tdr marco analitico informal id ad en a latina

8/8/2019 TDR Marco Analitico Informal Id Ad en a Latina

http://slidepdf.com/reader/full/tdr-marco-analitico-informal-id-ad-en-a-latina 1/8

1

TERMS OF REFERENCE

DEVELOPING AN ANALYTICAL FRAMEWORK ON

BUSINESS ENVIRONMENT REFORMS AND THE INFORMAL ECONOMY

IN LATIN AMERICA AND THE CARIBBEAN

CALL FOR PROPOSALS: UNTIL NOVEMBER 8, 2010

I. BACKGROUND

The Business Regulation and Evaluation Group (BREG) is a network of International

Cooperation and Development Organizations working together to improve the quality of theinterventions to reduce over-regulation in Latin America and the Caribbean (LAC). Thisnetwork aims to promote the evaluation and study of the long-term impact of businessenvironment reforms and assess the costs and benefits of regulations in the LAC region.

Some of BREG specific objectives are: i) To develop knowledge about the impact of BusinessEnabling Environment (BEE) programs to better up the design and implementation of futureprograms, projects and policies and ii) To explore and evaluate complementary initiativestowards BEE for Small and Medium Enterprise (SME) development.

Following its objectives, BREG has decided to launch a study to develop an analyticalframework on Business Environment Reform and the Informal Economy for LACregion. This study has to be based on the discussion paper produced by the DonorCommittee for Enterprise Development (DCED) on December 2009

1.

1 www.businessenvironment.org/dyn/be/docs/182/BERIE_Consolidated.pdf



2

II. The BEWG-DCED document

The paper produced by the Business Environment Working Group (BEWG) of DCEDprovides “guiding principles and advice to donor and development agencies, and theirprogram partners, on how [Business Environment Reform] BER programs might furthercontribute to poverty alleviation by reducing informality and encouraging informal business to

start operating formally”. As the paper states, “while BER may not be the only or even mainpolicy tool to address the concerns related to the [Informal Economy] IE, it is still importantthat BER could do more to address the needs of the [base of the pyramid] BoP. As such, thepaper focuses on identifying the links and analyzing the impact of BER on the IE as well ashow the IE impinges on the effectiveness of BER. The paper considers ways in which donor-supported programs can encourage the creation of incentives that lead informal businessesto formalize, and the impact on poverty reduction and economic growth from doing so. Thegoal is to go beyond issues such as business registration and licensing to consider the fullrange of informal business practices that contribute to the IE, such as informal employment,trade, premises, and the failure to pay tax. Finally, in addition to providing recommendations,the paper both provides a framework for thinking about how the BE and IE interact as well asidentifies related policy issues and opportunities outstanding”.

At the same time, the paper provides a typology of the degree of enterprise informality,identifing four national degrees of enterprise informality (See table 1 below).

Table 1: typology of the degree of enterprise informality

Characteristic

Least dynamic Highly dynamic

Completely informal Partially formal

Informal economy Formal economy

Subsistenceenterprises

Unofficial enterprises

Mostly unregistered Mostly registered Officialenterprises

Degree of

Informality

100 percent High proportion

of sales undeclaredand workers notregistered

Some proportion of sales undeclared and

workers unregistered. May use outside theofficial purview (e.g., Internet to deliver software)

Type of activity Single streettraders, cottage/microenterprises,subsistence farmers

Small manufacturers,service providers,distributors,contractors

Small and medium manufacturers,service providers, software firms

Technology Labor intensive Mostly labor intensive Knowledge and capital intensive

Owner profile Poor, loweducation, lowlevel of skills

Poor andnon-poor, welleducated, highlevel of skills

Non-poor, highly educated,sophisticated level of skills

Markets Low barriers to entry,

highly competitive,high producthomogeneity

Low barriers to

entry, highlycompetitive, someproduct differentiation

Significant barriers to entry, established

market/product niche

Finance needs Working capital Working capital, someinvestmentcapital, supplier credit

Investment capital and working capital, letters of credit, supplier credit

Other needs Personal insurance,social protection

Personal and perhapsbusiness insurance

Personal and business insurance, businessdevelopment services

Source: DCED (2009).



