The Conceptual Quandary of Informal Sector, Micro-Enterprises and Small-Scale Industries

Abstract

The term informal sector which groups informal, micro-enterprises and small-scale industries (SSIs) raises macro and micro issues by definitions which have not yet been fully addressed by numerous publications on the sector. Although the sector has become the engine of growth and for sustainable development in many economies, policy makers are not sure of what makes up the sector and its demands. Therefore countries, institutions and organisations have been left to adopt and adapt their own definitions to suit the objectives of their programmes and circumstances. This chapter therefore reviews the definitions put forward by different institutions and bodies with the aim of reviving the debate on the precise definition of the informal sector for universal usage if at all possible. The objective is to bring into focus the challenges the lack of precise definition presents to policy-makers, researchers and practitioners which needs to be addressed. It is recognises that the heterogeneity of the SSI sector means it is often necessary for definitions to be modified according to the context in which the sector is being examined. The chapter concludes, however, that using employment level of firms would be the ideal and easiest way of reaching consensus on possible universal definition of the informal sector.