What to Do with the Informal Sector?

Almost all informal firms in the Kenyan manufacturing sector are managed by Kenyans of African origin. Formal enterprises are run by Kenyans of both African and Asian origin. These three groups are distinct in terms of experience, productivity and access to finance. Asian formal firms are the most efficient, while there is no significant productivity difference between informal and formal African firms. There are thus weak incentives for African informal firms to become formal. At the same time, Kenya needs higher investments and larger exports to achieve economic take‐off, and this can only be achieved through an efficient formal sector. Therefore policy should aim to integrate the sectors by improving infrastructure, capacity‐building, credit delivery, and supporting networks.     

Whither the lender of last resort?: The rise and fall of public farm credit in Australia and New Zealand

Public farm financial institutions were established in 20th Century Australia and New Zealand to facilitate agricultural and rural economic development. This arrangement reflected agriculture's economic importance, and rural society's political importance to both countries until the early 1980s. With both countries’ adoption of monetarist principles (including financial deregulation and the drive for smaller government) from the mid-1980s these public farm credit providers were seen to distort the allocation of farm credit and to be an inefficient use of public resources. Deregulation would, according to its many proponents, remove these distortions and create a free market for farm credit which would deliver the most appropriate loan packages for both countries’ farm sectors. The extensive literature on the New Zealand experience of farm sector restructuring and primary research into the South Australian farm crisis of the late 1980s and early 1990s show that the commercialisation and/or abolition of public farm credit providers in both countries has fundamentally restructured the farm credit market but failed to address many farm families’ demand for concessional, long-term finance. The research also demonstrates the continuing need for local and regional case studies of the impacts of and responses to major institutional restructuring that are both theoretically informed and scale sensitive as a means to building a genuinely international literature on contemporary rural and agrarian change.     

Public policies on water provision and early childhood education and care (ECEC): do they reduce and redistribute unpaid work?

Governments need to provide public finance to support services to reduce and redistribute unpaid work. However, while the financial costs of the required public investment are up front and highly visible; the (many) benefits are diffuse, spread over time, and include non-monetary as well as monetary benefits. This article focuses on two experiences from developing countries, in the water sector in Tanzania and early education and child care in Mexico and Chile. These experiences provide us with evidence of impact, enabling activists and policymakers to develop analysis to use in advocacy and policy formulation, including the modes of provision that are more likely to ensure equitable outcomes.     

Banks That Don't Lend? Unlocking Credit to Spur Growth in Developing Countries

This article explores the level of liquidity within the banking systems of developing countries and the potential impact on rates of economic growth from prudently redirecting a portion of liquid assets into credit to the private sector. It finds that banks in developing countries are extremely liquid and growth rates per capita might increase substantially in response to heightened lending to the private sector. It then summarises the primary obstacles to this and presents several policy reforms that can augment the level of credit to the private sector in developing countries.     

Constraints affecting the efficiency of the urban residential land market in developing countries: a case study of India

Access to serviced land for housing is one of the major problems faced by practically all developing countries. In most cities of developing countries, the urban poor and even the middle-income group often have to step outside the formal land market to gain access to land and housing. Generally, in cities of developing countries the informal land market is much bigger than the formal market. To improve the operation of the formal land market it is necessary to understand the constraints that are preventing it from operating efficiently. It was found that finance, policies, regulation, laws and other instruments formulated to improve the efficiency of the land market have often themselves become constraints requiring change. It is suggested that to overcome these constraints it will be necessary for governments to recognise the informal market and work with it, rather than ignore or oppose it as at present.     

Credit play and casinos: Profitability,legitimacy, and social responsibility

The purpose of this paper is to explore casino granted credit in both the business operation of a casino and the regulatory and statutory structure in which casinos operate. How credit policy is developed, how it is implemented, and how it might be abused are explored for the existing statutory and regulatory structures which prevail for the Nevada and Atlantic City casino industries. Casino credit policy in other countries is discussed, and various alternative approaches to the casino credit issue are examined. Parallels to other forms of credit allowed in other businesses, such as bank credit and retail credit, are made. Finally, alternative regulatory policies to deal with credit play are outlined, in terms of their likely effect on both the business and economic performance of casino operations, and the likely effects on players, the regulatory process, and the general image of the gaming industry.     

