'A study of Egyptian and Palestine trans-formal firms – A neglected category operating in the borderland between formality and informality', by A. Floridi, N. Wagner, J. Cameron.

Abstract

This article outlines a new approach to firm behaviour different from both ‘dichotomist’ and ‘continuum’ formal/informal models. The approach adopts a new heuristic based on the notion of a borderland as space of interaction between dimensions of formality, and creates an umbrella category of trans-formal firms, which are neither purely formal nor informal. Three formality dimensions are adopted: (i) registration of the firm, (ii) existence of a bank account in the name of the firm, and the (iii) presence of an official balance sheet. After elucidating the new approach theoretically, the paper assesses the analytical capacity of the approach with quantitative and qualitative information representing 16 Egyptian and 16 Palestinian firms. The majority of the considered firms are found to be trans-formal moving in a space of decision-making representing our new, broadened notion of borderland showing that policies aiming at formalization processes misrepresent the realities of significant numbers of firms.

Keywords
Institutional economics of the firm, informal economy, borderland economy,
(trans-formal) firms, Palestine, Egypt

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About the authors

Andrea Floridi is a PhD researcher at ISS-EUR. He has experience in informal economy and in evaluation of international cooperation initiatives and projects. He published two evaluations on the OECD website, and four evaluations commissioned by Italian cooperation projects with emerging and developing countries. His research interests reach from informal economy to entrepreneurship, from institutions to economic behaviors.

Natascha Wagner is an assistant professor of Development Economics at the International Institute of Social Studies (ISS), Erasmus University Rotterdam (EUR). Her research interests lie in international economics, development and health. She has participated in various impact evaluation projects in Africa and Asia ranging from the assessment of public health programs to rural infrastructure programs. In her research, she applies quantitative microeconomic methods to interdisciplinary questions such as for example the impact of polygamous household organization on child health, the economic consequences of female genital cutting (FGC) and issues of good governance and local decentralization. She has published articles in, among others, Health Economics, Journal of Development Studies and World Development.

John Cameron has been a researcher publishing in the field of international development for more than forty years. He has been published in the European Journal of Development Research on the issues for international development raised by Kant's categorical imperative.