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

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.

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).