Beyond the Informal Sector: Including the Excluded in Developing Countries : A Sequoia Seminar - Hardcover

Hardcover

ISBN 10: 1558150390 ISBN 13: 9781558150393

Publisher: Sequoia Inst, 1988

Synopsis

To the extent that the mandates as well as uncertainties of regulatory and other non-tax policies are More Taxing Than Taxes (the title of another Sequoia Seminar Publication) the greater will be the number of people engaged in economic endeavors that are off-the-books or outside the law. Informals is perhaps the most commonly used name for these participants in underground economies. Their activities constitute the informal sector, and involve most individuals and families in developing countries.

In spite of its importance, the informal sector remains the least understood phenomenon in the lives of most people in the Third World. The very fact that it goes by so many names manifests its elusive character. A short list of the appellations applied to it -- preceding either the word, "economy" or "sector" -- includes underground, shadow, parallel, black market, second, off-the-books, submerged, and, perhaps most appropriately, "hidden." Furthermore, as this volume makes clear, specialized studies that are devoted to the most common characteristics of informal sectors compound the disguise.

This book delves into informal sectors in diverse settings, discerning their least commonly reported characteristics. These emerge from within the informal sector, parallel the development of "common law" in the histories of western societies, and take the reader beyond the informal sector. But in order for the participants in hidden economies also to move beyond the informal sector, formal (official) political economies must be transformed. Much of this volume's concluding chapter delineates the requirements, means, and prospects for transformations that would allow the full participation of all individuals in the formal sectors of what, in the absence of such transformation, will remain the Third World.

About this title

About the Author

Jerry Jenkins taught international relations and political economy at The University of Georgia prior to becoming director of Sequoia Institute's International Development Program. His publications include contributions to two other volumes in this series, Capital Markets and Development (edited by Steve H. Hanke and Alan A. Walters) and Development by Consent (which he also edited with David E. Sisk).

Excerpt. © Reprinted by permission. All rights reserved.

From Chapter 2, by Hernando de Soto: Property rights serve a fundamental economic function; the assignment of resources. Without well-defined property rights, all activity and interchange is difficult. When neither exclusivity nor the right to transfer resources exists, the means for determining relative values and for maximizing economic benefits are lacking. On the other hand, the more secure are property rights, the less costly will be transactions, and the greater will be the interest in discovering and taking advantage of existing economic opportunities.

Thus, the function of property rights is to encourage those who hold them to add value to them by innovating, investing, or combining them productively. All of our empirical research regarding property demonstrates incontrovertibly that the lack of secure property rights enormously reduces the productivity of the majority of Peruvians. Not having legal recognition of their possessions causes people in informal settlements to limit their investment in them. Through a sample of 38 settlements, it was determined that, on average, the value of their investment increased 9 times once people had title to their land.

Edition details

• Publisher: Sequoia Inst
• Publication date: 1988
• Language: English
• ISBN 10: 1558150390
• ISBN 13: 9781558150393
• Binding: Hardcover
• Number of pages: 250
• Editor: Jenkins Jerry