3

The paper argues that each sub group calls for specific BER programs and policyinterventions as each sub group has different motivations for transacting in the informaleconomy see Table 2. In addition, the paper also states that this classification may varyamong regions and have a different mix of the subgroups2. Along with that idea, the purposeof the assignment is to adapt the analytical framework develop by DCED for LAC regionidentifying which is the typology of enterprise informality in the region, which are their

motivations in terms of cost or benefits for remaining informal and which are the most suitableBER programs to address them and how evaluate these programs.

Table 2: Indicative motivations for transacting in the informal economyInformal economy Formal economy

Subsistenceenterprises

Unofficial enterprises

Mostly unregistered Mostly registered Officialenterprises

Costs

Tax evasion:Direct, Indirect

Labor regulation Other regulation Fear of predation

Fraud Distrust of government

Costly start-upprocedures

Ignorance Benefits

Bank inance Non-bank financialservices

Land tenure

Government/donor TA

Public utilities Social protectionservices

Court/policeaccess

Avoid compliancefines

Marketopportunities

Source: DCED (2009).

2“[T]he literature indicates that regions have a different mix of the subgroups contained in Table 2.1.

For example, Sub-Saharan Africa has a significant contingent of non-dynamic, involuntary, subsistencebusinesses while in the larger countries of Latin America, unofficial enterprises and skilled part-timeworkers tend to be voluntary and even oscillate in and out of formality.”



4

The typology and this costs-benefits scheme has an instrumental value and must beunderstand inside a most comprehensive approach. As it said in DECD document, “Towardthis end, the large body of related literature is interpreted through two complementary lenses,cost-benefit analysis and economic empowerment. The former lens views the formalitydecision of the economic agent as one of rational choice, where the transaction costs in

terms of money, time, and knowledge (required to overcome the high-cost impediments toparticipation in markets and to access key inputs) are weighed against the benefits thatformality might confer in terms of greater access to goods and services (both economic aswell as those related to social protection) at their existing level of quality and reliability. Thelatter lens views the causes of informality—the aforementioned components of the cost-benefit decision—as the consequences of a nation’s abrogation of certain human rights.These rights relate to access to justice, security of property rights, the fulfillment of laborrights (as specified in the Fundamental Principles and Rights at Work and the Decent Work Agenda ), and business rights (access to finance, limited liability, insurance, ability to useformal contracts, etc.)”

3.

III. THE STUDY

3.1. Objective

The objective of the study is to adapt the analytical framework on “Business EnvironmentReforms and the Informal Economy” produced by DCED for LAC region.

The expected outcome is a friendly manual to be used by donors and their partners whichcontains: characterization of informal economy in LAC and guidelines to develop BERprograms and to evaluate them.

3.2. Scope

1. Based on DCED paper, identify which is the typology of the degree of enterpriseinformality in the LAC region. Identify which other mix of the subgroups may exist anddescribe these sub groups taking into account the characteristics established in the tableabove. Justify the typology identified. State if there are significant differences andparticularities inside the LAC region regarding this typology and how the countries may begrouped according to them.

2. Founded on the results of the previous classification, identify which are the motivations interms of costs and benefits that each sub group has for transacting in the informaleconomy. Take as a reference the table 2 and justify each motivation identified.

3. Identify which are the BER reforms that have been undertaken in the LAC region andwhich have been its results. State if these results are based on heavy empirical evidenceor which kind of analysis has been undertaken and if they are evaluation informationgaps.

4. Recommend which are the appropriate BER to deal with the sub groups identified beforeand justify.

3Business Environment Reforms and the Informal Economy, Zinnes/DCED, 2009



5

5. Provide recommendations for BER programs evaluation and state which should be themore appropriate methodology to use depending on the program and also which shouldbe the variables to be assessed.

3.3. Methodology

The study requires a revision of the existing literature and database. It implies a combinationof theoretical and empirical analysis. The methodology may include interviews with membersof BREG or any other relevant institution if the consultant finds useful to do so.

