How institutions foster the informal side of the economy: Gold and platinum mining in Chocó, Colombia

The mining formalization is a precondition for the sustainable development of the sector. This piece proposes a new qualitative method for mining and minerals policy assessment, based on novel institutional concepts and empirical gathering instruments, according to the stakeholders involving. To this end, we determine the self-reinforced rules that compose the formal and informal sides of the market economy and the explicit rules of the Colombian national mining formalization policy. Our evaluation, consulted officials of the centralized environmental and mining authorities through legal instruments, interviewed officials of the decentralized organizations, and interacted with who manage the land of the larger platinum extraction in Latin America, whose deposits are associated with gold, both alluvial. Our findings evidenced a rule of informality in the province of Chocó, where armed illegal groups settle down underground-states toward illegal economic activities, and also where centralize and decentralize state organizations get rid of their responsibilities. Such picture allowed foreign illegal miners and provoked the widespread customs of informality. On the other hand, we found an exclusive mining formalization policy, with few strategies to push the formalization through capacity-building initiatives for the artisanal and small-scale miners, an embedded state inefficiency that originates explicit rules, which exclude the inhabitants with vulnerable livelihoods. We propose policy insights for the institutional change of the artisanal and small-scale mining in Chocó, Colombia. Finally, future research should aim to study the environmental externalities of the informal economy in this biodiversity hotspot, and the effects of the possible pacification of the region. [Display omitted] •Mining formalization is a precondition for the sustainable development of the sector.•Institutions are social systems of explicit and tacit rules.•The market economy have two sides, one formal and other informal.•The state organizations self-reinforce tacit rules and enforce exclusive rules.•Gold and platinum ASM remains informal being key into illegal economic activities.