Narrow Results

A widespread assumption is that competition from the informal sector has a negative impact on the firm performance of legitimate enterprises. This is because of the unfair competition they face from such enterprises in the informal sector. The aim of this paper is to provide an evidence-based evaluation of whether this is the case based on an analysis of the relationship between the firm performance of enterprises and their perception of the prevalence of informal sector competition. To do so, data is reported from a representative sample of 1,430 enterprises in Bulgaria, Croatia and FYR Macedonia. The finding is that enterprises asserting that their competitors participate in the informal economy have significantly lower real annual sales growth rates compared with those who assert that their competitors do not participate in the informal economy. The theoretical and policy implications are then discussed.

Over several years the author co-operated closely with Julius Wess at the University of Munich in supporting re-establishing scientific links between physicists of the countries of South-East Europe and between these and the rest of the world. Major achievements have been the SinYu project leading to high-speed internet at the Serbian universities as well as re-establishing two series of conferences and summer schools. This is the first time, that the short history of the "WIGV initiative" has been written up.