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The Oxymoron of Informal Sector: A framework for conceptualising informal sector as enabler of economic development in developing countries
University of Gävle, Department of Business Administration and Economics, Ämnesavdelningen för företagsekonomi.ORCID iD: 0000-0003-0477-855X
2009 (English)In: Journal of International Business and Economics, ISSN 1544-8037, Vol. 9, no 1, p. 118-131Article in journal (Refereed) Published
Abstract [en]

Extensive attention has been given to the role of entrepreneurship in facilitating global economic development, with research indicating that much employment growth originates from the “entrepreneurial sector” of the economy. Paradoxically enough, in discussions of economic development, industrial dualism is often ignored. This paper fills this gap by acknowledging the Informal Sector, sometimes regarded as an unorganised “nuisance” sector, as an oxymoron. We show that the importance of informal activities is highly correlated with a nation’s level of economic development and the quality of its institutions. Furthermore, the informal sector emphasises small-scale, unskilled-labour intensive, self-financed activities and under capitalisation. In the light of this, we introduce a framework for understanding the role of the informal sector in the process of economic development. The framework developed also aims to accentuate the continuum, interplay and interconnectedness between the informal and the formal sectors and the role entrusted on some change agents such as  international NGOs, small community based or local NGOs as well as government authorities in this process. The conclusions and implications drawn for theory development and public policy recognise the role of industrial dualism in economic progress.

Keywords: Informal Sector, Formal Sector, Economic development, Dualism, Oxymoron.

Place, publisher, year, edition, pages
International Academy of Business & Economics , 2009. Vol. 9, no 1, p. 118-131
Identifiers
URN: urn:nbn:se:hig:diva-5499OAI: oai:DiVA.org:hig-5499DiVA, id: diva2:236591
Available from: 2009-09-24 Created: 2009-09-24 Last updated: 2019-11-25Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • harvard-cite-them-right
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • sv-SE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • de-DE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf