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The formal–informal dichotomy: Revisiting the debate on the agriculture–industry linkage

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  • Saumya Chakrabarti

Abstract

Incorporation of the informal sector in the general Kaleckian framework of agriculture–industry linkage is the primary target of this article. We show that the agriculture–informal sector interaction is distinctly different from the agriculture–formal sector relationship. Although agriculture supports the formal sector only from the supply-side, it helps the informal sector by providing both demand- and supply-side inducements. Next, contrary to the general perception of formal–informal complementarities, we rather propose a fundamental conflict. This conflict arises in the presence of the food supply-constraint or the generic resource-constraint. Subsequently, with these theoretical perspectives, we show that policies that are beneficial for the formal sector, in fact, constrict the informal economy.

Suggested Citation

  • Saumya Chakrabarti, 2014. "The formal–informal dichotomy: Revisiting the debate on the agriculture–industry linkage," The Economic and Labour Relations Review, , vol. 25(1), pages 154-178, March.
    • Handle: RePEc:sae:ecolab:v:25:y:2014:i:1:p:154-178
    DOI: 10.1177/1035304613517988
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    More about this item

    Keywords

    Accumulation by dispossession; agriculture–formal sector linkage; agriculture–informal sector symbiosis; formal–informal conflict; Kalecki; resource-constraint;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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