THE ROLE OF THE INFORMAL SECTOR IN NATIONAL DEVELOPMENT AND INTEGRATION PROCESSES: A CASE STUDY OF THE SECTOR IN ACCRA, GHAN

The realization that cities in underdeveloped countries are becoming the sanctuaries for a large group of people who survive economically through various low-paying and sometimes illegitimate activities has triggered off efforts to understand the activities of the so-called informal sector. However, most informal sector studies have dealt with the micro-economy and internal dynamics of the informal sector, ignoring its relationships with the broader national economy. This study attempts to understand these relationships. Specifically, 356 operations in the informal sector are surveyed regarding their relations with their areas of origin and with the formal sector.;Three major hypotheses are examined in the study namely, (1) that the informal sector serves as a waiting sector for aspiring formal sector workers, (2) that the informal sector has a demonstration effect on non-urban areas, and (3) that the formal and informal sectors reinforce each other. Only the second hypothesis was strongly confirmed.;In a broader sense the study findings suggest that notions about the role of the informal sector in the process of national economic development may be slightly overstated and rather too optimistic. A more realistic picture suggests that the informal sector is evidence that a considerable proportion of the urban population in underdeveloped countries are undergoing a process of permanent marginalization from the predominant economic sectors.