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6. Pursuing the agenda forchangeOver the last two decades, much attention hasbeen paid to legal and regulatory institutions andto their influence on economic outcomes. It isrecognition of the importance of good governancein advancing economic development initiatives.As a result, much development assistance isbeing directed towards reforms of national legalcodes, public institutions, and bureaucraticprocesses. The anticipated result is a legalinfrastructure conducive to market-led economicgrowth. However, the reform movement has notfully (perhaps only marginally) addressed themultifarious issues of informal economic activity.Deregulation was expected to result in significantshifts of entrepreneurial activity from informalto formal. But, as pointed out earlier the scaleof informal economic activity is actually growing,not decreasing. The informal sector is hereto stay. At the same time, policy reform, thatstrengthens what works for the working poor andresponds to what does not, is long overdue.Laws, regulations, and institutions governingcommercial relations need to reflect the realitythat most economic units are very small with fewhired workers and that many of the working pooroperate on their own account. Also, biases inexisting laws, regulations, and institutions thatfavour large enterprises over small ones, and menover women, need to be addressed. Meanwhile,in the absence of new and more appropriate laws,regulations and institutions, most informal businesseswill remain unprotected, insecure, andvulnerable.Business-related reforms are now really comingunder closer scruitiny. 99 In fact, there is anincreasing demand for reforms to contain ‘valuebased policies, strategies and institutions’ thatwill bring long-term sustainable benefits to thepoor in general and to informal enterprises inparticular.What is needed at this juncture are policiesregarding formalisation that not only simplifyformalities or improve the quality of regulation,but also increase the value of informationprovided by public registers to their users, bothpublic and private. This is because business formalisationis an ordinary productive process thatincurs costs but also provides valuable publicand private services. The private services reducefirms’ transaction costs in many of their contracts,and the public services facilitate the workof the administration in its dealings with firms.In other words, ‘the main priority should not beto reduce the cost of business formalisation — acost paid only once — but rather to reduce transactioncosts in all business dealings. . . . Therestructuring of formalities is in itself insufficientfor reducing total transaction costs. It may alsobe a costly distraction. It is necessary, rather, toenhance the value of formalisation.’ 100Addressing informality, therefore, is a multi-facetedproposition requiring a thorough understandingof the factors that create and drive informality.Reform initiatives may also require that theformal sector be re-defined to accommodatemany of the principles and values which characterisethe vibrancy and resilience of the informalsector. Clearly, there is no single approach toreform but there are essential and common principlesthat must be observed. Three key ones are:context specificity, a participatory and genderedapproach, and recognition of legal empowermentof informal businesses as a governance issue.This section sums up our discussion on what thepromise of legal empowerment holds with respectto unlocking the productive capacities of the256