ABSTRACT
This research investigated barriers to the formalization of economic activity that was generally untaxed and unmeasured, referred to as informal economic activity, in an emerging economy. Nepal was selected as the country for study because it presents a case of a market undergoing economic and political liberalization. The paper presents background information on the economy of Nepal, the conduct of the fieldwork in Nepal, perspectives on informal economic activity, and the necessity of harnessing this activity. This is followed by research dealing with the informal economy and perceptions of the barriers to integration based on fieldwork in Nepal. Suggestions to harness this activity are offered. The results of this study may provide insights into the formulation of public policy and social marketing initiatives for addressing informal sector development in emerging markets.