Across the border: Immigrants’ economic opportunities, social capital and informal business activities

Abstract

In this article, we have explored the relationship between informal economic activities and recent immigrants in the Netherlands. First, we argue that opportunities for a significant participation of immigrants in informal economic activities have increased after 1980. On the demand side, the scope for informal economic activities has increased because of trends towards disintegration of activities in manufacturing and especially in service industries, the fragmentation of consumer markets, a gradual emergence of a demand for ‘ethnic’ products, and also owing to the dynamics of so‐called ‘vacancy chains’ whereby indigenous entrepreneurs vacate certain slots and thus create opportunities for immigrant entrepreneurs. On the supply side, processes of social exclusion and marginalisation appear to contribute to an increased participation of immigrants in informal economic activities. More or less permanent high levels of unemployment are pushing an increasing number of immigrants towards entrepreneur‐ship. They usually set up their businesses in those sectors where informal production could give them a competitive edge. Through their networks of relatives, co‐nationals or co‐ethnics they have privileged and flexible access to information, capital and ‐ with relatively low monetary costs ‐ labour. The second part of the article presents recent empirical evidence on informal economic activities on the part of immigrants. The findings confirm that immigrants are indeed heavily involved in informal methods of production in specific sectors.