Working Paper 127

The concept of ‘formalisation’ has been ubiquitous in development discourse and policymaking in the early twenty-first century. It has underpinned policy interventions and proposals from tax registration to property titling, and a range of measures intended to connect informal entities with state institutions or formally structured markets.

Despite the policy enthusiasm, however, the outcomes of formalisation policies have frequently been disappointing. We argue that this disconnect lies in the concept of formalisation itself and that common approaches to formalisation are often rooted in three conceptual fallacies: (a) there is a binary distinction between formal and informal economic actors; (b) all informal economic actors are alike; and (c) ‘becoming’ formal necessarily spurs a set of positive externalities.

These conceptual confusions pay insufficient attention to contextual complexity and the political and social dynamics that shape informality in a given context, and are frequently rooted in the practicalities and power structures that shape knowledge creation in this area. Consequently, we argue for a new research agenda on formalisation that challenges both its conventional conceptual foundations and the practices of research that engage with it.


Max Gallien

Max Gallien is a Research Fellow at the ICTD. His research specialises in the politics of informal and illegal economies, the political economy of the Middle East and North Africa and development politics. He completed his PhD at the London School of Economics. Max co-leads the informality and taxation programme with Vanessa, as well as the ICTD’s capacity building programme.

Vanessa van den Boogaard

Vanessa van den Boogaard is a Research Fellow at the ICTD and a Senior Research Associate at the Munk School of Global Affairs and Public Policy at the University of Toronto. She completed her PhD thesis on informal revenue generation and statebuilding in Sierra Leone, and has ongoing research on the topic in the Democratic Republic of the Congo and Somalia. Vanessa leads the ICTD’s new programme on civil society engagement in tax reform and co-leads the research programme on informal taxation.
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