2.1.1. Weak governance and institutional quality in many economies. Inconsistent regulatory enforcement, overregulation in the labour market, outside the formal system to avoid institutional issues (OECD 2009; APEC PSU 2024a). These problems take away from the benefits of formalisation, creating an environment where remaining informal becomes a rational option for workers or firms to survive. Tackling this issue is typically related to addressing Types 2, 3 and 4 informality, as these informal actors The score is measured on a scale from approximately -2.5 to 2.5, where the higher value corresponds to better governance. The estimation is presented in a standard normal distribution, meaning that roughly 99 percent of estimates will fall within that range but more extreme values may still be seen in rare cases. Government effectiveness captures perceptions of the quality of public services, the quality of the civil implementation, and the credibility of the government's commitment to such policies. society, and in particular the quality of contract enforcement, property rights, the police and the courts, as well as the likelihood of crime and violence. including both petty and grand forms of corruption, as well as ^capture' by elites and private interests.