Round table, Sofia, April 18-19, 2002
Within the framework
of the network "Towards European Integration", consisting of 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, the Bertelsmann Foundation and the
Center for the Study of Democracy. It brought together experts
involved in policy and research 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
international organizations, multilateral and bilateral donor
agencies.
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
World Bank grants.
The discussion
focused on the following major issues:
There are multiple definition of the term "informal
economy" which is also referred to as "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, for instance, to the
"criminal" sector or the "subsistence" economy.
There was a consensus that the informal economy is
not just a feature of developing countries or countries in
transition: not only it exists in the EU and OECD member-states but
in some of them it is very dynamic in nature and large in size. The
informal economy does not recognize national boundaries: one could
argue that the informal sector in the EU accession countries 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 generated in
the informal sector of the candidate countries; in a sense, the
informal economy has already achieved a significant degree of
European integration.
This should be taken into account in further
research and policy work if it is to help better understand its
nature and implications of the phenomenon as well as 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
It was noted that the key factors for people to go
"informal" are the inappropriate state intervention in the economy
and society, often materialized 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 for any of the actors involved.
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 its spread. Forcefully pushing
into "formality" can entail much greater costs for a national
government than tolerating a manageable informal sector in the
absence of adequate social safety nets, business growth
opportunities and a well-working market environment.
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 in an enlarged union may motivate further growth or at
least internal transformations in the informal sectors in the new
member states.
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, bring better understanding of the
phenomenon of the informal economy necessary and lead to
formulation of 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 specific
aspects of the study of the informal economy, for instance, its
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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