informal economy essay outline

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It is likely that you have participated in the informal economy before, especially when you were younger. Have you ever cut a friend's hair for a few quid? How about mowing a neighbour's lawn or shovelling snow? Or maybe you ran a lemonade stand. If we had to take a guess, we'd assume your lemonade stand was not evaluated by a health inspector, you didn't have a business license, the friends who helped you weren't given any tax documents, and your profits were not reported to the government. 

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A man is selling unmarked DVDs on a street corner in Bristol, UK. You are sure he made illegal copies of the movies and is selling them to make a living in the city. Which of the following BEST describes the situation?

Which of the following is NOT part of the informal economy? 

The informal economy is also called:

True or False: The black market is part of the informal economy.

What is the relationship between the informal economy and the tertiary sector?

The black market revolves around services or the sale of goods that are _______. 

True or False: The informal economy includes the illegal wildlife trade.

A friend asks you to come join his lawn mowing business for the summer, but doesn't want to register you as an official employee so he can avoid paying taxes. Is this part of the informal economy?

A friend asks you to come and help out at her start-up for the summer, but cannot pay you because the company cannot afford to provide another salary. You would be on the books, but as a volunteer. Is this part of the informal economy?

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Welcome to the informal economy. We'll take a look at different jobs, examples, and causes of informal economic activity, and discuss its benefits and disadvantages.

Informal Economy Definition

You can think of informal economic exchanges as the most rudimentary form of capitalism (the exchange of capital) in that they are simply an interpersonal exchange of private goods for money without any third-party involvement. It's the barter system, but with money. This is as basic as capitalism gets.

The informal economy includes all of these informal economic exchanges around the world.

The Informal Economy : The collection of economic activity that occurs outside of any formal regulation, observation, or taxation by a government.

The informal economy may also be called the grey economy or, more commonly, the informal sector .

Informal Economy Jobs

Much of the informal economy revolves around rather mundane retail sales and services that are simply not registered with the government. This may be because the government is not diligent in enforcing its own laws, or it may be because the workers are actively trying to avoid taxation or oversight. On the other hand, it's entirely possible that many workers are not even aware that their activity is considered 'informal' – the lack of government oversight and accountability may simply be the norm where they live.

Collectively, these types of informal economy jobs are sometimes colloquially called 'under the table' work or 'off the books' work. Almost any type of work can fall into this category. However, here are some of the most common jobs:

Day labouring.

Unregulated market booths.

Unregulated street vendors.

Unregulated food sales.

However, the informal economy also includes goods and services that some portion of the public is willing to pay for, but a government refuses to officially sanction (for better or worse). The item or activity itself is illegal – so it would be confined to the informal economy regardless. This portion of the informal economy is often called the black market . Depending on local laws, this category can include:

Illegal drug (and/or alcohol) trade

Prostitution and sex work

Illegal arms deals

Wildlife trade, including items like ivory, rhino horns, and pangolin scales

Protection racket (taking money from others in exchange for no violence or property damage)

Sale of counterfeit (fake) goods

Slavery and the slave trade

Informal Economy Examples

Let's look at a few informal economy examples using the jobs described above. First, we'll start with the 'under the table' example:

Suppose you live in Michigan, USA. A family friend has asked if you want to help him with some part-time work at his custodial company for the summer. To avoid taxes, he never fills out the paperwork that would make you a legal employee. You are paid entirely in cash, and because you are not officially 'on the books' with the company, you also never receive government benefits for your work. When you file your taxes in April of the next year, you do not mention this income. If you or your family friend were to be audited, you would likely be in serious trouble for violating labour and tax laws.

In developed countries, the above example can be common amongst children below the legal working age (13 in the UK and 14 in the US) and undocumented immigrants, as neither group can legally register their earnings with a government. This puts both groups in a position to be taken advantage of if/when they want or need to work, but such an arrangement need not necessarily be entirely wrong or unfair. Think of the examples in the introduction. A child running her own lemonade stand informally is not on par with a child being forced to toil in a factory informally – but both jobs would technically be part of the informal economy.

What about a country where 'off the books' work and sales are a bit more commonplace?

You are visiting an open-air market in Uganda. A woman operating a booth offers to sell you some beautiful fabric. You haggle a bit on the price, and then you finalise the purchase. There was no sales tax or receipt. You notice that most of the other booths in the open-air market are operating in a similar manner. No one seems to care, and if you asked about why the retail sales are not standardised, reported, or taxed, most people would likely shrug.

How about something a bit more nefarious? An example from the black market:

You are now visiting an open-air market in China. People are selling food and clothing when suddenly you come across a cage with a dead pangolin in it. You surmise that it is a Cape pangolin ( Smutsia temminckii ) from South Africa, whose keratin-based scales are prized in traditional Chinese medicine. It is illegal to hunt pangolins in South Africa, it is illegal to traffic pangolins internationally, and it is illegal to sell pangolins in China. If the vendor were to be reported, she would likely receive a fine.

