By definition, informal economies are part of the economy that is not monitored or taxed by the government, and as is such informal economies signal low fiscal capacity because state-agents do not have the ability to effectively monitor and collect revenues from its populace.
By definition, informal economies are part of the economy that is not monitored or taxed by the government. As is such, informal economies signal low or zero fiscal capacity because state-agents do not have the ability to effectively monitor and collect revenues from its populace.