Constructing Alliances: The Politics of Informality in Weak States

Abstract

In contrast to initial expectations of canonical economic development models, economic in-formality has remained a key feature of developing countries. Not only does informality create fiscal problems, but it is also reflective of a dysfunctional social contract between the state and its citizens. Despite extensive research on the persistence and growth of informal economies, the political dimensions of informality are largely unexamined. This dissertation begins to answer three important questions to address this blind spot: (1) Under what conditions do politicians tax the informal sector? (2) What explains the varying levels of informality? (3) Why and when does precarity engender divergent preferences for redistribution? The findings show that the heterogeneity in the informal sector in weak states leads to heterogeneous state responses, and therefore varied and complex interactions between the state and informal actors. The answers in my dissertation provide important insights into the governance implications of pervasive and persistent informality in developing countries.