The concept of ‘Informal Economy’ revisited: A review of related literature

Abstract

The informal economy occupies a centre stage in today's development agenda. It is an avenue for people to put their entrepreneurial ingenuity into fruition - majority surviving through evasion of tax and other forms of enterprise regulation. However, there is no consensus on exactly what the informal economy stands for and what it constitutes. The paper substantiates this argument with literature. Illustrations of the problem are provided with empirical data on 85 Ghanaian manufacturing micro and small enterprises. Evidently, the place of unregistered businesses that pay 'taxes'and the selfemployed that offer employment to other people in the formal-informal economy cannot easily be determined. It is concluded that until the present cloud of confusion surrounding the concept is well addressed, the informal economy is less likely to properly function os an ideal pro-poor growth platform for development and poverty alleviation.