1.3 South Asian Firms Are Predominantly Small

FIGURE 1.3 South Asian Firms Are Predominantly Small

Sources: based on tables published in government reports on bangladesh Economic growth institute census (2009) microdata and the india Economic Census (2013–14), the Nepal Economic Census (2018), and the Sri lanka Economic Census (2013–14). Note: The Economic growth institute census covers only urban locations in 19 districts.

The size distribution of informal firms is dominated to an even greater extent by tiny firms. In Nepal, among firms in nonfarm activities that are not registered with any government agency, nearly 99 percent employ only five or fewer persons (figure 1.4). In Bangladesh, among firms in nonfarm activities that do not possess the most basic type of business license, a municipal trade license, 98.1 percent employ only five or fewer persons.

Chatterjee and Kanbur (2014) infer the shares of factories evading and avoiding the Factories Act, a law in India under which all manufacturing factories with more than