Introduction to Formalising the Informal Economy Using an E-government Approach

What is the informal economy? Why is formalising the informal economy necessary? What is an e-government approach? In answering these questions, this introductory chapter sets the scene for the rest of this book on how digital technologies can facilitate the transition to formality. It commences by reviewing the various adjectives and nouns used to describe socially legitimate paid activities that are legal in all respects other than they are hidden from, not declared to, or unregistered by the authorities for tax, social security, and/or labour law purposes when they should be reported, declared, or registered. Attention then turns towards why formalising the informal economy is necessary. This reveals that any beneficial consequences of the informal economy are far outweighed by its harmful consequences and that most benefits of the informal economy are only beneficial if this economic activity is subsequently brought into the formal economy, meaning that action is required by governments to formalise the informal economy. The third and final section then turns to how this can be achieved. This introduces the emergent e-government approach that digital technologies applied in public initiatives, programmes, and policies can be an effective means for accomplishing this transition to formality.