The Power of the Informal Economy

 Below is a quote from the Ted website – Robert Neuwirth spent four years among the chaotic stalls of street markets, talking to pushcart hawkers and gray marketers, to study the remarkable “System D,” the world’s unlicensed economic network. Responsible for some 1.8 billion jobs, it’s an economy of underappreciated power and scope.

Informal Economy

In this talk Neuwirth brings out some interesting facts -

- System D, which is defined as the economy of unlicensed business including street vendors, would be the second largest economy in the World if all of the revenue were combined.
- This is the fastest growing economy in the World.
- Proctor and Gamble’s biggest “formal” client is Walmart.  However, the street vendors and entrepreneurs from the System D economy are really the largest segment of their business.

If you would like to see the actual Ted Talk - The Power of the Informal Economy

This talk raises some interesting questions and redefines some paradigms about business.

We have thought of the “formal’ economy as the real economy because this is the economy that is reported in the news and this is the economy where most of the information and “accurate” data is available.

However, if we just focus on the “formal” economy, in which the barriers to entry are very high, we miss a huge segment of the economy and the true driver of our economic lives.

This is sort of focusing on the dot in the middle of the circle and choosing to ignore the rest of the circle that surrounds the dot.

It seems that there is no way to stop this economy, so it is probably better to begin to embrace System D and allow it to happen.

Easier said than done with government regulations and the economic machine around big business but it seems that the momentum of System D is too strong to ignore.