What is the difference between the three examples? It is not illegal to do custodial work, but the employment was never formally registered. It is also not illegal to sell fabric, but the sale was never formally registered. However, the sale of the pangolin was illegal, and as such, the sale can only ever be informal; such an activity cannot legally be registered formally as part of the world economy.

Formal and Informal Economy

The key difference between the formal and informal economy is what we just mentioned above; formal economic activity takes place within the 'official' world economy, while informal economic activities occur outside of it. You can think of this as the difference between the football matches that are taking place between officially registered clubs versus a football match between some unknown players at a small local park.

The world economy, also called the global economy or world system , is the sum of all formal economic activity. The global economy binds our domestic businesses and governments together and helps us understand trading relationships (including economic dependencies) amongst the global community. The informal economy is simply not officially part of this.

Domestically, formal economic activity is subjected to government scrutiny. This allows two things: taxation and labour rights. Income earned as part of the formal economy is taxed by your domestic government(s), allowing those governments to fund their budgets, which usually include various public services, law enforcement, and the military. When you register employment, you are also entitling yourself to certain rights as a worker that your government will (or should) enforce on your behalf, including things like safe and humane working conditions, a minimum wage, equality of opportunity, and avoidance of forced labour. In the informal economy, you have neither taxes nor labour rights.

Causes of Informal Sector

Why do people even participate in the informal economy, to begin with? What are the causes of the informal sector?

Based on everything we've mentioned so far, you can probably estimate a few reasons:

People are unwilling to participate in the formal economy (desire to avoid taxes).

The nature of the activity is casual/unofficial (lemonade stand in a suburban neighbourhood).

The local community has adopted an informal attitude toward economics.

People are unable to participate in the formal economy (undocumented immigrants; children below working age).

The activity is illegal, so it cannot legally be part of the formal economy.

The local government lacks the infrastructure or willpower to enforce formality in economics.

Informal Economy in Developed Countries

The informal economy plays a very large role in the least developed and developing countries, as they are more likely to lack the infrastructure necessary to support the formal economy. For some less developed countries, most, if not all, of their tertiary sector activity (service and retail) may take place within the informal economy.

That's not to say that the informal economy does not play a role in developed countries. In fact, it is estimated that over 12% of the UK's GDP comes from activity in the informal economy, with around 2 million people working in the sector (2017). 1 This includes work from undocumented immigrants in agriculture and construction, but it also includes black market activities.

Benefits of Informal Economy

Perceived benefits and disadvantages of the informal economy are a matter of perspective. You may have read this explanation and thought, 'Wow, no taxes? I can just be responsible for myself? No government can tell me what I can or cannot buy?' and decided the informal economy sounded pretty great. Or you may have read this explanation and decided that the informal economy sounds dangerous, risky, and precarious.

So, depending on your perspective, the benefits of the informal economy can include the following:

People (especially self-employed merchants and vendors) can support themselves monetarily even when formal economic systems are not in place (self-sufficiency).

Avoid paying taxes to an incompetent or corrupt government.

Provide services or goods that are desired by the general public but not sanctioned by the government.

Protection and preservation of local community and culture by circumventing the world system.

Of these benefits, the first bullet point is probably the most important: the informal economy lets people survive when the formal economy is not up to par in an area.

Disadvantages of Informal Economy

Disadvantages of the informal economy include the following:

Taxes are not being fed into any government system, reducing a government's ability to provide any social services or public programs to its citizens.

Complete lack of third-party scrutiny or accountability, leaving informal economy employees vulnerable to exploitation.

Black market employees (especially prostitutes and sex workers) are particularly vulnerable to manipulation because they are, in the eyes of the law, criminals, so they cannot seek outside help if they are being exploited or endangered.

The lack of formal health inspection of food vending means food in the informal economy is not guaranteed to be safe for consumption.

Spread of illegal goods and activities that can bring harm to society.

Informal Economy - Key takeaways

• The informal economy is the collection of economic activity that occurs outside any formal regulation, observation, or taxation by a government.
• Informal economy jobs vary widely and include everything from unregulated street vending and unregulated day labouring to the selling of illegal goods and services.
• Unlike the formal economy, the informal economy takes place outside of our interconnected system of global trade.
• Informal economic activity may be common in areas where people are unwilling or unable to participate in the formal economy or where there is a demand for illegal goods and services that a government is unwilling to sanction formally.
• Dipa Patel20, A prize winning essay: Why it matters to understand the informal economy, LSE, 2017.
• Fig. 1: street vendor in Malaysia (https://commons.wikimedia.org/wiki/File:Malaysia_Street_Vendor.jpg), by Joshua T. Garcia (https://commons.wikimedia.org/wiki/User:Joshua_T._Garcia), Licensed by CC0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en).

