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 will address the roleof the informal sector in the Mozambican rescue. For a betterunderstanding of the topic some important definitions shall be given.For the purpose of this essay, the concept of economy can be definedas the science that deals with production and consumption of goods andservices, the circulation of wealth and the redistribution of income.On the other hand, the concept of the informal sector was introducedinto international usage in 1972 by the International LaborOrganization (ILO) in its Kenya Mission Report. Though there is noconsensus on the definition of the informal sector, coupled with the event that in Mozambique the concept varies with the different periodsof history, the following are the common characteristics of thissector as defined by ILO (a) ease of entry (b) reliance on autochthonous resources (c) family ownership (d) small scaleoperations (e) labor intensive and adaptive technology (f) skillsacquired outside of formal sector (g) unregulated and competitivemarkets.Since that time, different authors and the ILO itself introduced numerousdefinitions. The ILO/ICFTU international symposium on the informalsector in 1999 proposed that informal sector work bear on can becategorized into three broad groups (a) owner-employers of microenterprises, a few paid workers, 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, home workers and paid domestic workers. (Santos inDhemba 1999)Mozambique Social Economic Situation====================================The signing of the peace agreement and the implementation of theStructural Adjustment Progra m (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 liberalization of the market opened up thepossibilities to import goods, however, the purchasing power ofMozambican citizens are still very low. in that respect 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 stick study, andmany other studies, unemployment is a strong indicator of frugalcrisis.In spite of all the measures taken by the Government to bring abouteconomic and social development, this development was not percolatingdown to the masses fast enough. Due to the pervasive effects of theglobalizing economy, population growth and urban migration, the activelabor force was growing at a much faster rate than the availability of