The Informal sector and economic transformation in India

In the literature on development and modernization, it has been expected that with economic growth and a consequent increase in per capita income, the dualism between the formal and informal economic sectors will wither away, leading to a structural transformat...

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Autor Principal: Kesar, Surbhi
Otros Autores: The Economics of Informality Conference 2018
Formato: Objeto de conferencia (Conference Object)
Lenguaje:Inglés (English)
Publicado: Universidad del Rosario. Facultad de Economía 2018
Materias:
Acceso en línea:http://repository.urosario.edu.co/handle/10336/18249
id ir-10336-18249
recordtype dspace
spelling ir-10336-182492019-09-19T12:37:54Z The Informal sector and economic transformation in India Kesar, Surbhi The Economics of Informality Conference 2018 Segmentación Visión microempresaria Informalidad India Producción Microempresas Economía informal Segmentation Micro-entrepreneurial view Informality India In the literature on development and modernization, it has been expected that with economic growth and a consequent increase in per capita income, the dualism between the formal and informal economic sectors will wither away, leading to a structural transformation and formalization of the economy. However, in India, in spite of a long period of sustained economic growth, the informal sector has continued to persist and to provide employment to a vast majority of the population. The interaction of informal economy with the process of economic growth has been widely debated in the literature from two competing perspectives – (i) the segmentation / dualist views, which sees the informal economy as a residual sector that absorbs the excess labour force in the economy. This view supports the ‘need’ for a transition towards a full-fledged formal/ ‘modern’ economy as the ideal path of development (Ranis and Stewart, 1999; Mandelman and Montes-Rojas, 2009; La Porta and Shleifer, 2014); and (ii) the micro-entrepreneurial view, which sees the informal economy as dynamic in nature, with risk taking and profit-maximizing enterprises that can act as the engines of economic growth. This strand views the self-employment in informal sector as the seedbed for modern capitalism in the Third World countries, thereby implicitly arguing that the issue of transformation is already resolved (De Soto, 1989; Fajnzylber et al, 2006). It has been further argued that the informal economy might be the preferred destination for the workforce than being employed as formal salaried workers (Maloney, 2004). On the other hand, there has been a concern that has also been raised about a possible stalling of the transformation process across developing economies (Timmer & Akkus, 2008; DeVries et al, 2012). Specifically, in the Indian context, some recent works have argued that the growth process has been largely exclusionary, leaving out a major part of the workforce outside the dynamics of transformation (Sanyal, 2007; Bhaduri, 2017), while it has also been argued that if the growth process can be made more inclusive, it would eventually lead to a large scale transformation of the Indian economy (Bardhan, 2009). 2018-05-28 2018-08-03T14:47:48Z info:eu-repo/semantics/conferenceObject info:eu-repo/semantics/publishedVersion http://repository.urosario.edu.co/handle/10336/18249 eng Atribución-NoComercial-CompartirIgual 2.5 Colombia http://creativecommons.org/licenses/by-nc-sa/2.5/co/ info:eu-repo/semantics/openAccess application/pdf Universidad del Rosario. Facultad de Economía instname:Universidad del Rosario reponame:Repositorio Institucional EdocUR
institution EdocUR - Universidad del Rosario
collection DSpace
language Inglés (English)
topic Segmentación
Visión microempresaria
Informalidad
India
Producción
Microempresas
Economía informal
Segmentation
Micro-entrepreneurial view
Informality
India
spellingShingle Segmentación
Visión microempresaria
Informalidad
India
Producción
Microempresas
Economía informal
Segmentation
Micro-entrepreneurial view
Informality
India
Kesar, Surbhi
The Informal sector and economic transformation in India
description In the literature on development and modernization, it has been expected that with economic growth and a consequent increase in per capita income, the dualism between the formal and informal economic sectors will wither away, leading to a structural transformation and formalization of the economy. However, in India, in spite of a long period of sustained economic growth, the informal sector has continued to persist and to provide employment to a vast majority of the population. The interaction of informal economy with the process of economic growth has been widely debated in the literature from two competing perspectives – (i) the segmentation / dualist views, which sees the informal economy as a residual sector that absorbs the excess labour force in the economy. This view supports the ‘need’ for a transition towards a full-fledged formal/ ‘modern’ economy as the ideal path of development (Ranis and Stewart, 1999; Mandelman and Montes-Rojas, 2009; La Porta and Shleifer, 2014); and (ii) the micro-entrepreneurial view, which sees the informal economy as dynamic in nature, with risk taking and profit-maximizing enterprises that can act as the engines of economic growth. This strand views the self-employment in informal sector as the seedbed for modern capitalism in the Third World countries, thereby implicitly arguing that the issue of transformation is already resolved (De Soto, 1989; Fajnzylber et al, 2006). It has been further argued that the informal economy might be the preferred destination for the workforce than being employed as formal salaried workers (Maloney, 2004). On the other hand, there has been a concern that has also been raised about a possible stalling of the transformation process across developing economies (Timmer & Akkus, 2008; DeVries et al, 2012). Specifically, in the Indian context, some recent works have argued that the growth process has been largely exclusionary, leaving out a major part of the workforce outside the dynamics of transformation (Sanyal, 2007; Bhaduri, 2017), while it has also been argued that if the growth process can be made more inclusive, it would eventually lead to a large scale transformation of the Indian economy (Bardhan, 2009).
author2 The Economics of Informality Conference 2018
author_facet The Economics of Informality Conference 2018
Kesar, Surbhi
format Objeto de conferencia (Conference Object)
author Kesar, Surbhi
author_sort Kesar, Surbhi
title The Informal sector and economic transformation in India
title_short The Informal sector and economic transformation in India
title_full The Informal sector and economic transformation in India
title_fullStr The Informal sector and economic transformation in India
title_full_unstemmed The Informal sector and economic transformation in India
title_sort informal sector and economic transformation in india
publisher Universidad del Rosario. Facultad de Economía
publishDate 2018
url http://repository.urosario.edu.co/handle/10336/18249
_version_ 1645140825385992192
score 12,111491