Out of the shadows? Formalisation approaches to informal economic activity

Recent years have witnessed a shift in the policy debate concerning informal economic activity in the advanced industrial economies away from an emphasis only on deterrence towards the possibilities for encouraging transition into the formal economy. Such formalisation policies have a considerable history in the developing world but to date these have only weakly informed this policy debate. This article reviews the dominant conceptualisations and policy approaches towards the informal economy as these have evolved in the developing world and critically evaluates how these provide a context for the development of new policy approaches in the developed world.