Assessment of the Proliferation of Illegal Neighborhood Shops in Wuse 2, Abuja
Chapter One
Research Objectives
The main objective of the study is to assess the proliferation of illegal neighborhood shops in Wuse 2, Abuja, the specific objectives are to
- To determine the extent of the proliferation of illegal neighborhood shops in Wuse 2, Abuja, and the specific types of goods and services they offer.
- To assess the impact of the proliferation of illegal neighborhood shops on formal retail businesses and the local economy.
- To identify the factors contributing to illegal neighborhood shops’ growth in Wuse 2, Abuja.
- To gather opinions on potential policy solutions to address the proliferation of illegal
CHAPTER TWO
LITERATURE REVIEW
Conceptual review
Concept of Informal Economy
The concept of the informal sector was first used by well known social anthropologist Keith Hart in his article Informal income opportunities and urban employment in Ghana (Hart 2013). Hart‘s study focused on self employed workers in Ghana who were unable to find jobs in the formal sector.
Hart (2013) explained that price inflation, insufficient wages, and a growing number of workers who were surplus to the requirements of the urban labour market had led to a soaring level of informality in the income generating activities of workers, which varied in terms of legality, official registration, skills required, and other factors. Hart also showed how informal employment may act as a buffer, for those who are out of employment, against impoverishment or reliance on others. The concept of the informal sector used by Hart and the ILO and later supported by Tokman is known as the dualist theory. Other theories regarding the informal sector are the structuralist and the legalist.
Over the years there have been continuous debates among the three theories regarding the informal economy. According to the dualist theory, the persistence of informal activities is due to the fact that not enough formal job opportunities have been produced to take in surplus labour due to a slow rate of economic development and a faster rate of urbanization (Tokman 2018). It was argued that industrial growth would result in increased wage sector employment on the basis that there was a positive relationship between the growths of output, employment and labour productivity, while the filter down effect would eventually lead to redistribution of resources and income throughout society (Moser 2018). In this logic the economy was conceived as being dual, consisting of traditional and modern sectors. Thus the dualistic theory views the formal and informal sectors as having almost no links with each other and in theory represent almost two opposite parts of the economy.
As a result, the informal economy has generally been defined in contrast to businesses in the formal economy (Wahnschafft, 2016). For instance, the International Labour Organization (ILO) characterised the informal activities as ones in which there was ease of entry for the new enterprises, reliance on indigenous resources, family ownership, small scale operations, unregulated and competitive markets, labour intensive technology, and workers acquired skills outside the formal school system (Papola 1980: 819). In contrast, the formal economy was characterised by higher barriers of entry, frequent reliance on imported resources, maybe organized as corporations, operate mainly at larger scales, are capital intensive and based on imported technology, formally acquired skills and protected markets using tariffs, quotas and licenses (Timothy and Wall 2017)
Consequently, the informal economy has come to be understood as the obverse of the normal sector in terms of being unregulated, unregistered and untaxed, that is, as being outside the modern economy or not formalised (Tokman 2018). The informal sector was also viewed primarily as a developmental component of the urban economy that provides jobs for the increasing number of migrants who leave the rural areas and flood the urban cities of many developing countries. It was assumed that the informal economy was characterized by its own dynamics and that it would be able to create additional jobs and income if supported by government policies (Teltscher 2016)
However, Chen disputed the dualist view of thinking by arguing that, the formal and the informal economy are often dynamically linked with many informal enterprises having production or distribution relations with formal enterprises, supplying inputs, goods or services ready for the market either through direct transactions or subcontracting engagements; moreover, several formal enterprises employ wage workers under informal employment relations, for instance, the majority of part time workers, temporary workers and home workers work for formal enterprises through contracting or sub-contracting arrangements (Chen 2018).
In reaction also to the dualist theory, a new understanding of the informal sector emerged, the structuralist also known as the black market theory, the underground theory, the world systems theory and the Portes theory (Rakowski 2016). The structuralist school was propounded by Moser and by Castells and Portes in the late 1970s and 1980s and they focused on the analysis of the modes of production within the capitalist system and the subordinations that occurred within it (Saha 2009).
Structuralist proponents rejected the dualism argument of the economic system and emphasised the way in which forms of production, productive units, technologies, and workers are integrated into various parts of the economy (Rakowski 1994: 503). For instance, micro firms in the informal sector act as subordinated, dependent and specialised units of a formal sector (Moser 1978), where you have the owner of the means of production producing for the market.
The Large capitalist producers (owners of production) were frequently equated with formal enterprises while small petty producers with informal sector workers (Teltscher 1994: 170). This has lead to the majority of workers being pushed out of the formal sector, where they enjoyed job security, and into the informal sector, where they have no security, due to large capitalist firms‘ desire to cut down input and labour costs, increase flexibility, increase competitiveness and protect profits in the wake of increased state regulations and changing global conditions (Saha 2009: 232). The forces of global integration also put downward pressure on salaries and, in addition to deregulation, liberalization and privatization, resulted in the erosion of incomes, social services and benefits, leaving many workers with no option but to create their own jobs in the informal sector in order to survive (Kirshner 2010).
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