ABSTRACT
The term “informal sector” has been one of the most hotly debated socio-economic concepts of the past forty-five years. Etymologically, one can only define it with respect to the formal sector as it derives from and is intrinsically defined by its comparison to this term. Taking this cue, it can be understood as all income-generating economic activities not authorized or regulated by the State (→ Nation State, II/38) in social contexts where other similar activities are monitored and authorized (Castells and Portes 1989, 12). Widening this definition to encompass socio-cultural aspects, one can perceive the informal sector as contravening State regulations but not social moral codes (De Soto 1994). But as Portes (1996) says, these definitions are more appropriate for industrialized countries not the Third World. The character of what is informal or formal is always defined in the ever-fluxing relationship between the State and civil society (→ II/28). The informal sector must also be differentiated from the illegal economy. While the first term entails the production, distribution and sale of goods (and services) that are socially perceived and normatively defined as licit, the second involves goods that are deemed illicit.
