Making it Underground: Comparative Material on the Informal Sector in Western Market Economies

This paper examines the informal economy and its relationship to commonly held theories of industrial development. Although these theories stem from very different intellectual traditions, their general assumption has been that widespread informal economic activities are primarily a feature of Third World economies, in which they function as a refuge from destitution; such activities are presumably destined to desappear with the advance of modern, industry-led growth. Evidence is presented that indicates that these assumptions, including the identification of informality with conditions in the less developed countries, are wrong. Alternative interpretations of the resilience of these activities in Third World countries, despite rapid industrialization, and their continuity and apparent revival in the advanced economies and discussed.