Flashcards in Informal Economy 9

He is selling counterfeit goods; he is participating in the black market of the informal economy.

Being a salaried preacher at a local community church. 

The informal sector.

Many informal economy activities take place in the tertiary sector, especially in developing countries without much formal tertiary sector infrastructure. 

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Frequently Asked Questions about Informal Economy

What is the informal economy? 

The informal economy is the collection of economic activity that occurs outside of any formal regulation, observation, or taxation by a government. 

What is the difference between formal and informal economy? 

Formal economic activity takes place within the 'official' world economy, while informal economic activities occur outside of it. 

What are examples of the informal sector? 

Informal sector examples include unregulated street vending, day labouring, and the illegal sale of counterfeit goods. 

Why is the informal economy so important? 

The informal economy allows tertiary sector employees to survive in areas where the formal economy simply does not have enough infrastructure. 

What are the characteristics of the informal economy? 

The informal economy is characterised by activities that are occurring outside of the formal economy because they are illegal; the parties involved are unwilling or unable to participate in the formal economy; or because an area lacks the infrastructure necessary to support formal economic activity. 

What are the reasons for the informal economy? 

The reasons for the informal economy include: people are unable or unwilling to participate in the formal economy; the nature of the activity is casual/unofficial to begin with; and/or the activity is illegal, so cannot be legally part of the formal economy. 

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Pakistan’s Informal Economy: The Way Forward CSS ESSAY 2020

Table of Contents

Thesis statement

The informal economy in Pakistan presents both challenges and opportunities, and a strategic approach is needed to harness its potential and address its drawbacks.

Introduction

The informal economy refers to economic activities that operate outside the legal and regulatory framework, often characterized by unregistered businesses, casual employment, and limited social protection. In Pakistan, the informal economy plays a significant role in employment generation and income generation, particularly for marginalized groups. However, it also presents challenges in terms of legal recognition, social security, and tax compliance. This essay explores the opportunities and challenges of Pakistan’s informal economy and proposes strategies for harnessing its potential for sustainable development.

Exposition: Understanding Pakistan’s Informal Economy

The informal economy in Pakistan is characterized by its large size and diverse nature. It encompasses a wide range of activities, including street vending, home-based work, small-scale manufacturing, and agriculture. The informality is fueled by factors such as limited access to formal employment, weak regulatory enforcement, and the informal social networks that facilitate economic transactions. Despite its prevalence, the informal economy faces limited legal protection and operates in a vulnerable environment.

Argumentation: Challenges of the Informal Economy

The informal economy in Pakistan faces several challenges that hinder its potential benefits. Firstly, informal workers lack legal recognition and protection, leading to exploitative labor practices and limited access to benefits such as minimum wages, social security, and occupational safety. Secondly, the absence of formal financial inclusion restricts access to credit and savings, hindering investment and growth. Thirdly, the informal sector’s contribution to tax evasion deprives the government of vital revenue, limiting public investment in infrastructure and social services. Lastly, the informal economy can create an uneven playing field, impacting the formal sector’s growth and competitiveness.

Argumentation: Opportunities and Benefits of the Informal Economy

Despite the challenges, the informal economy in Pakistan also offers opportunities and benefits. Firstly, it serves as a significant source of employment and income generation, absorbing surplus labor and providing livelihoods for individuals who lack formal employment options. Secondly, the informal sector demonstrates flexibility and adaptability in response to economic shocks, allowing for resilience and survival in times of crisis. Thirdly, the informal economy contributes to poverty reduction by providing opportunities for income generation and livelihood sustainability. Moreover, it acts as a breeding ground for entrepreneurship and innovation, fostering economic dynamism and creativity. Lastly, the informal economy presents avenues for economic integration and inclusive growth by providing linkages with the formal sector.

Description: Strategies for Harnessing the Informal Economy

To harness the potential of Pakistan’s informal economy, a comprehensive and strategic approach is needed. Firstly, formalization initiatives should be implemented, including simplified registration procedures, tax incentives, and legal protection for informal workers. Secondly, enhancing access to social protection and welfare programs, such as healthcare, retirement benefits, and insurance, is crucial for improving the well-being and security of informal workers. Thirdly, promoting financial inclusion through the expansion of formal banking services, microfinance, and digital payment systems can provide access to credit, savings, and financial tools for informal entrepreneurs. Fourthly, investing in education and skills development programs tailored to the needs of the informal economy can enhance productivity and enable upward mobility. Lastly, fostering collaboration and coordination between formal and informal sectors, such as supply chain integration and subcontracting arrangements, can create synergies and facilitate the gradual transition to formality.

