Informal vendors in India. (Photo: Wikimedia Commons)
It is estimated that about half of the world’s workers toil in the informal economy — working in unregistered, off-the-books businesses that don’t pay taxes, can’t borrow money, and often skirt labor laws and safety regulations. Many of these are individual entrepreneurs who would like to formalize and grow their businesses, but are stymied by high costs and a maze of red tape.
Any serious attempt to address global poverty must therefore take the informal sector into account, argues CIPE Executive Director John D. Sullivan in a recent editorial for the Huffington Post. As part of the ongoing effort to define a post-2015 development agenda that will replace the Millennium Development Goals, leaders of the international development community should reflect the needs of the businesses and entrepreneurs in the developing world who will be expected to drive growth and create jobs in the coming decades.
Sullivan writes:
Governments and the private sector have a crucial role to play in this process by supporting business enabling environments that allow individuals to start and grow businesses and take part in the economy. Key are systems that give entrepreneurs and small businesspeople control over their assets and a legal framework that protects property rights and upholds contracts.
Since the Millennium Development Goals were first proposed, hundreds of millions of people have been lifted out of poverty thanks to strong private sector growth in emerging economies, especially in Asia and Latin America.
Sullivan argues that their replacement should carefully take into account the kinds of policies that can help this growth to continue while ensuring that opportunity is extended to all — creating an enabling environment of good institutions that allows all entrepreneurs to thrive.
