What is Informal Economy?

What is informal economy? A informal economy involves business that is not traceable and therefore not taxable. We can also call this informal market. Informal economic negotiations are not part of the GDP official country (Gross Domestic Product).

Newspapers today often use the term informal sector. This means the same as the informal economy.

This economic modality exists in a system where people use mostly or exclusively cash. Participants do not keep transaction records or record them in accounting books.

Although the informal sector accounts for a large share of income in developing countries, people often stigmatize it. In addition to describing him as uncontrollable, politicians also see him as problematic.

However, for people at the bottom of the socioeconomic scale, this economy provides economic opportunities. Indeed, for billions of humans, the informal economy is their only source of income.

Examples of informal economy:

• street vendors
• marketers
• car washers
• manicures

The Economist makes the following comment about the informal economy:

“Such transactions do not normally show up in GDP figures. So, the black economy can mean that a country is much wealthier than official data suggest.”

Related Contents:

• The sectors of the economy and their characteristics