Transitioning the informal economy to a formal one
Developing countries often prioritize the formalization of enterprises in their MSME development policies. The benefits of formalization include increased access to credit, higher productivity, and better social protection, while governments gain from a higher tax base. However, informality continues to persist despite these apparent benefits.
This blog stresses on the need to modulate our approach to formalization of the informal economy and explores three principles on how the digital economy can enable this process.