Domestic Credit and Diversification of Manufactured Exports from Developing Countries

This article uses panel data to analyse the effect of domestic credit on the diversification of manufactured exports from developing countries. Given the evidence that export variety of manufactured goods affects productivity positively, the results imply that policy reforms that improve access to domestic credit for firms can raise productivity and hence economic growth in many poor countries. In addition, the results also show that building infrastructure and implementing reforms in governance that improve the quality of government regulations are important for encouraging diversification of manufactured export products in developing countries.     

A Comparative Analysis of the Use of Microfinance and Formal and Informal Credit by Farmers in Less Developed Areas of Rural China

Based on household survey data, this article shows that farmers' demand for credit in poor areas of rural China has increased significantly in recent years, and credits from various sources are used differently in production and consumption. For example, microfinance is used primarily in livestock and non‐agricultural investments, formal credit is often used in crop production, and informal credit is largely used to meet farmers' consumption requirements. Developing a complementary system with various financial channels in rural China, particularly for non‐governmental microfinance, is crucial for meeting farmers' rising demand for credit in both production and consumption.     

Alleviating poverty or reinforcing inequality? Interpreting micro‐finance in practice,with illustrations from rural China

Academic and political discussions about micro‐finance have been found lacking in predictive power, because they are based on orthodox economic theory, which does not properly comprehend the social components of credit. I take a better approach, utilizing credit theory – specifically, Ingham's explication of how the nature of money as credit leads to social inequality. I also expound the perspective that morality is not separate from considerations borrowers make in micro‐finance programmes on the micro level. I draw upon illustrations from my fieldwork in rural China, where a group‐lending micro‐finance programme was administered as part of a larger government‐initiated effort across the country.     

Social effects of group migration between developing countries

Recent large-scale emigrations from developing countries have been provoked by world economic crises and/or by reaction to dangers posed by armed conflicts. Migrants eventually induce social, economic, and political problems in receiving countries, including 1) increases in the population, with adverse effects on existing social institutions; 2) increases in demand for goods and services; 3) displacement of nationals from occupations in the countryside and in the cities; 4) increases in the size of the informal sector of the national economy; 5) deterioration in the salary structures of the informal, rural, and urban sectors of the economy; 6) transculturation; 7) occasional loss of customs and traditions by the local population; and 8) the introduction of diseases and social problems. The receiving countries do benefit from the infusion of skills. Governments must also do everything possible to facilitate integration of refugees. The consequences of migration for developing countries include the following aspects: 1) adaptation of labor markets to demands of the economy, 2) degree and type of concentration of migrant populations in the receiving country, 3) differences that arise between formal and informal and urban and rural sectors of the economy, 4) type and degree of concentration and interaction of population groups, and 5) possible moral deformation of some migrants and their deviant behavior. In conclusion, receiving countries must have policies that responsibly address the presence of economic immigrants and refugees on their territory, without this being considered detrimental to the national interest.     

Informal Work in Nonmetropolitan Pennsylvania1

Abstract It is well recognized that the informal economy—unregulated economic activities that generate real or in-kind income—features prominently in the day-to-day lives of many in the developing world. Researchers have begun to explore the informal economy in developed countries but this work has focussed primarily on urban areas to the neglect of rural areas. In this paper the nature and correlates of informal work in nonmetropolitan Pennsylvania are described through an analysis of survey data on 505 families. Results indicate that participation in informal activities is widespread, is not more typical of the poor, does not contribute greatly to family income on average but does help many poor families weather difficult economic times, is both economically and noneconomically motivated, and, net of other sociodemographic variables, is positively related to rurality of residence and formal labor supply.     

