Informality in Emerging Market and Developing Economies: Regional Dimensions

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No AccessFeb 2022Informality in Emerging Market and Developing Economies: Regional DimensionsAuthors/Editors: Dana Vorisek, Gene Kindberg-Hanlon, Wee Chian Koh, Yoki Okawa, Temel Taskin, Ekaterine Vashakmadze, Lei Sandy YeDana VorisekSearch for more papers by this author, Gene Kindberg-HanlonSearch for more papers by this author, Wee Chian KohSearch for more papers by this author, Yoki OkawaSearch for more papers by this author, Temel TaskinSearch for more papers by this author, Ekaterine VashakmadzeSearch for more papers by this author, Lei Sandy YeSearch for more papers by this authorhttps://doi.org/10.1596/978-1-4648-1753-3_ch5AboutView ChaptersFull TextPDF (0.5 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract: Reports that emerging market and developing economies (EMDEs) experienced a decline in informality over two decades before the COVID-19 pandemic. Output informality declined most in East Asia and Pacific and South Asia, while employment informality fell most in the Middle East and North Africa, South Asia, and Sub-Saharan Africa. Yet the incidence of informality remains high in all regions. In South Asia and Sub-Saharan Africa, pervasive informality has associated with low human capital and large agricultural sectors. In Europe and Central Asia, Latin America and the Caribbean, and the Middle East and North Africa, heavy regulatory and tax burdens and weak institutions have proven important factors. In addition, legacies of the transition from central planning to market economies and disruptions related to conflict remain important. In East Asia and Pacific, employment informality associates with lagging social protection in cities following large-scale rural-to-urban migration. A balanced policy mix tailored to economy-specific circumstances can help mitigate the adverse effects of informality. 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