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Informal Economy, Wage Goods and Accumulation under Structural Adjustment Theoretical Reflections Based on the Tanzanian Experience

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  • Wuyts, Marc

Abstract

Economic development in sub-Saharan Africa under structural adjustment witnessed the upsurge of informal sector development--the development of unregulated labour-intensive activities, in part export-oriented. This paper argues that two factors played an important role in shaping the dynamics of informal sector development: (1) the process of the relative cheapening of wage goods as a result of their importation, partly financed through foreign aid, thereby lowering unit-labour costs in labour-intensive production, and (2) the processes at work of subsidising real wages by other forms of economic security as a result of multiple, diversified and spatially extended livelihood strategies. While these factors undoubtedly brought a new vitality to economic development, this paper questions the long-run sustainability of this new trend for two reasons. One is its dependence on foreign aid to finance imports. The other is that it does not appear to propel endogenous increases in productivity by achieving greater synergy in intersectoral linkages between agriculture and industry. Copyright 2001 by Oxford University Press.

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  • Wuyts, Marc, 2001. "Informal Economy, Wage Goods and Accumulation under Structural Adjustment Theoretical Reflections Based on the Tanzanian Experience," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 25(3), pages 417-438, May.
    • Handle: RePEc:oup:cambje:v:25:y:2001:i:3:p:417-38
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    Cited by:

    1. Dzanku, Fred Mawunyo, 2019. "Food security in rural sub-Saharan Africa: Exploring the nexus between gender, geography and off-farm employment," World Development, Elsevier, vol. 113(C), pages 26-43.
    2. Peter Lawrence, 2005. "Forum 2005," Development and Change, International Institute of Social Studies, vol. 36(6), pages 1121-1141, November.
    3. Elgin, Ceyhun & Oyvat, Cem, 2013. "Lurking in the cities: Urbanization and the informal economy," Structural Change and Economic Dynamics, Elsevier, vol. 27(C), pages 36-47.
    4. James T Murphy, 2006. "The Sociospatial Dynamics of Creativity and Production in Tanzanian Industry: Urban Furniture Manufacturers in a Liberalizing Economy," Environment and Planning A, , vol. 38(10), pages 1863-1882, October.
    5. Fraser, Iain & Davis, Junior & Balcombe, Kelvin & Bezemer, Dirk, 2005. "Is Rural Income Diversity Pro-Growth? Is It Pro-Poor? Evidence from Georgia," Proceedings of the German Development Economics Conference, Kiel 2005 4, Verein für Socialpolitik, Research Committee Development Economics.
    6. Sugata Marjit & Dibyendu S. Maiti, 2005. "Globalization, Reform and the Informal Sector," WIDER Working Paper Series RP2005-12, World Institute for Development Economic Research (UNU-WIDER).
    7. Murphy, James T., 2007. "The Challenge of Upgrading in African Industries: Socio-Spatial Factors and the Urban Environment in Mwanza, Tanzania," World Development, Elsevier, vol. 35(10), pages 1754-1778, October.

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