefully going
"formal" can be much greater than tolerating a manageable informal
sector in the absence of adequate social safety nets and business
growth opportunities, guaranteed by a well-working market
environment.
6) Little has been done so far to study the
implications of the EU accession for the informal sector both in
the EU member-states and the candidate countries. It is expected
that the strict regulations by which business and society will have
to abide may motivate further growth or at least internal
transformations in the informal sectors of the new union
members.
The participants in the round table agreed that the
launch of a European thematic network of academics, policy
analysts, representatives of civil society (interested NGOs) and
relevant international organizations can provide an effective
mechanism for future cooperation among experts in the filed from
different countries can provide on a continuous basis an insight
into the phenomenon of the informal economy necessary for its
better understanding and for the formulation of policy
recommendations to benefit policy makers in individual countries
and the European Union as a whole.
A possible immediate follow-up action can be
the organization of a second round table devoted to certain aspects
of the study of the informal economy, for instance, its specific
implications for one or another sphere of business or social
activities or the health of society in general. (CERGE-EI expressed
an interest to host such an event in the future.) There was an
understanding of the need to cooperate in raising funds for such
initiatives from various sources, including international
organizations, donor agencies, private sector contributions,
etc.
See agenda
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