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The urban informal sector : an alternative analysis

University of British Columbia

The concept of dualism was applied to the urban economies in the Third World in the mid-sixties. Two sectors were identified, the informal sector and the formal sector. The informal sector was recognised to be primarily the refuge of the poor, the unemployed, and surplus labour from rural areas. Consequently, theories were advanced to explain how the informal sector was created, and why it persisted in the Third World develoment process. In the last ten years, however, research findings have shown that the informal sector may not necessarily be the sector of the poor or be confined to the Third World. These studies indicate that the informal sector is sometimes quite thriving, and present in centrally planned socialist economies as well as Western capitalist nations. It is time therefore for a comparative analysis of the various types of informal activities in the different economies to ascertain how and why the phenomenon exists in the different contexts. This research examines the course of the debate on the informal sector from 1965-1985 and presents an alternative analysis on the informal sector. The alternative analysis redefines the 'informal sector' as the 'petty capitalist sector' and proposes that this sector is created in response to the market forces in the formal sector, irrespective of the type of economy. The 'petty capitalist sector' caters to the demands for goods and services that are unfulfilled by the formal sector, and these are not necessarily confined to cheap goods. The labour for petty capitalist sector is similarly not confined to the poor and the unemployed. There are a variety of demands from the petty capitalist sector and different sources of labour for it. It is the potential for different combinations of labour sources and types of demand that create the wide variety of petty capitalist activities in the different economies. This research also presents the potential contribution of the alternative analysis to Third World planning. Planning for the informal sector has been important in the Third World because it has been tied to poverty and unemployment. But, according to the alternative analysis, because the 'petty capitalist sector' includes a range of activities with different problems, it would be inaccurate to say that it can be planned for per se. At best, a nation can deal with some specific problems of the petty capitalist sector, and this would depend on the development priorities of each nation.

Text

2010-07-31

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http://hdl.handle.net/2429/27062

Planning

University of British Columbia

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