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Bahamas informal sector 20%-30% of total economic activity, notes IDB

XIAN SMITH
Guardian Business Reporter
xian@nasguard.com

Published: Aug 11, 2017

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A recent study by the Inter-American Development Bank (IDB) estimated the size of The Bahamas’ informal sector at 20 to 30 percent of total economic activity.

The research paper titled, “Estimating the size of the informal economy in Caribbean states” by author Amos Peters, sought to determine the size of the informal sector in heterogeneous Caribbean countries.

“The findings suggest that the size of the informal sector is 20–30 percent in The Bahamas, 30-40 percent in Barbados, 29-33 percent in Guyana, 35-44 percent in Jamaica, 35-45 percent in Suriname, and 26-33 percent in Trinidad and Tobago,” the study states.

The findings show that informal sector activity in The Bahamas ranges from 15 to 28.6 percent of GDP using the unitary elasticity assumption and 24.5–27.9 percent of GDP using an estimated elasticity for the Bahamas of 0.61.

“These estimates are 22-year period averages and based on initial estimates of 26.1 percent in 1999 and 26.2 in 2007,” the author states.

“It is also clear that the informal sector size follows the official sector quite closely, falling precipitously during the Great Recession and then rising thereafter until the end of the sample period.

“In keeping with The Bahamas’ status as a high-income country, the findings indicate that The Bahamas’ informal sector is under one-third of total economic activity with a very marginal upward trend.”

 

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