Economics & Finance / Economic Theory / Development Economics
Why bribing businesses to go formal fails? A Sri Lanka experiment reveals the truth
The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka
In Sri Lanka, 90% of businesses are informal. Researchers offered cash up to 40,000 LKR to register. The result? Only a tiny fraction took the deal. The rest? They had no land title, no trust in government, and no benefit from being legal. This video breaks down the real reasons why formalization doesn't work for most micro-enterprises, and what actually makes a few succeed. Based on the 2012 study by De Mel, McKenzie, and Woodruff.
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