How does globalisation affect informality in sub-Saharan African countries?

This paper delves into the complex relationship between informality and globalisation in sub-Saharan Africa, focusing on 30 African countries. Employing the Method of Moments Quantile Regression (MM-QR), it evaluates how overall, economic, and trade globalisation influence informal economic activities. The study also examines how institutional quality, measured across five dimensions, mediates this relationship. Results reveal a consistent negative correlation between various measures of globalisation and informality, suggesting that greater global integration tends to reduce informal economic practices. Moreover, the interaction between globalisation and institutional quality reinforces this trend. Notably, the study underscores the pivotal role of legal frameworks and governance in curbing informality, while highlighting the detrimental impact of corruption. By employing a nuanced analytical approach, this paper enriches understanding of how globalisation and institutional factors affect informality across different segments of African economies. Ultimately, it advocates for comprehensive policy strategies that address both globalisation and institutional dimensions to promote formalisation and sustainable economic progress in the region.

Abstract based directly on source.