This indicator measures the proportion of businesses that find themselves in competition with unregistered or informal enterprises within a given market. This dynamic highlights significant
challenges faced by registered firms, as the
presence of informal competitors can lead to distorted pricing structures, reduced market share, and potential revenue losses. The degree of competition against these unregistered entities can also signal the effectiveness of regulatory frameworks and the overall business environment. A higher percentage may indicate a thriving informal sector, which, while providing employment and services, often diminishes tax revenues and undermines the competitive landscape for legitimate businesses. Understanding this metric helps policymakers assess the need for regulatory reforms and promote fair competition in the economy.
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