The BRIC and African Countries’ Informal Economies: Differences, Similarities and Some General Observations

Abstract

ABSTRACTThis study examines whether African countries can learn from the experiences of BRIC countries that have informal economies. Our analysis revealed that some characteristics of the informal economy are common in both the BRIC and the select African group. The study found that the size of the economy does not tell the full story about the informal economy, and that post-conflict economies have a higher proportion of informal economy. Countries with the largest informal economies have had the greatest decline. Further, the absolute size of the informal economy is greater in both groups, resulting in more people working in the informal sector than official records would indicate. Moreover, countries with high female labour participation registered a far greater reduction in their informal economies than those countries with low female labour participation. All in all, limited availability of quality data on the nature, structure, behavior and consequences of the informal economy and its relations with the rest of the economy and society need to be overcome for a better understanding of the informal economy and informed development policymaking.