Social Policy in a Developing World
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Social Policy in a Developing World

Edited by Rebecca Surender and Robert Walker

This volume provides a critical analysis of the challenges and opportunities facing social protection systems in the global south, and examines current strategies for addressing poverty and welfare needs in the region. In particular, the text explores the extent to which the analytic models and concepts for the study of social policy in the industrialised North are relevant in a developing country context. The volume analyses the various institutions, actors, instruments and mechanisms involved in the welfare arrangements of developing countries and provides a study of the contexts, development and future trajectory of social policy in the global South.
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Chapter 5: The informal economy: dilemmas and policy responses

Sony Pellissery


Since it escapes the state’s regulatory framework, the informal economy challenges the wider notion of social contract, which is the cornerstone for the legitimacy of the state. At the same time, the informal economy is the sole source of livelihood for the vast majority of households in the global South. Is this paradox good news for the welfare state? Or does it indicate that the welfare state is a straightjacket when the European model is emulated in the global South? Answering these questions, the chapter argues that, while dealing with the complex issue of the informal economy, nation states in the global South are creating welfare institutions very different in substance and form from those of industrialized countries. The chapter has two parts. The first part deals with the conceptual issues about the nature of the informal economy. It summarizes how four decades of academic research have shaped the discipline of the informal economy. Further, it attempts to uncover the structure and map of the informal economy, which is defined by a variety of systemic embeddedness between social and economic motivations, and variations across occupational categories. This part ends by providing evidence of how the globalization process intensifies the informal economy. The second part deals with policy responses by nation states in dealing with the challenge of informality. The early attempts at formalization, attempts to organize informal labourers, the model of the welfare fund and the task of broadening social protection are also discussed in this part.

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