The nature of activity of the informal sector may vary across the developed and developing countries, yet it is evident that the sector contributes to economic growth anywhere in the world, regardless of a country's economic system. This article aims to highlight the importance of the informal economy in a less developed country like Bangladesh, where a large section of the people is engaged outside of the formal economic activities. Moreover, the study attempted to find out the determinant of the informal economy in the global context. It likewise attempted to relate the informal economy with governance issues, with a view to understanding how the informal economy can be best managed through appropriate government policies.