The Informal Sector, Micro-Enterprises and Small-Scale Industries: The Conceptual Quandary

Abstract

The term informal sector which groups informal micro-enterprises and small-scale industries (SSI) raises macroand micro issues by definitions which have not yet been fully addressed by numerous publications on the sector.Although the sector has become the engine of growth and for sustainable development in many economies,policy makers are not sure of what makes up the sector and its demands. Therefore countries, institutions andorganisations have been left to adopt and adapt their own definitions to suit the objectives of their programmesand circumstances. This paper reviews the definitions put forward by different institutions and bodies with theaim of reviving the debate on the precise definition of the informal sector for universal usage if at all possible.The paper concludes that the heterogeneity of the SSI sector means it is often necessary for definitions to bemodified according to the context in which the sector is being examined. The paper concludes that usingemployment level of firms would be the ideal and easiest way of reaching consensus on possible universaldefinition of the informal sector.Keywords: Informal Sector, Small-Scale Enterprises, Micro-enterprise, Rural