Latin American Informal Sector Study

This dissertation mainly focuses on the study of politics, economics and social activities of the Latin American informal sector. It attempts to start the discussion from the overall development of Latin American informal sector, further expand to the analysis the politics, economics and social factors. The thesis strives to study the interrelations among the informal sector, formal sectors and other social organizations in Latin America from the perspectives of the government, the economy and the society. It also discusses the impact of informal sector on the politics, the economy and the society, and provides path selection for China to draft policies in regards to informal sector in China.This dissertation mainly focuses on the study of following eight fields:First, the paper discusses the theoretical foundation and the definition of the informal sector’s study. The paper describes theories such as Poor Employment Theory, Dual Economic Structure Theory, Theory of Regulation, Theory of Embeddedness, and etc. These theories are considered to be the theoretical foundation for the existence and development of the informal sector. The paper also discusses the concepts of informal sector, informal employment and informal economy, and points out different concepts have different connotations and denotations. It also demonstrates the differences and connections among informal sector, informal employment, informal economy, and formal sectors. After discoursing the concepts related to economic and social impacts of informal sector, and the concepts of informal sector regulation and policies, the paper finally generalizes the problems and drawbacks that current studies face. And based on that, the author proposes the prospect for innovative research on the informal sector phenomenon.Second, the paper disserts the study of the development process of informal sector and the reasons behind the study. The paper analyzes the reasons why the informal sector in Latin America develops and discusses the characteristics of their development. It emphases the relation and impact of informal sector and social structure change. It also dissents the positive and negative impacts that informal sector bring to social economy and social structure. This paper argues that the imbalance of Latin American urbanization and industrialization, the imbalance of economic and social development, institutional and non-institutional factors motivates the development of informal sector. Latin American informal sector can play a positive role in promoting economic growth, adjusting employment and income, alleviating poverty, satisfying social needs, maintaining social stability and other city functions, meanwhile there existing many negative effects. Therefore, the governments in Latin American countries should consider the development of the informal sector when making national development policies. They should increase productivity in the informal sector through a variety of supportive policies and measures to make sure informal sector further play an active role, and to limit the negative impacts to a minimum. This can create a decent environment for maintaining social stability and developing the economy.Third, the paper studies the political behavior in informal sector. First of all, the paper discusses the basic meaning of political behavior. Second, it studies the impact of individual political behaviors and group political behaviors on informal sector. Third, it disserts the relation between informal sector and democracy. Finally, through the study of informal factors and ownership system, the dissertation proposes that informal sector need protection for ownership system. It points out the reasons behind the appearance of ownership system and the regularization of Informal Ownership. This paper argues that, populism as a political trend highlights the rationality behind the values of middle-to-lower strata masses. Civilians and popularity are the basis of all political movements and legitimacy of the political system. The paper advocates upholding the real interests of the middle-to-lower strata masses. Individuals who participate political actions that informal sector organize, in order to get necessary economic, social and political conditions for their own survival and development and for their long-term effective access to full and equal civil rights.Fourth, the paper reveals the research of the economic behavior of informal sector. Based on the political and cultural background of informal sector’s economic behavior, and the study of economic behavior’s origin, the paper dissents the major activities from informal economy and the characteristics of informal economy underground activities, informal architecture, informal business, informal industry and informal service. The paper argues that the informal sector of the economy originates from inefficient regulations. Lack of legal protection and high legal costs generate and develop the economic activities in the informal sector. Underground activities of the informal sector in Latin America are not essentially considered to be crimes in nature. They are one component of a country’s economic activities. Informal sector plays an important role in construction and real estate industries. Urban constructions are mainly done by the informal sector. Itinerant peddlers complete significant informal business activities throughout the Latin American cities. Services in the informal sector have also achieved very high standard and large in size. They are unformed and operated by private operators. These have considerably developed irregular transport system in Latin American countries.Fifth, the paper discusses the study of employment in informal sector. Based on the study of origin and characteristics of informal industries, the paper analyzes the labor market in informal sector. It further discusses the characteristics of informal sector workers, the structure and income level of informal industries. The paper also conducts case studies on the employment in informal sector and the impact of employment on politics, economy and the society. It proposes the rational choice for the paths of informal sector employment. This paper argues that, through the development of policies, focus on economic activities, expansion of market, improvements on the organization and cost structure, improvements on credit conditions in the informal sector, reinforcement of human resources training and other measures, the competitiveness and efficiency of the informal sector can be improved. It can also increase informal sector’s productivity and their income. At the same time, promoting the development of small and micro-enterprises is an optional solution for the unemployment problem existing in the informal employment labor market. And obtaining social security for informal sector workers is a decisive factor in achieving social cohesion.Sixth, what role informal sector plays in the society? First of all, the paper specifies the strategies on how the society accepts informal sector and discusses that the acceptation of informal sector is a strategic choice. Second, the dissertation illustrates the relationship and the impact of informal employment and the society as a whole. Finally, informal industries and related policies have been raised. The paper argues that, the integration of informal sector and mainstream society is the key to achieve political, economic, and social stability and sustainability. Therefore, Latin American countries have to regulate the informal sector’s economic behavior, improve the employment rate in informal sector, improve their income level, and eliminate discrimination among informal employment. Latin America countries have to achieve integration of the informal sector and the mainstream society. Development of specific laws and regulations and improvement on the existing laws and regulations can provide policy support for informal sector. Improving the regulatory system to support productive activities in the informal sector can get them access to more productive resources. Improving the political environment, the market environment, and social status of the informal sector will guarantee labor rights and social security rights for informal sector workers.Seventh,the paper studies the path selection for informal sector’s development. First of all, the dissertation summarizes the theoretical basis for informal sector’s path selection. Second, in regard to the time range and policy implementation condition, the paper demonstrates the improvement of regulatory framework, the completion of macroeconomics policies, and reinforcement of designing and implementing social activities. This paper argues that the informal sector in Latin America have four most important issues that need urgent solutions. Issue one is the impact of regulatory on the informal sector. The second issue is the impact of macroeconomic policies on the informal sector. The third issue is lack social security for informal sector workers. The last issue is that the majority of informal sector activities are inefficient. These issues must be addressed and eliminated by making policies. These policies should focus to protect informal sector employment, prevent them from being vulnerable, helping them out of poverty. The policies can be divided into three categories. They are regulatory framework, macroeconomic policies, and social programs design. Path selection is to promote changes in the regulatory system, to complete macroeconomic policy making, and to strengthen the design and implementation of social projects.Eighth, the paper studies the enlightenment of informal sector in Latin America to China. First of all, it discusses the revelation of the informal sector in Latin America for the development of urbanization in China. For Latin America, similar to our country, the development of the informal sector is accompanied by excessive urbanization. This paper discusses many aspects of revelations. They are the coordinated development of urban and rural areas, the optimal size, structure and function of cities, the scientific management mechanism of urban migrants, the promotion of social fairness and justice, the protection of vulnerable groups, the regulation for development of urban services, the processing of informal real estate based on laws, the establishment of a sound social security system and the legalization of the informal financial system. Second, the paper discusses the enlightenment to informal sector employment in our country. For China, which is similar to many Latin American countries, the informal sector employment has a positive effect in easing the employment pressure. However, it also easily brings adversely affect to the orderly development of the economy and society. This paper discusses the enlightenments to optimizing the informal sector employment tax laws and regulations, to improving informal sector employment and housing security mechanism, and to many other aspects as well.