Is informality welfare-enhancing structural transformation ? evidence from Uganda
AbstractWhile Africa's recent decade of growth and poverty reduction performance has been lauded, concern has been expressed regarding the structure of this growth. In particular, questions have been raised about whether the growth is based on a commodities boom, or whether it is the beginning of a structural transformation that will lift workers from low-productivity jobs into higher-productivity ones. Macro evidence has suggested that the structural transformation has not started. But macro analysis misses the evidence that the process of transformation has started, because this process begins at the household level. Household livelihoods do not move from ones based on subsistence farming and household level economic activities into livelihoods based on individual wage and salary employment away from the household in one leap -- this process takes generations. The intermediate step is the productive informal sector. It is income gains at the household level in this sector that fuel productivity increases, savings, and investment in human capital in this sector. Ensuring that most households are able to diversify their livelihoods into the non-farm sector through productive informality not only increases growth, but also allows the majority of the population to share in the growth process. This paper illustrates this point with the case of Uganda which followed this path and experienced two decades of sustained growth and poverty reduction.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5866.
Date of creation: 01 Oct 2011
Date of revision:
Rural Poverty Reduction; Achieving Shared Growth; Labor Policies; Regional Economic Development; Economic Theory&Research;
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-11-14 (Africa)
- NEP-ALL-2011-11-14 (All new papers)
- NEP-DEV-2011-11-14 (Development)
- NEP-FDG-2011-11-14 (Financial Development & Growth)
- NEP-IUE-2011-11-14 (Informal & Underground Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- van de Walle, Dominique, 2000.
"Are returns to investment lower for the poor? Human and physical capital interactions in rural Viet Nam,"
Policy Research Working Paper Series
2425, The World Bank.
- Dominique van de Walle, 2003. "Are Returns to Investment Lower for the Poor? Human and Physical Capital Interactions in Rural Vietnam," Review of Development Economics, Wiley Blackwell, vol. 7(4), pages 636-653, November.
- Margaret S. McMillan & Dani Rodrik, 2011.
"Globalization, Structural Change and Productivity Growth,"
NBER Working Papers
17143, National Bureau of Economic Research, Inc.
- McMillan, Margaret & Rodrik, Dani, 2012. "Globalization, structural change, and productivity growth:," IFPRI discussion papers 1160, International Food Policy Research Institute (IFPRI).
- Fox, Louise & Sohnesen , Thomas Pave, 2012. "Household enterprises in Sub-Saharan Africa : why they matter for growth, jobs, and livelihoods," Policy Research Working Paper Series 6184, The World Bank.
- Philippe De Vreyer & François Roubaud, 2013. "Urban Labor Markets in Sub-Saharan Africa," World Bank Publications, The World Bank, number 15808, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.