What is a key characteristic of the informal economy?

The informal economy is characterized by activities that often lack legal recognition or protections, which is why option C is the correct choice. This sector typically includes a wide range of jobs and services that are not regulated by the government or covered under labor laws. As a result, workers in the informal economy usually do not enjoy benefits such as health insurance, paid leave, or job security, which are commonly associated with formal employment.

In contrast, option A is incorrect because if the informal economy were fully regulated by the government, it would cease to be “informal.” The essence of the informal economy lies in its unregulated nature.

Option B is also incorrect because the informal economy is characterized by a lack of formalization. It does not adhere to established business regulations or standards, which distinguishes it from formal sectors that are highly structured.

Lastly, option D is misleading, as informal economies are prevalent in developing regions but can also be found in developed areas. They often arise out of necessity when individuals seek to earn a livelihood without access to formal job opportunities. Thus, the unsanctioned nature of the informal economy is its defining feature.