Sociological, Psychological, and Political Factors Behind the Informal Economy: Recommendations for Successful Development Policy

Main Article Content

Colin Scott


Informal economic activity is an inevitability that occurs around the world. There is a strong correlation between a region's level of development and the size of its informal economy. Although informal economies exist in both the developed and the developing world, they are more significant to the everyday lives of individuals in the Global South. This paper examines the ways in which sociological, psychological and political factors mediate the pervasiveness of the informal economy. Here, the argument is made that the objectives of development policy can more effectively meet the needs of the developing world if policy-makers work to reduce both the barriers to formal activity and the incentives to operate informally.

Article Details

Author Biography

Colin Scott, Memorial University of Newfoundland

Collin Scott graduated from Memorial University in 2011 with a joint major in Psychology and Political Science. He is currently completing a Master’s in Political Science at Memorial and a Master’s in Applied Psychology and International Development at the University of Guelph, with plans to continue studying political psychology at the doctoral level. His research interests span a number of disciplines including: international development and economics; social, cross-cultural, and political psychology; cognition and cognitive development; and public opinion and voting.  ­