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Can the Organised and Unorganised Sectors Co-exits: A Theoretical Study

Author

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  • Manoj Pant

    (Centre for International Trade and Development,Jawaharlal Nehru University)

  • Shobha Bagai

    (Cluster Innovation Centre, Delhi)

Abstract

In the past debates around protection are usual couched in terms of protection of the manufacturing sector from imports and are centered around the so called “ infant industry” argument. However, while this argument is difficult to apply in a post WTO world, the more pressing issue today seems to be in the realm of services where the unorganised sector is a major employer. Despite the usual efficiency arguments many developing and developed countries continue to restrict competition via zoning and other local restrictions. Yet there seems no analytical study to determine whether organised and unorganized sectors can co-exist in the absence of such restrictions. In this paper we have tried to model a scenario where organised and unorganised sectors compete and where the organised sector is only restricted by statutory rules of setting up business. The model indicates that coexistence of the two sectors is a knife-edge problem and generally unlikely. It is seen that while low growth rates of demand would eliminate the organised sectors, high growth rates and product competition will eliminate the unorganised sector. The political need to ensure coexistence for some time would require some market segmentation via regulatory restriction like zoning.

Suggested Citation

  • Manoj Pant & Shobha Bagai, "undated". "Can the Organised and Unorganised Sectors Co-exits: A Theoretical Study," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 15-11, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    • Handle: RePEc:ind:citdwp:15-11
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    References listed on IDEAS

    as
    1. Mathew Joseph & Nirupama Soundararajan & Manisha Gupta & Sanghamitra Sahu, "undated". "Impact of Organized Retailing on the Unorganized Sector," Indian Council for Research on International Economic Relations, New Delhi Working Papers 222, Indian Council for Research on International Economic Relations, New Delhi, India.
    2. Mathew Joseph & Nirupama Soundararajan & Manisha Gupta & Sanghamitra Sahu, 2008. "Impact of Organized Retailing on the Unorganized Sector," Macroeconomics Working Papers 22167, East Asian Bureau of Economic Research.
    3. Mathew Joseph, 2008. "Impact of Organized Retailing on the Unorganized Sector," Working Papers id:1672, eSocialSciences.
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