Abstract
Ph.D. (Economics)
The main objective of this study is to assess the role of the informal sector in the
economy of the Democratic Republic of Congo (DRC) by assessing its linkage
with the formal sector. An attempt to assess the linkage between the formal and
informal sectors was carried out by using quantitative techniques that range
from the construction of a Social Accounting Matrix (SAM) to the building of a
Computable General Equilibrium (CGE) model to assess the impact of each of
the sectors in the DRC economy. A new SAM that incorporates formal and
informal sector is constructed whereby different techniques and methodologies
are applied. The data sources and techniques used to build the SAM and CGE
model are described. The DRC Formal Informal Sector Model (DRCFIM) is
constructed based on ORANI model of the Australian economy. The generic
edition of the model, ORANI-G, developed for CGE modellers was constructed
by Horridge (1998). The model has a theoretical composition which is typical of
a static Applied General Equilibrium (AGE) model. Nonetheless, one
particularity of the DRCFIM is that it is a multi-sectoral CGE model that
depicts the reflected structure of the DRC’s formal and informal sectors along
with a diversity of linkages between various economic agents such as
government, investors, traders and enterprises. DRCFIM is used to perform two
policy simulations. The first policy simulation assessed the impact of land use
on the DRC economy and the second is on trade liberalisation. In tracing the
impact of the land use subsidy shock, output rises and domestic prices decline in
most sectors, indicating considerable efficiency and lower costs per unit of
output. Land use subsidy raises output in most sectors, stimulating the real
GDP to rise by 0.34 and 0.26 percent in the short and long run respectively.
Concerning the second policy simulation, we only allowed the import price to
decrease by 5 percent in the model. As we would expect, gross domestic
product, exports and employment rise when the import price on products is
reduced by 5 percent in the short run.