Identifying Participation in the Informal Economy Using Survey Research Methods1

Abstract There is growing interest in the extent of informal economic activity as a form of income generating or subsistence activity within first world economies, but little agreement exists in the literature as to what constitutes informal work, what activities in addition to monetary exchanges make up the informal economy, and where these activities are located. The lack of consensus on the proper definition of the activities ,that make up the informal economy is reflected in the lack of systematic data available to investigate these forms of work. This paper investigates using telephone survey research techniques to develop inexpensive and efficient data sources to answer questions about the forms, prevalence, and location of informal work. The research uncovers problems associated with developing survey based measures of informal activity, but it also demonstrates the viability of this approach as well as the generally high level of participation in both rural and urban places.     

Ethical tensions of migrants in the informal economy in the Global South

Considering the ongoing, record-setting migration in the Global South, this paper explores the values, principles and ethical tensions of Venezuelan migrants in the informal economy of Colombia. We found that migrants frequently prefer to stay within the informal economy as a way of preserving their identities, values and principles, rather than adopting those of their new country. This choice sets up ethical tensions for the migrants and their host countries. Our analysis challenges the current policy goals of transitioning migrants from informal to formal economies as a mark of success and inclusion. Instead, we attempt to recognize the migrant voice and their agency capacity through our research using focus groups and applied thematic analysis (ATA) of popular music and narratives. Our findings broaden the understanding of why migrants choose to stay in the informal economy and challenge policy goals that focus on inclusion and integration of migrants into formal economy.     

Out of the shadows: Classifying economies by the extent and nature of employment in the informal economy

Given the prevalence of informality, this article proposes a typology for classifying countries by the extent and nature of employment in the informal economy, rather than by the composition of their formal economies. The author analyses ILO data on employment in the informal economy in 36 developing countries, and shows that there is a significant correlation between cross‐national variations in the degree and intensity of informalization and cross‐national variations in social and economic indicators such as levels of GNP per capita, corruption, poverty, taxation and social contributions. The article concludes by discussing implications for theory and policy.     

Credit at the Corner Store: An Analysis of Resource Exchange among Detroit‐Area Urban Poor

This ethnographic study examines how and why Detroit‐area credit‐constrained members of the urban poor relied on owners/employees of corner convenience stores, known as “party stores,” for accessing short‐term, interest‐free informal credit services. Findings indicate that informal credit at party stores functioned as a low‐ or no‐cost alternative to formal credit and high‐cost fringe banking services such as payday loans, both of which were inaccessible and/or cost prohibitive for informants. These data contribute empirically to a growing body of research on “credit invisibility” by exploring these populations' use of informal credit mechanisms. Findings also make a theoretical contribution by highlighting the importance of resource exchange networks through which members of the urban poor build strong yet disposable social ties in order to respond to economic shocks, combat food insufficiency, and survive economic destitution.     

Remittances,Institutions and Growth in Africa

Remittances have become an important source of external finance in many developing countries. This article examines the relationship between remittances, institutions and economic growth in a panel of 26 African countries over the period 1980–2014. We apply the fixed effects (FE) and the two‐step system generalized method‐of‐moments (GMM) estimation methods. Our results show that there is a positive relationship between remittances and growth. We also find that institutions are an important determinant of economic growth. The interaction terms have a positive and statistically significant effect on economic growth. Thus, the growth effect of remittances is enhanced in the presence of strong institutions. Strong institutions are therefore germane in attracting greater remittance inflows to African countries. A clearer understanding of the channels through which remittance flows will enhance growth in African economies may assist policymakers to craft appropriate policies. In particular, a policy environment that promotes strong institutions would serve to attract more remittances.     

