A conceptual model for the development of indicators for informal markets

Abstract

Informal markets are recognised as presenting lucrative business opportunities for the private sector. However, informal markets function by a different set of rules when compared to the formal sector, and so require a different paradigm altogether. The approach proposed in this report sees the convergence of conventional micro economics with development economics and the theories of sustainable development.A community is used as the unit of analysis for the informal market. A model is proposed that uses the sustainable livelihoods framework to describe the various elements of the community as a system, and how these interact to produce desired outcomes. This study was designed from the perspective of measuring the informal market. Measurement allows quantification and qualification of the phenomenon of the informal market and allows for more effective decision making. The conceptual model was therefore developed to gain a theoretical understanding of the phenomenon to be measured. A systems perspective is taken to develop a high-level framework for indicator selection. This is considered to be the first, in a series of steps, towards developing indicators for the informal market, and even a single composite indicator for the informal market.A small sample of experts was interviewed to explore the informal economy from their own observation and experience. The insights shared in the interviews pointed to the applicability of the proposed model to informal markets, and demonstrated the complexity of these markets. A number of further research opportunities can be explored to further develop this concept.