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billstew
03-28-09, 06:13 AM
The informal sector is economic activity that is neither taxed nor monitored by a government; and is not included in that government's Gross National Product (http://en.wikipedia.org/wiki/Gross_National_Product) (GNP); as opposed to a formal economy.

http://en.wikipedia.org/wiki/Informal_sector

Although the informal economy is often associated with developing countries (http://en.wikipedia.org/wiki/Developing_countries) —where up to 60% of the labor force (with as much 40% of GDP) works, all economic systems contain an informal economy in some proportion. The term "informal sector" was used in many earlier studies, and has been mostly replaced in more recent studies which use the newer term.

The English idioms "under the table" and "off the books" typically refer to this type of economy. The term black market (http://en.wikipedia.org/wiki/Black_market) refers to a specific subset of the informal economy in which contraband (http://en.wikipedia.org/wiki/Contraband) is traded —where contraband may be strictly or informally defined.

Informal economic activity is a dynamic process which includes many aspects of economic and social theory including exchange, regulation, and enforcement. By its nature, it is necessarily difficult to observe, study, define, and measure. No single source readily or authoritatively defines informal economy as a unit of study.

To further confound attempts to define this process, informal economic activity is temporal in nature. Regulations (and degrees of enforcement) change frequently, sometimes daily, and any instance of economic activity can shift between categories of formal and informal with even minor changes in policy.

Given the complexity of the phenomenon, the simplest definition of informal economic activity might be: any exchange of goods or services involving economic value (http://en.wikipedia.org/wiki/Value_%28economics%29) in which the act escapes regulation of similar such acts.

Statistics on the informal economy are unreliable by virtue of the subject, yet they can provide a tentative picture of its relevance: For example, informal employment makes up 48% of non-agricultural employment in North Africa, 51% in Latin America, 65% in Asia, and 72% in sub-Saharan Africa. If agricultural employment is included, the percentages rises, in some countries like India and many sub-Saharan African countries beyond 90%.

Estimates for developed countries are around 15%.<sup id="cite_ref-ilo_3-0" class="reference"></sup>

In developing countries, the largest part of informal work, around 70%, is self-employed, in developed countries, wage employment predominates. The majority of informal economy workers are women. Policies and developments affecting the informal economy have thus a distinctly gendered effect.