The informal sector and its impact on sustainable development: An empirical study on urban perspective

The informal sector and its impact on sustainable development: An empirical study on urban perspective

This research aims to critically evaluate the economic, social, and environmental dimensions of the informal sector, which has become a significant aspect of urbanization in developing countries and presents various challenges to development. The particular objective is to evaluate the role of the informal sector in achieving the green, inclusive, and resilient development agenda outlined in the Sustainable Development Goals (SDGs). This is a thesis based on published works and consists of nine empirical studies covering both the macro and micro aspects of the topic. These studies collectively contribute to a well-founded resolution of the issue by answering the research questions. The findings of the initial studies (Study 1 and Study 2) pinpoint urbanization as one of the catalysts for environmental degradation, which underscores the pressing requirement to confront the economic, social, and environmental concerns associated with the process of urbanization. Exploring urbanization in the broader context of environmental degradation through environmental Kuznets' relationships, this research finds evidence of pursuing economic growth with targeted green growth arrangements in Bangladesh, the primary country of study for this research. Since urbanization process leads to the proliferation of the informal sector and its growth appears to be a complex urban issue in developing countries, this research seeks to generate empirical evidence on the informal sector, which is also a participant in SD, by examining its economic, social, and environmental aspects. Constructing and using a symptomatic composite index of sustainability, this research examines the impact of this sector on the overall sustainability of development in developing countries and ends up with a derogatory outcome (Study 3). This research also generates time-series data on the economic contribution of the informal sector in Bangladesh and examines its symmetric and asymmetric impacts on the GDP growth of the country. Findings suggest that downsizing informal sector activity would be in the best interest of achieving higher economic growth, thereby paving the way towards SD (Study 4). However, this research reveals the positive contribution of informal employment to the economic growth of developing countries in the context of SD (Study 5). Therefore, this research focuses on the socio-economic context of informal workers and uncovers their food insecurity, which impacts negatively on their health outcomes (Study 6). For digging into environmental consequences, the research constructs pollution load indices (PLIs) for two environmental compartments from surrounding areas of urban informal (manufacturing) enterprises. The study assesses their economic efficiency level and, using PLI, uncovers associations with pollution that subsequently indicate potential routes for promoting green growth (Study 7). This research further unveils the possibility of pollution shifts occurring from formal to informal sector enterprises when stringent institutional mechanisms are employed (Study 8). This leads to the investigation of raising environmental awareness (Study 9), which can serve as a strategy for implementing indirect environmental regulations in informally operated firms. The studies conducted in this research contribute to a deep understanding of the complex interactions between the informal sector and various dimensions of sustainable development, which is significant for achieving green growth in urban areas. Given the enduring presence of the informal sector within urban areas in developing countries, attributed to its survival dynamics, the findings and recommendations proposed by the studies will play a pivotal role in making well-informed choices directed at sustainable development. These resolutions are particularly centered around fostering awareness and limiting informal activity, facilitating integration into the formal economy, embracing eco-friendly technology, and leveraging synergies with the circular economy and social business practices.

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