Question

why is it not possible for our products of self employment to compete with globalised economy​

Answer 1

Answer:

Southeast Asia that experienced substantial growth of modern sector employment.

However, in the wake of the recent financial crisis, most of these countries experienced a

substantial decline in formal wage employment and a concomitant rise in informal

employment. How many retrenched workers have been reinstated in formal jobs as these

economies have begun to recover from the crisis is not yet known. Even before the Asian

crisis, official statistics indicated that the share of the informal economy in the non-

agricultural workforce ranged from over 55 percent in Latin America to 45-85 percent in

different parts of Asia to nearly 80 percent in Africa (Charmes 1998a).

Why has the informal economy continued to expand and grow? There is no simple

answer to this question as different causal factors are at work in different contexts.

However, some mix of the following sets of factors would explain the persistence or

expansion of the informal economy in most countries, regions, or industries. The first

set of factors relates to the pattern of economic growth. Some countries have

bexperienced little or no economic growth, while others have pursued capital-intensive

growth or what some observers call “jobless growth”. In both such contexts, not enough

jobs are created for all those seeking work. Many frustrated formal job seekers find

employment or create their own work in the informal economy. Another pattern of

economic growth – “high tech” growth - tends to create more high-skill service sector

jobs than lower-skill manufacturing jobs. In such contexts, those without the skills to

compete for high-tech formal jobs find work or continue to work in the informal

economy. There is another, more optimistic, scenario: namely, “growth from below”.

In some regions, countries, or industries, the small business and micro-business sectors

are more dynamic and create more jobs than the formal sector.

The second set of factors has to do with economic restructuring and economic crisis.

Available evidence suggests that during periods of economic adjustment, whether due to

economic reforms or economic crises, the informal economy tends to expand. This is

because, retrenched workers move into the informal economy when public enterprises are

closed or the public sector is downsized. This is also because households need to

supplement formal sector incomes with informal earnings in response to inflation or

cutbacks in public services.

The third set of factors relates to the globalization of the world economy. Global trade

and investment patterns tend to privilege capital, especially companies that can move

quickly and easily across borders, and to disadvantage labour, especially lower-skilled

workers that cannot migrate easily or at all (Rodrik 1997). To increase their global

competitiveness, more and more investors are moving to countries that have low labour

costs or shifting to informal employment arrangements. Furthermore, there has been a

radical restructuring of production and distribution in many key industries characterized

by outsourcing or subcontracting through global commodity chains. The net result is that

more and more workers are being paid very low wages and many of them have to absorb

the non-wage costs of production (Ibid.). Globalization also tends to privilege large

companies who can capture new markets quickly and easily to the disadvantage of small

and micro entrepreneurs who face difficulties gaining knowledge of - much less access to

- emerging markets. In sum, globalization puts pressure on low-skilled workers and

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