Informality and Inclusive Growth in the Middle East and North Africa[L’informalité et la croissance solidaire au Moyen-Orient et en Afrique du Nord]

The long-standing informality debate in the Middle East and North Africa (MENA) Region has taken on a new urgency as it looks for a pathway to more socially inclusive growth that is less reliant on fossil fuels. This is occurring against a backdrop of subpar labor market outcomes, further growth setbacks, and deteriorating fiscal and current account de ficits in the aftermath of the COVID-19 pandemic—and in the wake of high in flation and supply chain disruptions triggered by the Russian Federation–Ukraine war. "Informality and Inclusive Growth in the Middle East and North Africa" aims to better understand the characteristics and incentive structure that have led to the prevalence of informal employment in three MENA countries—the Arab Republic of Egypt, Morocco, and Tunisia. The report breaks new ground by adopting a comprehensive perspective to focus on the features of, and interrelationships among, different aspects of these countries’ institutional landscapes to make sense of the complex incentive structure that workers and firms face when deciding between formal and informal options. Specifically, the report groups these issues in three broad realms:(1) entrepreneur-worker relations, (2) taxes and transfers, and (3) market conditions.