3.4. Deliverables

The following deliverables will be submitted by the firm, based upon satisfactory review andapproval by BREG. The consultant will need to input all comments and revisions made byBREG on ALL deliverables and re-submit revised versions incorporating BREG commentsand revisions before receiving payment

1. Work plan: A detailed written work plan, including schedule and highlighting keymilestones.

2. Submitted draft 1 addressing items 1 and 2 of the section Scope of these TORs and apower point presentation.

3. Submitted draft 2 addressing items 3, 4 and 5 of the section Scope of these TORs and apower point presentation

4. Final paper presenting the main conclusions of the study and a power point presentationand a Manual for donors and their partners which contains: characterization of informaleconomy in LAC and guidelines to develop BER programs and to evaluate them.

It is expected that as part of its deliverables, the consultant may provide a survey of theexisting literature and identify if there are gaps of information related to the assignment, andthis has to be communicated to BREG as the study develops.

All deliverables should use the format contained in Annex 1 and should be presented inEnglish and Spanish, in written format (2 copies) and in CD.

IV. CONFIDENTIALITY STATEMENT

All data and information received from BREG for the purpose of this assignment are to betreated confidentially and are only to be used in connection with the execution of these Termsof Reference. All intellectual property rights arising from the execution of these Terms of

Reference are assigned to BREG. The contents of written materials obtained and used in thisassignment may not be disclosed to any third parties without the expressed advance writtenauthorization of BREG.



6

V. OWNERSHIP OF MATERIALS

Any deliverables under this assignment in any forms will be the property of BREG, includingany intellectual property developed under this assignment. All project deliverables, includingreports and other creative work called for by these Terms of Reference, in written, graphic,audio, visual, electronic or other forms shall acknowledge the support of BREG. Such

acknowledgment shall contain the BREG logo. The BREG logo should be included in alldocuments published and distributed.

VI. QUALIFICATIONS AND POSITION REQUIREMENTS

The consulting organization must have ten years experience; most of their researchers mustbe PhD, doctor or master, with publications in international magazines. Specially, theorganization must have minimum of four years experience researching or developing BERprograms preferably in Latin America, and have in-house expertise in the following technicalareas:

• BER reforms framework• Public sector reform programs design and evaluation in Latin America

• Evaluation techniques and methodologies

The team must include:

• Coordinator: Senior researcher with 7 years experience on BER programs.

• Professionals (2), social scientists and/or lawyer. One of 5 years researching,designing or implementing BER programs and one of 5 years with expertise inprograms evaluation techniques and methodologies.

VII. BUDGET

The indicative budget for the total assignment should not exceed US$ 77,000.

VIII. LOCATION OF ASSIGNMENT

The consulting organization is expected to carry out all activities in their own headquarters.Any necessary travel expenses will be the responsibility of the organization.



7

IX. PROPOSAL SELECTION

The selection will consider:

Institutional experience related to the topic, including a fluidnetworking capacity in this field.

20%

Team C.V.: researching and evaluating experience, publications,relations with business environment reform.

20%

Technical proposal: theoretical and methodological approach, bestpractices and failures practices review, probability to implementedrecommendations, will be considered.

40%

Economic proposal: detailed budget to implement this assignment.Best justification and reasonability will be appreciated inside the rangeestablished between higher and lower proposal.

20%

IX. TIMEFRAME

Call for proposals: Open between October 18 – November 8

Selection process: November 10 - November 17

Timeframe project: This project is planned for four months starting in December 2010. Finaldeliverables must be ready for March 31/2011.

X. CONTRACT DURATION AND PAYMENT SCHEDULE

The consulting organization will have a 4 month contract and receive payments according thefollowing schedule:

• 20% upon a detailed written work plan, including schedule and highlighting keymilestones.

• 25% upon submission of Draft 1

• 20% upon submission of Draft 2 and Final paper• 35% upon submission of Manual

Send proposal to/ any consultation:

Carmen Vildoso ([email protected])

Executive Secretary

Business Regulation and Evaluation Group - BREG



8

Annex 1: format for deliverables

(TITLE OF ASSIGNMENT)

( NAME OF THE DELIVERABLE)

(Name of consulting organization)

(date)

Total or partial use of the contents of this document should not be used or published without the written consent

of the BREG.

tdr marco analitico informal id ad en a latina

Documents