Narration: Success Stories and Case Studies

Several countries have successfully integrated their informal economies, providing valuable lessons for Pakistan. For instance, India’s National Rural Employment Guarantee Act (NREGA) guarantees a minimum number of days of employment for rural workers, ensuring income security and poverty alleviation. Brazil’s Bolsa Familia program provides conditional cash transfers to low-income families, improving their social and economic conditions. Closer to home, the Punjab Small Industries Corporation (PSIC) has facilitated the formalization of small-scale industries in Punjab, promoting access to finance and market linkages.

Pakistan’s informal economy presents both challenges and opportunities. While the informal sector provides employment and income opportunities for many, it also faces issues related to legal recognition, social protection, and tax compliance. By implementing targeted strategies, such as formalization initiatives, enhanced social protection, and financial inclusion, Pakistan can harness the potential of the informal economy for sustainable development. It requires the collaboration of policymakers, stakeholders, and society at large to recognize the importance of the informal economy and work towards creating an enabling environment that fosters its growth and integration. Through these efforts, Pakistan can pave the way forward towards a more inclusive and resilient economy.

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Chaired by Stephen Pursey, Cabinet of the Director General Alice Sindzingre , Senior Research Fellow, Centre National de la Recherche Scientifique, Paris, and Research Associate and Visiting Lecturer, School of Oriental and African Studies, University of London.

The academic debate on the concept of informality focuses on the definition and the dichotomy between formal and informal. There are conceptual problems with the vagueness and pluralities of definitions of the informal economy, as well as difficulty in measuring something that is not well defined, resulting in large variations in estimates.

There are also logical inconsistencies in terms of hierarchy and exclusiveness. For instance informality is often defined in terms of the criterion of a form which simultaneously coexists with a series of substantive criteria. Therefore the form (which is often a negative one) is at the same time defined as a set of features, which entails logical problems. The respective features of the informal, moreover, do not constitute necessary and sufficient characteristics that would unambiguously assign phenomena in either the formal or informal category. In addition, labour statisticians recognize the difficulty of drawing a formal-informal dichotomy.

Another logical problem is that informal activities may be defined as a sector, which is both a motive and an outcome of macroeconomic analysis and national accounts building. Informal may also refer to types of firm or of firm features. It may refer to employment. It may also be defined as an activity or a type of activity.

The formal-informal dualism represents a partition of the world into two and only two categories, with the formal being defined by default, by what is non-informal and vice-versa. Both categories are residuals of each other. Given that there are only two categories in this dualistic system, if the first category loses workers, the latter will necessarily arrive in the second category, as they have no where else to go.

Some characteristics that differentiate between the formal and the informal include:

• discriminative capacity of criteria - macro level differences vs. heterogeneous firms;
• the dichotomy formal-informal hides the dynamics of employment processes;
• the endogenous response to government regulation (informal disappears if it is relaxed);
• the unrecorded character of its activities, which is a continuum rather than a dichotomy;
• labour flexibility - some activities may involve both formal and informal contracts;
• low barriers to entry (skills, capital, credit, networks);
• low degree of organization;
• sometimes lower levels of income, but studies show large variations in earnings;
• skilled-unskilled more relevant, as globalization negatively impacts unskilled.

The meaning and relevance of the concept of informal has been significantly influenced by policy determinants. Donors see it as a political economy and governance concept. For governments it is linked to national accounts. In developing countries it relates to economic reform and possible roles in policymaking. International organizations have contributed to the shaping of the concept and the interest of the Bretton Woods institutions in the informal sector is related to accuracy of the calculations of GDP and growth, strengthening statistical services and taxation.

The concept of informality is less a dualism than a continuum in many ways:

• contracts, including informal arrangements and transactions;
• institutions (self-enforcing constraint vs. formal regulations);
• individual level (trade offs on norms according to situations, adherence to rules according to their credibility);
• within activities (multiple employment, entrepreneurs operating in both sectors households with members in both the formal and informal);
• between activities (unclear borders, market linkages, corruption, value chains).

The impact of globalization is dependent on the type of activity and type of economy. Rather than being issues of formal and informal, it is more about skilled and unskilled workers. Globalization will hurt the unskilled workers.

There are also unwritten, informal rules that can be more coercitive and even more complex than formal ones, especially where the state is not credible. However, they can also be more efficient because they correspond to local norms.

The debate today is that the informal economy covers very different objectives and complexities. There are as many concepts as there are situations and yet we use the same word to talk about very different realities and problems.

Ms. Flodman Becker prefaced her presentation by saying that her experience is what is seen on the ground in informal settlements, mostly in the cities, where informal economy operators are deprived of all basic economic rights and deprived of a voice. Although not all poor are informal, almost all of those who are informal are poor.

