Trade and Industry

Working Paper 1-2009: Informality in Latin America: Interpretations, Facts and Opportunities

  • Year: 2009
  • Organisation: TIPS
  • Publication Author(s): Viktor Tokman
  • Countries and Regions: Mercosur (Common Market of the South)
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This paper deals with informality and its transition to modernity. The transit to formalization will enable those working in the informal economy to improve their chances of being included, become less vulnerable, and ensure a better performance of their activities. But this also requires recognition of the fact that formality has been tailored according to the needs of those already there, rather than to incorporate the excluded. The mechanisms of formalization should be improved upon and adapted, as well as the capacity of the informal to effectively use these for empowerment purposes.

The paper reviews the evolution of the concept of informality and analyzes the size, characteristics and evolution of the informal economy in Latin America. The author also considers a strategy for inclusion and opportunities for both enterprises and workers in the informal economy. The paper concludes with a brief comment on the cultural change required to ensure the success of a strategy of inclusion and of opportunities.