Formalisation – the creation of new institutional linkages between the state or formal economic structures and an individual, business, economic object, or activity – has been central to a range of development policy interventions. This entry explores the conceptual foundations of formalisation in the context of pervasive, though often poorly defined, informality in low- and middle-income countries. Formalisation is approached differently from statist development, market-based, and rights-based perspectives, with this heterogeneity shaping views of what types of interventions can effectively lead to formalisation. There is a surprising scarcity of robust evidence of what types of policy interventions effectively support formalisation, but existing evidence suggests that common policy approaches often do not lead to the intended outcomes. With this in mind, it is important to consider the ways in which formalisation interventions are located within political economic structures and tend to conflate different institutional processes and relationships.
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