Tackling entrepreneurship in the informal economy: evaluating the policy options

What is it about?

Although there is emerging an understanding that many entrepreneurs conduct some or all of their transactions off-the-books, there has so far been little attempt to consider what can and should be done about entrepreneurship in the informal economy. The aim of this paper is to bridge this gap.

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Why is it important?

Evaluating the possible policy approaches of doing nothing, eradication, de-regulation and facilitating formalisation, the finding is that doing nothing leaves intact the existing negative impacts on formal and informal businesses, customers and governments, whilst eradicating informal entrepreneurship results in governments stamping out precisely the entrepreneurship and enterprise culture that they wish to nurture, and de-regulation results in a levelling down rather than up of working conditions. Only facilitating the formalisation of informal entrepreneurship is found to be a viable policy approach. How this might be achieved is then considered.

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