Policy Paper

WAYS OUT OF INFORMAL ECONOMY

The informal economy, often referred to as the "shadow," "underground," or "grey" economy1, is a pervasive and complex phenomenon observed in countries worldwide. It encompasses economic activities that operate outside the purview of formal regulations, official oversight, and legal frameworks. Unlike the formal economy, which is characterized by registered businesses, regulated employment relationships, and transparent financial transactions, the informal economy is predominantly characterized by unregistered and unregulated activities, undeclared employment, and cash-based transactions. In this policy brief, we delve into the concept of the informal economy, exploring its defining characteristics, causes, and the challenges it poses. This policy brief is also intended to serve as a comprehensive guide to the research and statistics available on informal economy in Georgia over the years. By shedding light on this often-overlooked aspect of economic activity, we aim to contribute to informed discussions and evidence-based policy development that fosters inclusive and sustainable economic growth in Georgia. We conclude with potential policy interventions and strategies that can facilitate the transition towards formal economy.