Informality in the development process

The informal economy is a dominant feature of developing economies and encompasses a diverse group of workers and enterprises (Chapter 1). This heterogeneity prompts various perceptions of and stereotypes about the informal economy and has fuelled debate about its role in the development process. To inform policy debate and decision makers, this chapter reviews links between informality and the development process and, more importantly, provides new evidence on the less-studied drivers of informality. It shows that the long-standing negative connotation of informality is not always grounded in evidence and often masks the subtler reality. Fighting stereotypes and promoting an accurate picture of the informal economy’s contribution to development is key to making the case for investing in the protection of workers.