Urban development and employment in Abidjan

The city of Abidjan in the Ivory Coast has grown physically, economically, and demographically at rates exceeding all reasonable expectation. Yet, as in many other development nations, the employment generated by Abidjan's rapid economic expansion has failed to keep pace with the increase in working population it has attracted. Consequently, economic success has been accompanied by a variety of social strains. Some of these have been discussed in earlier issues of the "International Labour Review" by Louis Roussel. This discussion expands on Roussel's earlier treatment by focusing more specifically on several facets of the urban employment problem created by the rapid growth of Abidjan. Attention is directed to labor supply and employment, factors affecting migration, foreign Africans in the Ivory Coast labor force; the urban informal sector; urban infrastructure and development; social problems of population pressure; employment policy options (current government policies and other policy options); and general issues and policy alternatives (motivations for rural urban migration, smaller urban centers as alternative growth poles, and distributing the gains from development). Several essential features of the employment problem stem from the rural urban distribution of the workforce. The rural labor force, including temporary seasonal workers from the savannah countries to the north, remains more or less in balance with increasing rural employment opportunities, since the migration of Ivory Coast nationals to the cities is balanced by the inflow of foreign workers. In contrast, the influx of migrants into urban areas has led to a more rapid increase in the urban labor force than in urban employment, with a consequent rise in unemployment. In 1970 the Abidjan rate of open unemployment was probably around 20%. At this time, most people's idea of a desirable job is one in the formal sector of the urban economy. If there is to be any hope of an eventual balance between expectations and reality, it must be realized that an increasing share of the urban labor force will have to end up in the informal sector. Different attitudes towards work in the informal sector are needed on the part of both young people entering the labor force and of government policy makers. The latter should be seeking ways to increase productivity and incomes in the informal sector rather than for ways to destroy it. Current government policies include the training and educating of nationals to replace foreign technicians and managers, increasing the attractiveness of the rural milieu by the promotion of cooperatives, attempts to reform the land tenure system, the supply of electricity to villages, and the introduction of educational television; and adapting the educational system and technical training programs to the needs of the economy.     

Social support,the presence of barriers and ideas for the future from students with disabilities in the higher education system in Croatia

This paper examines how students with disabilities in Croatia perceive support, experience barriers and propose ways forward for equality of opportunities in the higher education system. In qualitative interviews, students were satisfied with the informal support they received from family and friends but dissatisfied with the formal support they received from universities and the government. Obstacles to inclusion included: inadequate transport and finance to attend university and minimal adaptation of buildings, toilets, lifts, classrooms and dormitories. Students proposed: investment in adapting buildings, personal assistants, educational grants and transport; coordination within the formal systems from national government to universities and non-governmental organisations; and measures to increase disability awareness for academics, professionals and other students within higher education. The situation for students with disabilities in Croatia is a reminder for those working in countries where policy and practice is relatively advanced that many disability battles are still to be won in newer nations.     

The credit channel of monetary policy transmission: evidence from stock returns

This paper offers a novel test of the credit view of the monetary policy transmission mechanism using stock market returns. We identify Fed policy shocks using newspaper accounts and track daily stock prices immediately following the shocks. If the credit channel is important, then firms that are dependent on bank credit and internal funds should receive a relatively greater benefit (loss) from a Fed easing (tightening) than firms with access to nonbank credit at favorable terms. We identify ten policy shocks during the expansion of 1993-94 and the 'credit crunch' period of the 1990-91 recession and find little evidence supportive of an operative credit channel.     

Theorizing Inequality: Comparative Policy Regimes,Gender, and Everyday Lives

Sociological explanations of inequality are incomplete unless they fully recognize the importance of social policy regimes, the policy logics embedded within them, and how policy arrangements work to stratify and shape daily lives. In this address, I develop my arguments by examining two overlapping struggles of everyday life in the contemporary United States: balancing work and family on the one hand, and securing health‐care services, both formal medical care and informal family care, on the other. Both struggles involve care deficits that are significantly more serious in the United States than in other high‐income countries, in part because our policy regime contributes to rather than counters the gendered roots of work–family conflict. Comparative studies hold a key to better understanding the link between policy regimes and everyday lives, as illustrated by the author's own comparative research in Finland and in the United States In terms of policies and policy logics that promote gender equity, paid parental leave for fathers has received much recent attention from social science scholars. Sociologists are challenged to become aware of comparative social policy scholarship and to approach inequalities and the related daily conflicts and struggles—such as over care deficits—by including this work in their analyses.