The Role of the Informal Sector in the National Economy :: Economics

The Role of the Informal Sector in the National economyMOZAMBIQUEIntroduction============In an attempt to respond to the topic this essay lead discuss the roleof the lax sector in the Mozambican economy. For a betterunderstanding of the topic some important definitions sh all(prenominal) be given.For the mark of this essay, the concept of economy can be definedas the cognizance that deals with production and consumption of goods andservices, the circulation of wealth and the redistribution of income.On the another(prenominal) hand, the concept of the informal sector was introducedinto multinational usage in 1972 by the International moilOrganization (ILO) in its Kenya Mission Report. Though there is noconsensus on the definition of the informal sector, coupled with thefact that in Mozambique the concept varies with the diverse periodsof history, the following are the common characteristics of thissector as defined by ILO (a) ease of entry (b) reliance onindigenous resources (c) family ownership (d) runty scaleoperations (e) labor intensive and adaptive technology (f) skillsacquired outdoors of formal sector (g) unregulated and competitivemarkets.Since that time, different authors and the ILO itself introduced manydefinitions. The ILO/ICFTU international symposium on the informalsector in 1999 proposed that informal sector man causation can becategorized into three broad groups (a) owner-employers of microenterprises, a few stipendiary give wayers, with or without apprentices (b)own-account workers, who own and operate one-person business, who workalone or with the help of unpaid workers, generally family members andapprentices (c) dependent workers paid or unpaid, including wageworkers in micro enterprises, unpaid family workers, apprentices,contract labor, shell workers and paid domestic workers. (Santos inDhemba 1999)Mozambique Social Economic Situation====================================The sign of the peace agreement and the murder of theSt ructural Adjustment Program (SAP) in Mozambique caused animpoverishment of the poor, especially in towns where the decline inpurchasing power is most felt as it is harder to find alternativeincome to buy food. The liberalisation of the market opened up thepossibilities to import goods, however, the purchasing power ofMozambican citizens are still very low. There was a rise in the levelsof unemployment as a result of the mass retrenchment originated by theimplementation of the SAP policy. According to a World Bank study, andmany other studies, unemployment is a strong indicator of economiccrisis.In spite of all the measures taken by the Government to bring abouteconomic and companionable development, this development was not percolatingdown to the masses fast enough. Due to the permeative effects of theglobalizing economy, population growth and urban migration, the activelabor lodge was growing at a much faster rate than the accessibility of