TACKLING ENTREPRENEURSHIP IN THE INFORMAL SECTOR: AN OVERVIEW OF THE POLICY OPTIONS, APPROACHES AND MEASURES

What is it about?

The aim of this paper is to review the various policy options, approaches and measures that can be used to address informal entrepreneurship. To do this, it firstly reviews four possible policy options, namely taking no action, eradicating informal entrepreneurship, moving formal entrepreneurship into the informal economy, or transforming informal entrepreneurship into formal entrepreneurship.

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Why is it important?

Revealing that transforming informal entrepreneurship into formal entrepreneurship is not only the most viable option but also the approach most commonly adopted by supra-national agencies and national governments, a review is then undertaken of how this can be achieved using either direct controls, which seek to increase the costs of informal entrepreneurship and/or the benefits of formal entrepreneurship, or indirect controls that seek to generate a commitment to compliance and greater self-regulation. It is then revealed how these approaches and their accompanying policy measures are not mutually exclusive and can be combined in various ways, exemplified by the responsive regulation and slippery slope approaches.

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