Informal hubs, formal impacts: Spatial dynamics of parallel trade in Setif and El Eulma

• Tahar KHARCHI

  University Lecturer and Researcher , Teacher Education College of Setif , LAGAM Lab

This study examines the spatial and economic dimensions of parallel trade networks in Algeria's high plateau region, focusing on Setif and El Eulma as representative urban systems. Using spatial econometric methods and network analysis, we investigate how informal economic structures, particularly the "Doubaï markets," have reshaped urban hierarchies and regional economic integration. Our analysis reveals that El Eulma has emerged as a critical node in transnational informal trade, connecting North African markets with Mediterranean and Asian supply chains. The parallel economy, estimated at 33-45% of regional GDP, operates through sophisticated networks that bypass formal institutions while generating significant employment and commercial activity. We employ a mixed-methods approach combining MIMIC (Multiple Indicator Multiple Causes) models, spatial autoregressive specifications, and qualitative network mapping to quantify these relationships. Results demonstrate strong spatial spillovers between formal and informal sectors, with infrastructure development and institutional quality serving as key determinants of informal economy size. The study contributes to urban economics literature by documenting how second-tier cities in resource-dependent economies develop alternative growth pathways through informal trade networks. Policy implications suggest that integration strategies focusing on reduced transaction costs and simplified regulation may prove more effective than enforcement-based approaches.

• PDF

Copyright (c) 2025 Tax Policy Journal

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.