Is informality a barrier to sustainable development?

Abstract

In this article, using a novel, annual cross‐country panel dataset that covers 160 economies from 1950 to 2016, we examine the association between the size of the informal sector and various indicators of sustainable development. The range of indicators encompasses health‐related, economic, environmental, education, and social variables. Our results suggest that the size of the informal sector is negatively associated with GDP per capita, carbon dioxide emissions per capita, education, educational attainment, life expectancy, and access to safe drinking water, and positively related to female labor force participation rate, poverty rates, mortality rates, and air pollution. We also find that these empirical associations significantly interact with GDP per capita, indicating that the effect of larger informal sector size is stronger in less developed economies.

The Environmental Impacts of Informal Economies in China: Inverted U-shaped Relationship and Regional Variances

“…Some studies have supported the assumption that informal economies degrade environments. Numerous quantity analyses based on the different countries provide evidence on the significant relationship between informal economies and higher levels of pollution (Biswas et al, 2012;Özgür et al, 2021), especially in case studies of Turkey (Imamoglu, 2018), Tunisia (Abid, 2015), and developing Asian countries (Huynh, 2020). Some studies suggest that the informal economies were positively related to provincial and regional pollution emissions in China (Chen et al, 2018;Wang et al, 2019;Pang et al, 2020).…”

Escalation of global risks and threats in a pandemic condition: financial and macroeconomic aspects

“…Literature suggests that informal sectors facilitate a green economy, for example, in terms of waste management, recycling and processing waste into new products; agri-food markets by encouraging the use of local green technologies in smallholder farming and by providing better affordable food, which in turn may allow consumers to undertake green investments; use of biomass energy; the upgrading of housing and infrastructure where achieving greater energy efficiency often requires labour-intensive works; and in the form of home-based work that compared to formal employment requires less transport, space and utilities, including electricity (e.g., Benson, 2014;Chen and Raveendran, 2014;Özgür, et al, 2021).…”

Assessing Sustainable Foreign Direct Investment Performance in Malaysia: A Comparison on Policy Makers and Investor Perceptions

“…SFDI is the investment practices in one country to another country and considers all TBL aspects development, together with the governance practices [1,5]. This is important as the foreign investor usually focuses only on their profitability and is not concerned on the negative impacts of the investment.…”

“…Prior studies lack to integrate the multi-aspects in SFDI and their features are divided into four aspects, which are economic, social, environmental, and governance [1,[3][4][5]. For instance, the economic, social, and political aspects encouraging to have more FDI inflows [6].…”