She has encountered prejudices in her work towards the informal economy which include perceptions that their activities are merely survivalist and not interesting, that the informal economy can never really contribute to economic growth, that people choose to be informal actors, or that they are involved in criminal activities.

However, in reality, the potential for entrepreneurship is substantial. Even with lack of supportive frameworks and insecurity of operations, the informal economy contributes to over 40% of GDP in Sub-Saharan Africa.

She gave illustrations of Harare, Lusaka, Nairobi and Addis where informal workers' shacks were destroyed - one of the extreme consequences of the way people in the informal economy have been viewed by governments and how unaccommodating the system is. Although most of them are providing services to informal settlements that are perfectly legal, these people are invisible. They are not included in any kind of decision-making. They are prevented from achieving their full economic potential and denied their economic rights as well as other basic rights.

However, with economic rights also comes economic power. So, negotiations between governments and different stakeholders would imply a shift of power. There must be political will to reverse the situation. Threats must be turned into opportunities. The alternative is exclusion.

The informal economy is now a priority within SIDA in private sector development policy and is increasingly being targeted as an intervention area in country strategies, using a rights-based approach. Great potential can be released by giving people rights.

However, along with rights goes responsibilities. The potential within the informal economy is tremendous. To build power, so that informal economy operators are not passive beneficiaries, but active contributors, is a long-term process, but not costly.

"The informal sector should not be romanticised as a permanent fixture of the economy or accepted as a catch basin of surplus labour. To do this is to perpetuate the duality between the formal and informal economies where a minority enjoys disproportionate access to resources while the vast majority, though anxious to participate, are excluded by virtue of decade-old policy biases" (Sandra Yu, Supporting the Informal Sector, 1994)

Dr. Dwight Justice , ICFTU, Multinational Enterprises Unit. Mr. Justice recalled that we were talking about real people who are marginalized and exploited and why they get forgotten. There are some very real social and economic problems subsumed under the concept. The term "informal economy" was not discovered - it was coined to interpret a reality and make some sense of things. In fact, it has come to include many disparate things. Different problems and the need for different solutions are all being grouped together under this one term. It is not a good intellectual construct and does not lead to good policy.

However, the idea of a continuum also is not helpful, as it tends to cover up things that are not connected. The workers prefer the decent work deficits approach.

Informality is principally a governance issue, In the ILO we call that application of standards. We need to have a tripartite approach and focus on providing changes to legal and institutional frameworks. ILO sets the standards and governments need to uphold them. This is the only way that the ILO can make a difference.

Rafael Diez de Medina , Senior Economist, Policy Integration Department, ILO Mr. Diez de Medina reiterated that at the academic level the term informal economy has been extensively criticized and neglected as a concept, although he thought that this is due to lack of clarity in concepts and of empirical evidence supporting them. If one looks at Google, 89% of the hits on the informal economy come from the ILO. So, how are we addressing this? We need to be pragmatic. The informal economy exists, it is growing and it is an important feature of labour markets. Thus, we have to deal with it coherently and usefully, giving answers to policy makers and the different players..

The idea of a dichotomy is not really established as a concept, although the ILO and other institutions have been very active in trying to measure the informal sector in the best way, even when we need a more complex way to measure it because of the complexity of the group.

He said that the idea of the continuum is still very relevant as a guiding concept, despite of its limitations and possible critics. It recognizes the wide spectrum of issues and provides a way to approach them from different perspectives and policies. The ILO has broad experience in the field on these issues and has used that as a basis for designing a model of change. The model serves as a road map on how to deal with these complex issues and looks at it from a broader perspective than just the work being done by the ILO. It also identifies the need for partners in that work. And it focuses on poverty, even when it also acknowledges the existence of free riders in the economy. The goal is to move women and men up the continuum to decent work. We should address the vulnerabilities within the informal economy, trying to formalise it but bearing in mind that it can be very difficult to focus only on that. Prevention is other major issue. The Model of change is a tool to try to identify concrete actions to provide more rights, better jobs and better conditions in the informal economy. It is presented in a multi-media presentation in the knowledge fair.

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Annual Review of Economics

Volume 12, 2020, review article, informality: causes and consequences for development.

