Pressures towards and against formalization: Regulation and informal employment in Mozambique

Abstract

The informal economy constitutes the bulk of employment in many emerging economies.Regulation theory suggests that all economic activity is characterized by a complex combination of formal and informal regulation. This article explores the pressures toward and against formalization, and what forms regulation can take, based on the case of Mozambique, and drawing on qualitative research involving elite interviews and observation. The findings highlight how the state may take a modernizing role, incorporating infrastructural development and formal regulation, yet also sustain conservative elements, tolerating:informal activity in the interests of political stability, infringements of employment rights, informal regulation and expropriation of space and natural resources. In theoretical terms, this paper highlights the limitations of accounts that focus on formal regulation; economic activity may be contingent on institutional mediation, but the primary basis of regulation may be informal. In countries such as Mozambique that have faced a troubled past, it should arguably be accepted by local and international institutions that the way forward will entail incremental change.

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