Abstract
This chapter offers several perspectives on the size and scope of informality in Paraguay. It places Paraguay within a typology of nations frustrated in its attempt to contest the informal economy. National policy limitations, created by informality, to monetary and fiscal initiatives are explored. And structural and cultural forces that enhance and enable informality are discussed. Informality in Paraguay is briefly examined in comparative perspective with informality in the US-Mexico borderlands and in Nicaragua. Utilizing the empirical findings, a set of public policy recommendations are offered and a research agenda for the future study of informality in Paraguay is proposed.
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Notes
- 1.
Transparency international ranks Paraguay near the bottom in transparency, scoring a 29 of 100 and ranked 132 out of 180 countries in 2018 (see https://www.transparency.org/country/PRY).
- 2.
Operationally, this estimate is derived from the EPH utilizing a labor market approach to earned income. Using the ten measures of informality and the following equation: (Total Monthly Earned Informal income)/[(Total Monthly Earned Informal Income) + (Total Monthly Earned Formal Income)].
- 3.
The Central Bank of Paraguay essentially operates in independent fashion (though the bank president is appointed by the president of the country).
- 4.
Authors’ calculation from the Global Financial Inclusion- [Survey] Paraguay, World Bank. Data was collected from December 2017 through January 2018. The survey data is available at: http://microdata.worldbank.org/index.php/catalog/3314/get_microdata
- 5.
- 6.
However, Ciudad del Este does attract people from all over the world where most clandestine economic activities may be more in tune with the underground economy.
- 7.
Curiously, the last Somoza dictator, Anastasio Somoza Debayle, fled Nicaragua in 1979 and found exile in Paraguay only to be assassinated a year later.
- 8.
The civil strife in Nicaragua continues as we write this in May 2019.
- 9.
These data are computed from the EPH 2018 by the authors. For informal workers the following three proxies yield the following percentages: 59.9% by non-enrollment in social security; 74.2% for not working in an enterprise with a RUC; and 63.7% for workers in microenterprises of 5 or fewer employees.
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Pisani, M.J., Ovando Rivarola, F.G. (2019). Policy Recommendations and Conclusions. In: Understanding the Determinants of Economic Informality in Paraguay. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-24393-7_6
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