• Gabriel Ulyssea 1,2,3
• View Affiliations Hide Affiliations Affiliations: 1 Department of Economics, University of Oxford, Oxford OX1 3UQ, United Kingdom; email: [email protected] 2 Center for Economic and Policy Research, London EC1V 0DX, United Kingdom 3 IZA Institute of Labor Economics, 53113 Bonn, Germany
• Vol. 12:525-546 (Volume publication date August 2020) https://doi.org/10.1146/annurev-economics-082119-121914
• First published as a Review in Advance on May 01, 2020
• Copyright © 2020 by Annual Reviews. All rights reserved

This article reviews the economic literature on informality, its causes, and its consequences for development. It covers a comprehensive body of research that ranges from well-identified experimental studies to equilibrium macro models, and which more recently includes structural models that integrate both micro and macro effects. The results available in the literature indicate that lowering the costs of formality is not an effective policy to reduce informality but may generate positive aggregate effects, such as higher output and total factor productivity (TFP). The most effective formalization policy is to increase enforcement on the extensive margin but not on the intensive margin of informality. The former generates substantial gains in aggregate TFP and output, without necessarily increasing unemployment. However, the overall welfare impacts are likely to depend on the transitional dynamics between steady states, which remains an open area for future research.

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THE ROLE OF THE INFORMAL SECTOR IN ECONOMIC GROWTH AND DEVELOPMENT IN AFRICA

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Ahmed El-Bakly

Informality has been a challenge for Egypt for some decade with the informal employment growing at a faster rate than the formal one and it accounts for about 40% of the total labour in 2012. Data series on new entrants to the labour markets (18+) show that in 1969 around 20% were disproportionately drawn into informal sector, increased to 70% in 1998. Recent data in 2014 suggest that this trend remains true. The negative impacts of informality are not restricted to individuals, households or institutions that are working in the informal sector but on the economy as a whole. Many attempts are trying to deal with informality for different purposes, some attempt to integrate informal sector into formal one, others see the economic unites or individuals belong to the informal sector as potential tax payers. Others are seeking to find decent work in the informal sector. Formalising the informal sector, encouraging people to join the formal sector, or recommending mandatory legislative, executive and judicial reforms aiming at depriving individual from joining the informal sector requires conceptualizing the informal sector and identifies the framework in which it operates and examining factors that influence people’s choices in entering labour markets, where the current paper is trying to uncover. The paper provides a discussion on the informal sector conceptualisation through range of literature on the Less Developed Countries with the main focus on Egypt. The discussion covers the terms and definitions used, the framework in which the informal sector theoretically operates, the determinants and factors that assumed or explored to affect the informal sector whether the starting point or its growth. The main result is that a universal definition of the informal sector cannot hold true for every single country context. In addition, instead of defining the informal sector unites a shift occurred toward defining the informal labour market workers. The criteria suggested to identify the informal sector workers include non-registration ofthe workplace, lack of contract, lack of social insurance and lack of health insurance. The conceptualisation and the framework in which the informal sector operates have changed over time. From the tripartite division of activity that failed to represent the heterogeneity of activities found under each subsystem, to the sectorist school that view the informal and the formal parts of the economy as two sectors operating under one economic system characterised by either a complementarity or competitiveness relationship. Informal sector within the Arab countries is assumed to be operating within the sectorist view. A shift of discourse on notion of the informal sector in Egypt is a substantial change, from the notion “margins” of the “modern” economy to the “engine of growth” of the economy. Till the end of the 1960s, the informal sector (margins population) was a problematic segment. After 1960’s, this problematic segment became a solution to the economic crisis just by redefining it to the “engine of growth” and suggesting that it can play an important role in addressing employment crisis. It seems that the determinants or factors that affect the growth of the informal sector differ between Developed and Developing Countries, while there are common factors between the two groups that affect its growth. The failure of the modern economy in the Developed Countries to provide sufficient jobs for the growing number of job seekers could be the starting point of the informal sector, while the sudden penetration of capitalism associated with twentieth-century techniques may have created the initiatives of the informal sector in the Developing Countries. On the other hand, informal sector growth in Developed and Developing Countries is affected by same factors: regulations and legislation, economic recession, and macro-economic policies. On the micro level factor, poverty, education, and skill level, along with the lack of jobs in the formal sector, are those factors that influence the growth of the informal sector.

Informality has always been a challenge for Egypt as a developing country. The informal employment has jumped from 30.7 per cent in 1998 to 40 per cent in 2012. The main reasons behind the increasing informality are varied, numerous and different. Moreover, the negative impacts of informality are not only confined to the individuals, households or companies that are working in the informal sector but on the economy of Egypt as a whole. Hence, an integratedregulatory approach must be adopted to rescue Egypt’s economy and get it out of the unforeseen future.

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• How to write an essay outline | Guidelines & examples

How to Write an Essay Outline | Guidelines & Examples

Published on August 14, 2020 by Jack Caulfield . Revised on July 23, 2023.

An essay outline is a way of planning the structure of your essay before you start writing. It involves writing quick summary sentences or phrases for every point you will cover in each paragraph , giving you a picture of how your argument will unfold.

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Table of contents

Organizing your material, presentation of the outline, examples of essay outlines, other interesting articles, frequently asked questions about essay outlines.

