The power of informal economies

There is no standard definition of the informal economy trade. However, Businessdictionary.com has defined the informal economy as a “a system of trade or economic exchange used outside state-controlled or money-based transactions. Practised by most of the world’s population, it includes barter of goods and services, mutual self-help, odd jobs, street trading and other such direct sale activities. Income generated by informal economy is usually not recorded for taxation purposes and is often unavailable for inclusion in gross domestic product computations.”

It is important to understand the informal economy dynamics within BRICS, given that it accounts for a large share of member-states GDPs. The informal  economy is usually underestimated when calculating GDP. Developing countries tend to have large sections of their populations involved in informal trade, as is the case with BRICS.

The cause of informal economies in BRICS tend to be the same, save for local peculiarities. They play a huge role in BRICS by facilitating the transition to a globalised world. In addition, the informal economy provides basis for survival for the poorest of the poor in these countries.

 

Read more on: BRICS Journal Issue 4           

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