“Developing countries’ one third of national income comes from the informal sector. The informal sector reduces the unemployment problems” The third world countries - especially those of Asia and Africa - are under the rapid transition phase and marked by rapid population growth. Hence, such countries face dual problems of economic development and sustaining such large populations. The size of the informal sector in developing countries excluding the agricultural employment ranges roughly between one-fifth and four-fifths and in terms of its contribution to GDP. The informal economy accounts for between 25 percent and 40 percent of annual output in developing countries of Asia and Africa.
The large fraction of people employed in the informal sector is firstly a result of the retrenching of labour in the formal sector and thereby acting like a reserve army of labour. Secondly there is an ease of entering the informal sector as there are low requirements of education, special skills etc. The rigidity of wages in the urban formal sector has been a major reason for the sprouting of the informal sector economy which has helped people to diversify the sources of income. There have been studies done by researchers on rice processing units, textile manufacturing units etc. in different parts of the country and the common conclusion that has been reached upon through such research is that the increase in informal sector economy has been equally high in industrialized cities as it has been in backward towns because of activities like sub-contracting that is adopted to employ the informal sector enterprises to feed in to the supply chain of the formal sector.
Informal economy in India is faced with many challenges despite its significant contribution to the economy Informal economy accounts for more than half of the $1.8tn Indian economy and employs about 90% of the total workforce. At about 55% of the GDP, the share of informal economy in India is second largest after that in sub-Saharan Africa. Most of the emerging economies have this number at about 20%. Even though the informal economy forms such a significant part of the country’s growth, government has little data on it and it is not so well understood. Informal economy includes that part of the economy that is no regulated by the government, does not pay taxes and conducts most transactions in cash.
There are different forms within the cities. In Africa, for example, renting informally can also be in public housing. Formal housing can become informal housing, and informal housing can also be part of the formal housing and creates economic opportunities (UN-Habitat, 2003). If informal settlements contribute to national economies, job creation and are a component of the formal sector, are they preventable? What are the
It is a common notion that Urban living is linked with the industrial way of life and a better employment opportunities in various modern sectors. But it was realized that less than half of the urban population are able to find employments in these sectors,
Even if the firm remains small the localized industry presence in one or two locations benefits huge costs benefits as the concentration of the industry is huge. For example most of the manufacturing of undergarments are specific to only a particular province in China which inadvertently leads to large scale importance to these sectors. The external and internal scales of economies are important for trade in general at competitive costs and margins in general for the industry. The industry in which the external economies of scale are only applicable would generally be formed by small companies only and would be under the influence of perfect competition mostly. The larger firms if are possessing cost benefits and advantages to their smaller counterparts and internal scales are advantageously benefitted lead to imperfectly competitive environment.
At the same time the role of the cities in attaining the agenda many a times has neglects the informal economy. The notions continued to believe that the informal economy in developing countries would disappear once these countries achieve sufficient levels of economic growth and modern industrial development. It has to be understood and accepted that informal economy can no longer be considered as a temporary phenomenon.Furthermore, the informal economy has been observed to have more of a fixed character in countries where incomes and assets are not equitably distributed.This paper examines the Urban policy reforms through which the urban informal economy puts forth in the transformation focusing on street vendors. Keywords: Economic growth, Informal economy, Street vendors, Urban policy reform, Urban development Introduction Informality has become a dominant feature
Thus, growth in the agricultural sector will lead to improvements in people's living standards. 12- Expansion of the market scale There is more output in the agricultural sector, due to the mechanization of agriculture. It expands the size of the market. If there is more production, then things can be exported to other countries in the world. Exporting help more foreign exchange in the country.
Previously, the informal sector was thought to symbolize a lack of economic development that would and should disappear with modernization. Until more permanent jobs could be provided by the modern sector, the former was expected to absorb unskilled workers who migrated to the city from rural areas. However, this informal sector seems to be growing more rapidly than the formal sector. Due to the rapid rise in urban populations and increasing awareness of the limited employment generated by large-scale industries, planners are beginning to acknowledge the importance of the informal