At the stage where you’re writing an essay outline, your ideas are probably still not fully formed. You should know your topic  and have already done some preliminary research to find relevant sources , but now you need to shape your ideas into a structured argument.

Creating categories

Look over any information, quotes and ideas you’ve noted down from your research and consider the central point you want to make in the essay—this will be the basis of your thesis statement . Once you have an idea of your overall argument, you can begin to organize your material in a way that serves that argument.

Try to arrange your material into categories related to different aspects of your argument. If you’re writing about a literary text, you might group your ideas into themes; in a history essay, it might be several key trends or turning points from the period you’re discussing.

Three main themes or subjects is a common structure for essays. Depending on the length of the essay, you could split the themes into three body paragraphs, or three longer sections with several paragraphs covering each theme.

As you create the outline, look critically at your categories and points: Are any of them irrelevant or redundant? Make sure every topic you cover is clearly related to your thesis statement.

Order of information

When you have your material organized into several categories, consider what order they should appear in.

Your essay will always begin and end with an introduction and conclusion , but the organization of the body is up to you.

Consider these questions to order your material:

• Is there an obvious starting point for your argument?
• Is there one subject that provides an easy transition into another?
• Do some points need to be set up by discussing other points first?

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Within each paragraph, you’ll discuss a single idea related to your overall topic or argument, using several points of evidence or analysis to do so.

In your outline, you present these points as a few short numbered sentences or phrases.They can be split into sub-points when more detail is needed.

The template below shows how you might structure an outline for a five-paragraph essay.

• Thesis statement
• First piece of evidence
• Second piece of evidence
• Summary/synthesis
• Importance of topic
• Strong closing statement

You can choose whether to write your outline in full sentences or short phrases. Be consistent in your choice; don’t randomly write some points as full sentences and others as short phrases.

Examples of outlines for different types of essays are presented below: an argumentative, expository, and literary analysis essay.

Argumentative essay outline

This outline is for a short argumentative essay evaluating the internet’s impact on education. It uses short phrases to summarize each point.

Its body is split into three paragraphs, each presenting arguments about a different aspect of the internet’s effects on education.

• Importance of the internet
• Concerns about internet use
• Thesis statement: Internet use a net positive
• Data exploring this effect
• Analysis indicating it is overstated
• Students’ reading levels over time
• Why this data is questionable
• Video media
• Interactive media
• Speed and simplicity of online research
• Questions about reliability (transitioning into next topic)
• Evidence indicating its ubiquity
• Claims that it discourages engagement with academic writing
• Evidence that Wikipedia warns students not to cite it
• Argument that it introduces students to citation
• Summary of key points
• Value of digital education for students
• Need for optimism to embrace advantages of the internet

Expository essay outline

This is the outline for an expository essay describing how the invention of the printing press affected life and politics in Europe.

The paragraphs are still summarized in short phrases here, but individual points are described with full sentences.

• Claim that the printing press marks the end of the Middle Ages.
• Provide background on the low levels of literacy before the printing press.
• Present the thesis statement: The invention of the printing press increased circulation of information in Europe, paving the way for the Reformation.
• Discuss the very high levels of illiteracy in medieval Europe.
• Describe how literacy and thus knowledge and education were mainly the domain of religious and political elites.
• Indicate how this discouraged political and religious change.
• Describe the invention of the printing press in 1440 by Johannes Gutenberg.
• Show the implications of the new technology for book production.
• Describe the rapid spread of the technology and the printing of the Gutenberg Bible.
• Link to the Reformation.
• Discuss the trend for translating the Bible into vernacular languages during the years following the printing press’s invention.
• Describe Luther’s own translation of the Bible during the Reformation.
• Sketch out the large-scale effects the Reformation would have on religion and politics.
• Summarize the history described.
• Stress the significance of the printing press to the events of this period.

Literary analysis essay outline

The literary analysis essay outlined below discusses the role of theater in Jane Austen’s novel Mansfield Park .

The body of the essay is divided into three different themes, each of which is explored through examples from the book.

• Describe the theatricality of Austen’s works
• Outline the role theater plays in Mansfield Park
• Introduce the research question : How does Austen use theater to express the characters’ morality in Mansfield Park ?
• Discuss Austen’s depiction of the performance at the end of the first volume
• Discuss how Sir Bertram reacts to the acting scheme
• Introduce Austen’s use of stage direction–like details during dialogue
• Explore how these are deployed to show the characters’ self-absorption
• Discuss Austen’s description of Maria and Julia’s relationship as polite but affectionless
• Compare Mrs. Norris’s self-conceit as charitable despite her idleness
• Summarize the three themes: The acting scheme, stage directions, and the performance of morals
• Answer the research question
• Indicate areas for further study

If you want to know more about AI tools , college essays , or fallacies make sure to check out some of our other articles with explanations and examples or go directly to our tools!

