The Informal Economy in Developing Societies: Implications for the Learning Cities Concept

The Informal Economy in Developing Societies: Implications for the Learning Cities Concept

Peggy Gabo Ntseane
Copyright: © 2019 |Pages: 14
DOI: 10.4018/978-1-5225-8134-5.ch005
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This chapter submits that the informal sector in developing countries is neglected in many respects. First, little effort is made to understand the going-on within the sector, and second, its contribution to the national economy is yet to be accounted for. After discussing the characteristics of the informal sector and after venturing a definition of “learning cities,” the chapter identifies four issues to which four recommendations were proffered. Two of the issues include the feminization of the informal economy sector and the possible development of best learning cities practice formats for the purpose of improving the practice of the informal economy within developing countries.
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The Informal Economy Concept

The conceptualization of the ‘informal economy’ or the ‘informal sector economy’ (as it is referred to, in some literature), is not one devoid of controversies. Attempts at providing this field with a globally uniform definition and efforts at mainstreaming it into national economies in developing countries are yet to bear their fruits.

In Asia (e.g. India, Indonesia and the Phillipines) Sharma and Chitkara (2006) use the terms ‘unorganized’ and ‘informal’ interchangeably in their description of the informal economy. Other definitions emphasize terms such as ‘unregulated’, ‘grey economic’, ‘not being formal’ in their discussion of this sector. Unfortunately, the lack of a standardized definition has resulted with countries having the flexibility to adopt a definition that is appropriate to the needs and system of data collection for the same. Furthermore, even where there have been attempts to include the informal economy activities into the formal national economy frames, still most economic units of the informal sector have escaped the administrative, legal and statistical frameworks in force. Yet, failure to tax profitable businesses in the informal sector means increased burden for those in the formal sector who pay taxes. Consequently, Ndoro (1996) has argued that the conceptualization of the informal sector cannot stand on its own theoretically as an economic category. It depends on the existence of that which is termed formal. Definitional debates and controversies of the informal sector have to be addressed if the sector’s contribution to national economies is to be realized (p.196).

Suffice it to say however, that while the search for a uniform definition of ‘informal economy’ goes on, and while efforts at migrating this economic sector into national economic grades continue, the historical trajectory of the terminology ‘informal sector economy’ shows that this terminology was not in existence before 1971. Beginning from 1971, a number of definitions have been suggested for the phenomenon with the most accommodating definition to date of the terminology ‘informal sector economy’ being that of the International Labour Organization (ILO, 1991).

Hart (1971)was the first to use this terminology in his famous article ‘Small Scale Entrepreneurs in Ghana and Development Planning’. However, the International Labour Office was the institution that eventually popularized and internationalized the concept in its 1972 study……(Biao, 2017 p.154).

Key Terms in this Chapter

Learning Cities: This is where resources of the locality are mobilized to facilitate education and learning critical for survival and for the workplace.

City Dwellers: Persons who reside and work within a city.

City Council Authorities: Civil servants charged with the responsibility of administering a city.

Lifelong Learning: Is learning required by every human being throughout their life. It is acquired in formal, non-formal and informal settings.

Developing Societies: Localities characterized by low levels of economic and technological development.

Gross Domestic Product: A total monetary value of goods and services produced and or provided in a country at a specific time period (usually calculated annually).

Informal Economy: Self-employment that is neither regulated, measured or taxed by the country where it occurs. Examples include small production and distribution of goods and services.

Eco-Friendly Environment: A geographic location/settlement with resources that are/or used and management in a manner that is not harmful to its inhabitants.

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