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Lecture 4: The Informal Economy in Cities of the South - Chant, 2014…
Lecture 4: The Informal Economy in Cities of the South - Chant, 2014
Lecture INTRO * : Session looks at globalisation and widening social and spatial inequalities in global south cities. A socio-economic analysis, it is argued that social wellbeing is being impeded by the rising climate of neo-liberal policy in development.
"The urban 'informal economy' has traditionally been equated with a heterogeneous range of precarious, low-productivity, poorly remunerated income-generating activities in cities of the south" - (: 200)
Usually in commerce and services, but does tie beyond into manufacturing.
Firstly coined by Hart (1973) on his work in Ghana, his denomination of the 'informal sector' was based on economic activities beyond regulation of 'legitimate' and 'illegitimate' varieties.
Whether legal or criminal, they were questioned of value towards development e.g. prostitution, scavenging etc.
Hart, 2010 argues that the most important factor in determining "informality" is regulation.
Through business registration to tax payments to compliance with the likes of legal working hours/benefits.
However to state it as a sector fails to acknowledge that many large firms employ labour on an informal basis. It is thus more appropriate to shift this thinking from a sector to an "informal economy", a labour arrangement matter.
However it is not just individuals who avoid paying tax in their informal enterprises that should be focused upon. Formal businesses such as Siemens were reported to make tax-evasion bribes totaling 2 billion dollars from 2001-2007 (Neuwirth, 2012)
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As seen in Chen (2010) the representation of women in informal activities is disproportionate.
Thus "women often bear the biggest brunt of economic deterioration"
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Portes and Itzigsohn (1997) would argue that some opportunities are opened in informal enterprise by globalisation and neoliberal strategies of export promotion.
Proctor and Gamble (P&G) make 20% of its profits from the informal economy, where people are unregistered and unlicensed on market stalls in global south cities.
Chen, 2009: 215
"Informality may not be the problem, and formalisation may not be the answer...What is needed are twenty-first century institutional arrangements - a creative mix of formal and informal - for twenty-first century economic realities"