INFORMAL_CITY_ASSIGNMENT_ONE_-_Copy[1]
Download as PPT, PDF1 like643 views
The informal sector provides employment opportunities for the poor and expanding populations when there are insufficient formal jobs. It exists where the means are illicit but the ends are licit as a response to excessive bureaucracy and manipulation by corrupt groups. The main causes of the informal sector are excessive government bureaucracy, rigid administrative procedures, inefficient legal systems, and the elimination of protectionism. The informal sector shows self-initiative and entrepreneurship by finding means of production and services, but it does not fall under government's planned economy and ignores official rules to meet basic needs. It consists of low-skilled labor and lacks capital and training.
INFORMAL_CITY_ASSIGNMENT_ONE_-_Copy[1]
- 1. URBAN INFORMAL SECTOR • According to Hart (1973), “Informal sector serves as a means for the poor to engage in employment when there is insufficient job opportunities for the expanding population.” • Hernando de Soto ( 1990 )argued that “informality” exists where the means are illicit but the end is licit” • Informality is viewed as a mass response to mindless, pompous bureaucracy and the manipulation of the economic system by corrupt vested interest group
- 2. CAUSES OF INFORMAL SECTOR Main cause of informal sector: •Excessive Governmental bureaucracy Rigid administrative procedures (red tapeism) •Persistent “mercantilist” system (exploitation) •Inefficient legal systems •Elimination of protectionism, subsidies and market segregation policies
- 3. SOCIO- ECONOMIC ASPECTS OF INFORMAL SECTOR Self initiative and entrepreneurial dynamism • Finding informal means of production and reproduction, establishing enterprises and providing services • Obtaining access to land, housing utilities and commodities Informality does not fall into Government planned, regulated and managed economy Informality is characterized by ignoring official rules so as to meet the basic needs Informal sector consists of people low skilled labour, inadequate capital, training and lack technical assistance Informality is dominant in underdeveloped and countries undergoing socio- economic transition
- 4. DEVELOPMENT POTENTIALS • Capacity to propel the engine of growth • Employment (A simple necessity for the poor to make a living) • Major contributor to GDP in some countries e.g Peru • Harnessing entrepreneurial dynamism • Informality when decriminalized and regulated serves the advantage to minimize illegal business operations. • Informality when carefully studied, it serves as a basis for Government to orient development strategies
- 5. CONSTRAINTS • Bureaucracy • Legal aspects • Lack of adequate funds for operation • Operate in small scale hence lack positive externalities • Social exclusion • Market segregation • Lack of database to inform decision making process
- 6. CONSTRAINTS • Bureaucracy • Legal aspects • Lack of adequate funds for operation • Operate in small scale hence lack positive externalities • Social exclusion • Market segregation • Lack of database to inform decision making process