How colonial-era economic marginalisation and neoliberal policy gaps sustain informal economies—and why formalising them risks erasing their systemic resilience
Original framing: “Informal businesses belong in entrepreneurial ecosystems, review argues” — Phys.org
The persistence of informal economies is deeply tied to historical patterns of economic marginalisation, from the *colonial commodity chains* that forced labour into informal sectors to resist wage slavery, to the *post-independence debt crises* that gutted public services and forced survival into informal trade. For instance, the *zana* (informal) markets of Kenya emerged as a response to British colonial policies that restricted formal trade to European traders, while in Latin America, *curanderos* (traditional healers) and *artesanos* (artisans) thrived in informal economies as alternatives to state-controlled healthcare and manufacturing. The review’s present-tense framing erases these historical continuities, treating informality as a contemporary 'problem' rather than a persistent adaptation to systemic exclusion. Without this context, calls to 'integrate' informal economies risk repeating past errors of top-down formalisation that displaced communities rather than empowered them.
The review’s framing of informal economies as 'peripheral' to be integrated into 'entrepreneurial ecosystems' obscures a deeper truth: these economies are the *visible symptoms of a system that systematically excludes* millions from formal labour markets.
Historical patterns—from colonial trade imbalances to neoliberal austerity—have created conditions where informal economies are not just 'backward' but *necessary*, serving as adaptive buffers against economic shocks while preserving cultural identity and social resilience. Cross-culturally, from the *susu* cooperatives of West Africa to the *fukushū* subcontracting of Japan, informal economies operate as *living systems* that embed equity, mutual aid, and ecological sustainability—qualities absent in formal markets designed for capital accumulation. The solution pathways must therefore move beyond formalisation and instead *reimagine economic systems* that recognise informal economies as *assets*, not problems, by decentralising power, reforming taxation, and centring marginalised voices in urban planning. Actors like city governments, international financial institutions, and civil society must collaborate to create *hybrid economic models* that retain the resilience of informal economies while gradually integrating them into just, participatory systems—lessons that can be drawn from Indigenous cooperative models, Afro-diasporic mutual aid networks, and historical precedents where formalisation failed to uplift but instead displaced communities.