• Ad hominem fallacy
• Post hoc fallacy
• Appeal to authority fallacy
• False cause fallacy
• Sunk cost fallacy

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You will sometimes be asked to hand in an essay outline before you start writing your essay . Your supervisor wants to see that you have a clear idea of your structure so that writing will go smoothly.

Even when you do not have to hand it in, writing an essay outline is an important part of the writing process . It’s a good idea to write one (as informally as you like) to clarify your structure for yourself whenever you are working on an essay.

If you have to hand in your essay outline , you may be given specific guidelines stating whether you have to use full sentences. If you’re not sure, ask your supervisor.

When writing an essay outline for yourself, the choice is yours. Some students find it helpful to write out their ideas in full sentences, while others prefer to summarize them in short phrases.

You should try to follow your outline as you write your essay . However, if your ideas change or it becomes clear that your structure could be better, it’s okay to depart from your essay outline . Just make sure you know why you’re doing so.

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Caulfield, J. (2023, July 23). How to Write an Essay Outline | Guidelines & Examples. Scribbr. Retrieved September 3, 2024, from https://www.scribbr.com/academic-essay/essay-outline/

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The Importance of the Informal Sector in the South African Economy

The Importance of the Informal Sector in the South African Economy:

The informal sector in South Africa is crucial because it contributes 6% to 10% of GDP and employs around 2.5 million people (17% of the workforce) . It plays a significant role in poverty alleviation , entrepreneurship , and provides essential goods and services to communities. Despite challenges like lack of access to finance, targeted government support can enhance its positive impact on the economy.

The informal sector in South Africa is a critical part of the economy, offering substantial contributions and addressing key socio-economic issues.

Table of Contents

Here are specific details and real information highlighting its importance:

Economic Contribution

The informal sector contributes significantly to South Africa’s GDP . While exact figures are challenging to determine due to its unregulated nature, estimates from the South African Reserve Bank and other economic studies suggest that the informal sector contributes approximately 6% to 10% of the national GDP. This contribution is vital for overall economic growth, particularly in a developing country where formal employment is limited.

Employment and Livelihoods

The informal sector is a major employer in South Africa. According to Statistics South Africa , around 2.5 million people are employed in the informal sector, representing about 17% of total employment . This sector provides jobs for a large portion of the labor force that cannot find formal employment, thereby playing a crucial role in reducing unemployment and poverty.

Example : In townships and rural areas, informal traders sell vegetables, clothing, and other goods, providing essential income for their families.

Poverty Alleviation

The informal sector plays a significant role in poverty alleviation . By offering income-generating opportunities, it helps reduce poverty levels. Many individuals working in the informal sector can support their families, pay for education, and improve their living conditions.

Example : Street vendors in Johannesburg sell snacks and beverages, earning enough to send their children to school and cover household expenses.

Flexibility and Entrepreneurship

The informal sector encourages entrepreneurship and innovation . Small businesses in this sector often start with minimal capital and can adapt quickly to changing market conditions. This flexibility allows informal businesses to thrive where formal businesses might struggle. The sector serves as a breeding ground for future formal businesses, as many successful entrepreneurs begin informally before transitioning to the formal economy.

Example : A small mechanic shop in a township grows into a formal auto repair business over time.

Consumer Services and Market Access

Informal businesses provide essential goods and services to communities, often at more affordable prices than their formal counterparts. They operate in areas that formal businesses might neglect, ensuring that even marginalized populations have access to basic necessities.

Example : Informal hair salons and barbershops in Soweto offer affordable haircuts and beauty services to local residents.

Real Challenges and Policy Implications

Despite its importance, the informal sector faces several challenges, including lack of access to finance , inadequate infrastructure, and limited legal protection. Addressing these issues requires thoughtful policy interventions. The government can support the informal sector by providing micro-financing options, offering training and capacity-building programs, and improving access to markets and technology.

Example : Initiatives like the Small Enterprise Finance Agency (SEFA) provide micro-loans to informal businesses, helping them expand and formalize.

Statistics and Real Data

• Economic Impact : The informal sector contributes up to 10% of GDP , according to the South African Reserve Bank.
• Employment : Employs around 2.5 million people , about 17% of the workforce .
• Income Generation : Informal traders and small businesses generate significant income, often supporting extended families and local economies.

The informal sector is a vital component of South Africa’s economy, providing significant economic contributions, generating employment, alleviating poverty, and fostering entrepreneurship and market access. Recognizing and supporting this sector through targeted policies can help unlock its full potential, contributing to a more inclusive and resilient economic future for South Africa. Enhancing support for the informal sector is crucial for sustainable development .

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