There exists a longstanding discussion of the role of the informal economy in the development process of Third World countries, notably in Africa. Much of the controversy was concerned with the question whether the informal sector promotes development or should rather be considered as a barrier to modernization. There is a remarkable shift of attention, away from artificial restriction on “pure economics” towards the social and political linkages of the informal and formal economy in recent years. However, there are still many open questions. First, is the heavy reliance of both neo-liberal economists and the donor community on quantitative economic analysis of GDP, growth and markets justified in the African context, even in view of the weak data available, that disregard most of the informal sector? Second, is the underlying assumption of a gradual substitution of informal by formal African institutions and economies in the process of urbanization and globalization viable? Third, are actors in the informal sector really belonging mostly to the disadvantaged social strata? Fourth, could we reasonably expect that the informal sector works predominantly in the interest of the poor? The answer to neither of these questions is an unequivocal 'yes'.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
980.