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extent that it has virtually dissolved the association
between informality and stagnation/
marginalisation and shone the spotlight instead on
the entrepreneurial potential of informal sector
workers (Tokman 1989: p. 1068).
While there is probably much to be said for
strengthening support for informal activity, it is
nonetheless important to sound a note of caution
about de Soto's arguments, one critical one being
that if excessive regulations spawn the informal
sector, then why has this not proved to be the case
in the wealthier economies of the world? (Portés
and Schauffler 1993: p. 47). Beyond this, an
important implication of advocating decontrol of
economic enterprise is that a precedent is set for
greater deregulation in the formal sector. This in
turn contributes to a broader process propagated
by the IMF, the World Bank and others to liberalise
production and markets in developing regions. This
has often been harmful to low-income groups and,
as signalled by Portes and Schauffler (
ibid.
: 55), the
repeal of protective regulations on wages, work
conditions, health and accident insurance, and
unemployment compensation threatens a greater
incidence of worker abuse, minimal wages, and
disincentives for employers to provide training and/
or engage in technological innovation. Greater
tolerance of poor working conditions in the
informal sector can also be politically expedient in
so far as it helps to depress unemployment figures.
For these kinds of reasons, a number of
commentators have been concerned to stress the
importance of remembering that the informal
sector basically exists because of poverty and, as
such, is not an effective solution to economic and
labour market disadvantage. As summed up by
Thomas (1995: p. 130), the informal sector 'is a
picture of survival rather than a sector full of
entrepreneurial talent to be celebrated for its
potential to create an economic miracle' (see also
Cubitt 1995; Roberts 1991:p. 117).
Although there may clearly be a perverse side
to policies geared to assist the informal sector,
measures are arguably needed, at least in the short
term to help it to operate more efficiently and
with better conditions for its workers. On top of
this, and with reference to the Caribbean, Portés
and Itzigsohn (1997: pp. 241-3), identify the
importance of removing constraints to informal
sector expansion such as:
1
Lack of working capital due to limited access
to mainstream financial institutions.
2
Concentration in highly competitive low-
income markets in which there are few
possibilities for growth.
3
Oligopsony in some sectors of the informal
economy, particularly artisanal craft
production, in which barriers to insertion in
more dynamic sectors of the formal economy
are erected through restrictive agencies or
middle-men.
4
Social atomisation of informal entrepreneurs
due to the irregular and/or chaotic nature of
supplies.
5
The existence of a 'craftsman ethic', which
prevents some informal entrepreneurs,
particularly in artisanal production, from
changing their traditional methods of
production.
While specific policy initiatives in different
developing countries are discussed in detail
elsewhere (see Chickering and Salahdine 1991a;
Portés
et al
. 1997; Thomas 1995: Chapter 4), a
much-favoured intervention on the institutional/
macro-economic side of the labour market is the
repeal of regulations and policies that obstruct
entrepreneurship without serving any legitimate
public regulatory purpose (Chickering and
Salahdine 1991b: p. 6). Indeed, even where
governments cannot waive regulations to any great
extent, they can potentially consider simpler and
diminished requirements and/or allow for
progressive implementation (Tokman 1991: p. 155).
On the supply side of the labour market, there
has been interest in and/or support for policies
geared to education and training to promote the
diversification of the informal sector, enhanced
access to credit, assistance in management,
marketing and packaging, and measures to
promote greater health and safety. These initiatives
are particularly relevant for groups within the
informal sector such as ambulant traders and food
vendors, where women are often a large
