Economic Environment and Differentiation: A Comparative Study of Informal Sector Economies in Nigeria

The paper examines the relative importance and source of informal sector differentiation in terms of firm characteristics and business behavior. Based on data from metal and wood-processing firms in the Nigerian cities of Lagos and Ibadan, the paper investigates branch-specific and locational differences among firms. Using multivariate analysis, the study demonstrates the primacy of the larger economic environment in which informal sector firms operate. and shows that locational factors are better predictors of firm characteristics and business behavior than industry-specific factors. The results suggest a shift in focus from economic sectors to regional economics. Implications for research and policy are discussed