The Impact of Cultural Values and Behaviours on Informal Economies

Abstract

Objectives

The thesis has two main objectives. The first one is to generalize the impact of culture on informal economies by classifying the various influences into broader groups. The second is to look for patterns in countries with high levels of informality.

Summary

The impact of cultural beliefs and behaviors has been an angle mostly neglected by the current research. A thematic network analysis was conducted, creating a tentative framework that identifies four organizing themes of how culture influences informal economies. In addition, 20 countries with high levels of informality were compared using Hofstede’s cultural dimensions framework, specifically the power distance, individualism vs collectivism, and uncertainty avoidance dimensions.

Conclusions

Influence on demand, perception of the government, labor markets, and status consumption are identified as ways in which culture can influence informal economies. The framework is tentative and is open to adjustments based on future research. The cultural dimensions analysis suggests a positive relationship between the combination of a high-power distance score and a low individualism vs collectivism score and the size of the informal economy. This applies to all part of the world expect Europe. The correlation between uncertainty avoidance and informal economies is unclear and determined to require further research.