Increasing formalisation is a key challenge in the process of economic development. Workers in formal companies receive social benefits and often experience better labour conditions and have higher wages. In addition, the expansion of the formal sector is likely to result in higher tax revenues as well as productivity growth at the macroeconomic level. In the mining sector, formalisation can also enhance environmental sustainability, as more dangerous production processes are abandoned. Yet expanding the formal sector is not easy, with many informal companies preferring informality to keep costs down, combined with a governmental struggle to implement effective policies.

This research will explore two questions: why is formalisation so difficult in countries like Peru and how can current trends be reversed in the future? With a focus on gold mining in Peru and taking a political economy approach, the project will explore the political obstacles to successful implementation of formalisation policies at the macro-level and the socioeconomic constraints towards formalisation at the micro-level, looking in particular at Arequipa.

This is a collaborative project with the Universidad del Pacífico's Centre for Mining and Sustainability Studies (CEMS) in Lima.