What is the difference between formal and informal sectors?

Answer

The formal sector consists of the businesses, enterprises and economic activities that are monitored, protected and taxed by the government, whereas the informal sector is comprised of the workers and enterprises that are not under government regulation. British anthropologist Keith Hart coined the term "informal sector" in 1973 as part of a study on Ghana. There are many conflicting theories as to the role and benefits of the informal sector.

In contrast to the formal sector, the laborers, businesses and activities that make up the informal sector are not registered with or taxed by the government. For this reason, scholars sometimes refer to the informal sector as the black market, shadow economy or underground economy. Originally, the term referred to self-employed small enterprises like street vending, sewing, artisanry and small farming. It now also includes wage-earning jobs like crop-harvesting, cleaning and any other unprotected occupation.

Academics and policy-makers view the informal sector with conflicting views. Some believe the informal sector fuels entrepreneurialism and provides a cushion during economic crises. Others argue that the informal sector undermines taxation and regulation and thereby weakens the overall economy.

Globally, the informal sector is steadily growing. It constitutes the majority of the economy in both Latin America and Africa. This pattern is the result of governments' failure to plan for sufficient formal jobs in the face of expanding global communication and competition.

Q&A Related to "What is the difference between formal and informal..."
Formal sectors is when one has a job that they get paid regularly for eg. monthly (long term job) You often get paid more than informal sectors. An informal sector is not a set job
http://wiki.answers.com/Q/What_is_the_difference_b...
The formal sector is where you have a nine-to-five job and are paid weekly or monthly. The informal sector is where you are hired by the day or even by the hour. It is more likely
http://answers.yahoo.com/question/index?qid=201110...
The hallmark of formal probate proceedings is the appointment of an executor (if there is a will) or an administrator (if there is no will) whose responsibility will be to gather
http://www.ehow.com/facts_5915096_difference-betwe...
A formal group has laws and bylaws that help the
http://www.chacha.com/question/what-is-the-differe...
Explore this Topic
The difference between formal and informal planning is that, formal planning has got a system of coordination and the objectives are well stated. Informal planning ...
There is a difference between formal and informal English. Formal English may also be considered 'proper English', as opposed to slang, or acronyms used in texting ...
One difference between formal and informal education is the setting. Formal education is classroom-based. The students would usually be around the same age, and ...
About -  Privacy -  Careers -  Ask Blog -  Mobile -  Help -  Feedback  -  Sitemap  © 2014 Ask.com