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Informal Economy

Why doctors leave their posts – problem-solving irregularities in the health sector with healthcare workers in Bangladesh

Mushtaq Khan's picture

It’s not often you get together the very people working on the frontline to sit down together and discuss why and how irregular practices occur in their sector – and what can be done about them. But that’s just what we did with a group of frontline health workers at a workshop in Bangladesh’s capital Dhaka in December 2017. We wanted to understand why corrupt and irregular practices occur in the health sector - what are the underlying incentives and processes? And what are some feasible and impactful ways to change these practices?

Many developing countries, including the three where our research consortium, the Anti-Corruption Evidence research consortium is working, Bangladesh, Nigeria and Tanzania, struggle to provide free or low-cost healthcare to all their citizens. Instead, citizens are often forced to buy services from the private sector at higher fees or worse, approach untrained or traditional healers. There is agreement in the literature that a large proportion of these inefficiencies occur due to corrupt practices (though there’s an active debate about whether using the c-word is helpful in this debate, which is why we talked about ‘irregularities’ during this workshop). Many of these practices are related to the way societies in developing countries are organized around patron-client relations, where tax resources are insufficient, and resources, jobs and promotions require lobbying powerful politicians.

Chasing shadows: Tax strategies to tackle the shadow economy

Rajul Awasthi's picture
Digital work by Steve Johnson

Tax administrations in developing countries are increasingly concerned about the persistent problem of loss of tax revenues to the shadow economy, and they often deploy a range of strategies to plug tax leaks and augment revenues. The erosion of the tax base prevents governments from collecting the revenue it needs to provide essential services, such as healthcare, road construction, and education. Nonetheless, it’s a sticky problem: how do you convince business owners to pay taxes?
 
Some possible answers, bolstered by evidence, include: simplify tax payment and provide incentives to formalize businesses. The World Bank’s Governance Global Practice will hold a conference between June 27-29 in St Petersburg, Russia, to bring together participants from almost 25 countries of the Europe and Central Asia region to discuss these issues under the aegis of the Tax Administrators eXchange of Global Innovative Practices, a peer-learning network of tax administrators. The event will be hosted by experts from the Public Sector Performance division of the practice.

Informal = Illegal? Think Again

Truman Packard's picture

Cover Photo: © Getty Images, Inc.
Book Title: In From the Shadow : Integrating Europe’s Informal Labor
by Truman Packard, Johannes Koettl, Claudio Montenegro

Few phenomena that occupy the time of governments and economists are as ambiguously defined and difficult to measure as the “shadow" or "informal" economy. Those terms immediately make some people think of the guys who built an extension for their house and insisted on being paid in cash. Others remember the taxi driver who took them home after a late night out, and either didn’t have a meter or didn’t turn it on. Those who have been in very poor countries might recall bustling markets where you can haggle for anything from a handful of fresh chilies to a pair of sandals or even livestock. All of these are likely to be part of the unregulated and untaxed transactions that make up a country's informal economy.