Informality is a matter of concern among policymakers and the business
community throughout the world. Impacts on productivity and growth, reduction in the
tax base and as a consequence in the amount of resources available to invest in the
provision of public goods and equity issues related to the existence of unprotected
workers are, not necessarily in this order, the main concerns associated with having a
significant part of the production and labor force in informality. Businesses tend to be
particularly concerned with the unfair competition associated with informality: recent
World Bank surveys of firms around the world show that firms tend to rank competition
from informal firms as one of their top three obstacles to do business. This can be seen in
14 Latin American countries, where 38.7 percent of the manufacturing firms ranked
informality ahead of issues such as tax rates and access to finance (Gonzalez and
Lamanna, 2007), as well as in countries as diverse as Vietnam and Mozambique, where
this same obstacle was ranked the top constraint for business growth. In the most recent
enterprise survey in Turkey, this topic was ranked the 4th major constraint for business
growth