Avoiding Informality Traps

By Ravi Kanbur on January 01, 2011

What will South Asia look like in 2025? The optimistic outlook is that India, which accounts for 80 per cent of the regional economic output, is headed towards double-digit growth rates. South Asia too will grow rapidly, primarily due to India. The pessimistic outlook is that, given huge transformational challenges facing the region, growth should not be taken for granted. Which of these two outlooks is likely to prevail? Ravi Kanbur's chapter "...hopes to clarify the precise sense in which informality is bad—a trap for development and growth—and to highlight policies that could help escape the trap. A key component of the argument is achieving clarity on what exactly is meant by informality by different participants in the analytical and policy debates, and to show how these different perspectives lead naturally to their policy prescriptions. Based on this clarification, and the anchor of a well-specified objective function for development policy, we can then discuss and delineate policies for avoiding the informality trap."

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