I doubt very much that the informal economy could someday outperform the formal economy. But wow, do I ever love Craigslist!
The Informal Economy has shown that it can not only provide a viable economic alternative for those rejected and discontent from the formal economy, but the informal economy, as a whole, can compete and potentially outperform the formal economy.
By Raphael Wright
@ross-bryan-31 I love craigslist also. To further argue my point, the informal economy can never win the battle of GDP because informality isn’t tracked, so there is no way to tell. However, our formal economies are not producing or creating enough opportunities for the majority. No one can argue the high value of informality, and along with the cheaper costs and faster productivity, the informal economy could POSSIBLY outperform on many bases.
@urban-plug very interesting topic. I would argue that the informal economy is becoming formalized. There are a ton of niche website, apps, and shops opening up that are starting to capitalize on the normally informal economy. They are calling it “The Sharing” or “Collaborative” economy. I wrote an article about it a few weeks ago here is the link http://www.volkalize.com/topic/the-collaborative-sharing-economy/
But basically companies are forming in order to help people sell their unrealized assets. I use tradesy to sell unwanted or old clothes. There are tons of other types of websites though.
@Ross-bryan-31 mentioned craigslist, which is basically the same thing although criagslist doesn’t track the earnings like these other websites and apps do. Which is why I say the sharing economy is essentially making the informal economy formal and measured.
@jordan-bosstick I can totally see your point. Formal businesses have always used informal tactics to grow, like Proctor & Gamble selling products to street hawking, informal merchants in South America, or phone companies selling their communication services through street hawkers in Africa. None of those entrepreneurs are formal, but both parties are profiting.
I truly believe that if America and other countries in the developed world take on an informal method towards running the economy, there will be real growth, for more people.
@urban-plug can you describe exactly what you mean by informal economy? Do you mean like, people selling each other goods without permits and without filing the proper documents? Do you mean businesses would operate without being taxed?
@juliaw Indeed. The informal economy is the segment of the economy that is unregistered and untaxed. The informal economy is home to the self-starting, self-reliant entrepreneurs and workers who have created their own opportunities without signing in with the government, most likely out of necessity. At this point, over half of the world operates informally with estimations being at 3/4 of the world operating in the informal economy in the next 15-20 years.
@urban-plug Very interesting. I think that because of some of the new technology and innovation I mentioned above, the informal economy will be able to somewhat be formalized. But I don’t think the informal economy could ever disappear because as you mentioned, some of these businesses run unregistered out of necessity. Another website that is allowing informal businesses to become formal is Etsy. Have you heard of it? Basically people are able to sell their handmade goods to anyone on the Internet. I personally believe in buying local, and I sell a lot of stuff on similar websites, its a great way to make extra cash and support people trying to do the same. Great topic!
@Ross-Bryan-31 @ubran-plug @JuliaW there must be a huge difference in the informal economy of the United States compared to other nations. I assume the International informal economy is huge. Especially in underdeveloped nations. Anyone have any info on that?
@jordan-bosstick Yes I have heard of Etsy. Love that site. I have bought many things from there. Because of how our formal economies operate, which are from the top-down, there will always be some who are rejected or not fully represented, which will always allow opportunity for an informal economy to exist, which operates from the bottom-up.
@Ross-Bryan-31 To answer your question, the informal economy as a whole is massive. If it was a nation, it would possess the second largest economic worth on the planet (second only to the United States, or China. Whoever you wish to ask). In the developed world, the informal economies are not large in size but in dollar worth. Lots of money can be made in these informal economies, so these informal workers and entrepreneurs can make a better living for themselves, surpassing survival in many cases. In the developing world, the population of participants involved in the informal economy are massive, but they generally don’t make as much. Still altogether, the informal economies combined is an economic wonder.
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