informal economy

The informal economy refers to economic activities, goods, and services that are not reported to the government, thus evading taxes and regulations. This can include both legal activities, like unreported self-employment income or bartering, and illegal activities such as drug dealing or trading stolen goods.1

This concept is particularly relevant in the context of neocolonial cities, often found in the Global South. In these cities, the informal economy comprises services and products offered by the poorest residents, such as street vendors and rag pickers. These individuals often form informal networks based on kinship or friendship for mutual support, as they lack job security and welfare protections. While these activities are essential for the survival of many, they can also lead to unfair competition for formal businesses and reduce government revenue for social programs.21