The Informal Sector Of An Emerging Economy

3285 WordsJun 24, 201514 Pages
Since the informal sector is believed to make a great contribution to an economy, there are a number of research papers which have been done in this sector. Some research has been done in relation to small-business participation in the informal sector. A prime example is from Trinidad and Tobago, considered as an emerging economy, whereby people have the perception of avoiding tax while performing their business and is the reason why people engage in the informal sector. The focus is on socioeconomic, demographic, and attitudinal characteristics that influence people to run their small business (Sookran & Watson, 2008). Moreover, Sookram & Watson (2008) in their research on ‘Small-business participation in the informal sector of an emerging economy’ explain that the word “informal sector” refers to the production of goods and services for market orientation, which is not captured in the estimation of a country’s GDP whether these activities are legal or illegal. The contribution of the informal sector to the national economy in the third world economies ranges from 20 to 70 %. It has been commonly thought that the informal sector is the sector linked with the poor and marginalized. However, in reality this sector attracts many people regardless of their social status and educational background. Thus, clearly policy makers need to look at this sector as it offers great economic advantages to both poor people and the country. The purpose of the study conducted by Sookram &
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