INFORMAL SECTORS Meaning and
Definition
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The informal sector refers to economic activities or businesses that are not regulated or monitored by the government and are largely unrecorded. It encompasses a wide range of activities that primarily occur in developing countries, often characterized by small-scale operations, minimal capital investment, and self-employment. The informal sector primarily includes informal businesses, such as street vendors, small farmers, artisans, and domestic workers, who operate outside the formal channels of taxation and government oversight.
These sectors typically lack legal protection, social security, and access to formal financial institutions. Workers in the informal sector often face precarious working conditions, low wages, and have limited access to educational or skill development programs, leading to a perpetuation of poverty and economic vulnerability.
Despite its informal nature, the informal sector plays a crucial role in many economies, especially in developing countries. It is a significant source of employment, income generation, and entrepreneurial activities, often filling the gaps left by the formal sector. Informal sectors contribute to economic growth, poverty reduction, and overall societal development, providing goods and services to a wide range of consumers who might not have access to formal markets.
Efforts to formalize the informal sector and provide support and integration have gained prominence in recent years. Governments and international organizations are recognizing the potential of the informal economy and working towards providing legal recognition, social protection, and access to markets and financial services to workers and businesses operating in these sectors.
Common Misspellings for INFORMAL SECTORS
- unformal sectors
- jnformal sectors
- knformal sectors
- onformal sectors
- 9nformal sectors
- 8nformal sectors
- ibformal sectors
- imformal sectors
- ijformal sectors
- ihformal sectors
- indormal sectors
- incormal sectors
- invormal sectors
- ingormal sectors
- intormal sectors
- inrormal sectors
- infirmal sectors
- infkrmal sectors
- inflrmal sectors
- infprmal sectors
Etymology of INFORMAL SECTORS
The term "informal sectors" originated in the mid-20th century as a way to describe specific economic activities that were not recognized or regulated within formal systems. The word "informal" comes from the Latin word "informalis", which means "not in accordance with established or formal rules". It was first used in English in the late 16th century.
The concept of informal sectors gained popularity in the 1970s when economist Keith Hart used it in his study of small-scale economic activities in Ghana. He observed that a significant portion of the population in developing countries engaged in economic activities that fell outside the purview of formal regulations, such as street vending, subsistence farming, or unregistered small businesses.
The term gradually spread and was more formally defined by other economists and scholars. Today, it generally refers to those sectors of the economy that operate independently from the formal or organized sector.
