Informal Employment and Development: Patterns of Inclusion and Exclusion

At present, there is renewed interest in the informal economy worldwide. This renewed interest has rekindled some of the old debates about the phenomenon. This article will address two of the core debates: first, whether or not the informal economy is linked to the formal economy and modern capitalist development; and, second, whether or not the informal economy is outside the reach of government regulation. In so doing, it will raise a third dimension largely overlooked in the debates: the exclusion of the informal economy in economic development planning, especially at the local level. The article concludes with reflections on the exclusion of informal employment in local planning (by government) despite its inclusion in global production (through the market) and a vision for more inclusive approaches to economic development that take into account the size, composition, contribution and dynamics of the informal economy today.