TO WHAT EXTENT CAN THE INFORMAL ECONOMY CONCEPT ADEQUATELY EXPLAIN THE DYNAMISM OF THE NON-FORMAL SECTOR IN DEVELOPING COUNTRIES?

The informal economy exists in both developing and developed nations, though it is most often associated as an engine of economic dynamism in developing countries. The concept is generally defined as the sum of economic income generating activities outside of the formal economy, which are registered, tax paying and legal. Since the 1970s when the term first entered academic discourse, the informal economy conceptually evolved through several distinct phases starting with neoliberal, then to reformist and next structuralist ideology before the term outgrew its usefulness in the 1990s and turned into the „social network ‟ concept to understand why and how people operate outside of the formal economy. This paper argues that the discourse of the informal economy remains inadequate and ill-defined to deal with developing countries ‟ policy dilemma on mainstreaming the informal economy