Entrepreneurship in the Underground Economy
Chapter 10: Helping Enterprises Start Up in a Legitimate Manner
10. Helping enterprises start up in a legitimate manner INTRODUCTION If the underground economy is to be tackled, it is insufﬁcient solely to adopt curative remedies to transform those enterprises and entrepreneurs currently operating on an underground basis into fully legitimate enterprises. Initiatives also need to be pursued to prevent future start-ups entering the world of underground work in the ﬁrst place. While later chapters deal with the curative remedies required, the intention in this chapter is to identify ways of helping enterprises and entrepreneurs start up in a legitimate manner from the outset. To help business ventures start up properly from the beginning, this chapter will evaluate ﬁve broad policy measures that might prevent new enterprises and entrepreneurs slipping into underground transactions. First, the issue of simplifying existing formalization procedures will be evaluated. Second, the idea of introducing new categories of legitimate economic activity so as to allow forms of endeavour currently conducted on an offthe-books basis to become legitimate will be considered. Third, the provision of direct and/or indirect tax incentives to help enterprise and entrepreneurs to start up legitimately will be reviewed. Fourth, the use of micro-enterprise development programmes (MDPs) to help micro-enterprises set up and develop in a formal manner will be examined and ﬁfth and ﬁnally, a range of initiatives for smoothing the transition from claiming unemployment beneﬁts to becoming self-employed. The outcome will be an analysis of a range of policy measures that could be implemented in order to help enterprises and...
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