Evaluating the Nature of the Relationship between Informal Entrepreneurship and the Formal Economy in Rural Communities

Abstract

This paper evaluates critically the different theorisations of the nature of the relationship between informal entrepreneurship and the formal economy, which variously depict informal entrepreneurship as a leftover from a previous era, a survival practice for those excluded from the formal economy, a complement or an alternative to participation in the formal economy. Reporting evidence from 350 face-to-face interviews in English rural communities, no single theorisation is found to be universally applicable. Instead, all are shown to be valid in relation to different forms of informal entrepreneurship, and only by combining them is it feasible to achieve a finer-grained more comprehensive explanation of this complex and multifarious phenomenon.

Keywords: entrepreneurship, informal sector, informal economy, rural development, rural economies, England

JEL Classification: O17, H26, H31, R20, K42