Monday, December 26, 2011

Informal economy and the WTO

A recent interview in the Wired magazine of Robert Neuwirth was an interesting read.  Robert Neuwirth in his new book, Stealth of Nations: The Global Rise of the Informal Economy points out that small, illegal, off-the-books businesses collectively account for trillions of dollars in commerce and employ fully half the world’s workers. Further, he says, these enterprises are critical sources of entrepreneurialism, innovation, and self-reliance. And the globe’s gray and black markets have grown during the international recession, adding jobs, increasing sales, and improving the lives of hundreds of millions. It’s time, Neuwirth says, for the developed world to wake up to what those who are working in the shadows of globalization have to offer.

The colors on this map indicate the size of each country’s underground economy, as a percentage of its GDP.

Source: Friedrich Schneider et al., “New Estimates for the Shadow Economies All Over the World,”International Economic Journal 2010

This has interesting lessons for understanding how globalisation works, its impact on local economies and the extent to which "unorganised" trade impacts lives. Is this part of the larger "trade statistics" that is used in trade policy?

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