This chapter considers the role of the urban economy and society in the growth and development of 21st century cities in the Global South. Given the increasing proliferation of literature on this broad issue, much of it highly descriptive, a continuing challenge relates to its robust theorization. The paper, therefore, focuses specically on conceptual approaches to dynamism and inequalities in the urban informal economy, highlighting the contradictions between the growing importance of cities that, as ‘engines of growth’ or ‘agents of change’ (van Vliet 2002), provide critical economic opportunities, at the same time as being sites of poverty, inequality and gender-based exclusion. Through the inclusion of a longitudinal perspective, it seeks to demonstrate the way in which interpretations of the function of the informal economy within cities have changed. Thus the paper starts with a brief historical contextualization of the informal sector, as it was rst known, within urban debates of economic modernization. It then turns to the contemporary globalized environment and its links to current urbanization processes. Finally, the paper discusses the asset-accumulation framework as a theoretical concept to better comprehend the dynamism of urban low-income households and communities as well as an operational tool to address the severe inequalities experienced in their daily lives.