Tool: Red Tape Reduction (RTR)

LRTR is a toll that aims to assist local stakeholders understand the importance of improving the local business environment by looking at the regulations and process that govern it. These instruments specifically considers the interface between local government and the local business community and often results in the initiation of a change process within local government ultimately aimed at improving service delivery.

Red Tape and the Informal Sector

In most developing economies, at least one third of entrepreneurs are informal, and thus are trapped in activities characterized by low productivity, limited access to finance and services, and a limited capacity to expand. Thus, informality many times represents a missed opportunity for faster economic growth and better income distribution, let alone functioning markets and rule of law. It is therefore important to ask the question of how informality and the regulatory environment are linked, and what improvements to the regulatory environment could produce incentives for formalization.