The informal economy is ever-present in developing countries. It is present in any worker and small business out of the state’s regulatory environment. Moreover, high poverty rates are also present...Show moreThe informal economy is ever-present in developing countries. It is present in any worker and small business out of the state’s regulatory environment. Moreover, high poverty rates are also present in such developing countries. Therefore, finding a way to address the informal economy to see whether poverty can be reduced is paramount. Thus, this thesis will explore the research question of: What state interventions to the informal economy can affect the countries’ poverty rates across different levels of economic development? For this purpose, this research will explore two state interventions: those facilitating business formalization and those providing social protection. By analyzing over 100 countries and conducting a multiple linear regression, this research has found a statistical effect of state interventions on the countries’ poverty rates. The findings show that state interventions can affect the poverty rates of developing countries. However, such an effect is contingent on matters such as the level of corruption and government effectiveness. Thus, these findings pave the way for future focus on how the countries’ institutional environment must be addressed when looking into how to target the informal economy to reduce poverty.Show less
The rise of globalization in the Occident after WWII was accompanied by neoliberal policies based on economic expansion. In the case of Argentina, the country was affected by this neoliberal wave...Show moreThe rise of globalization in the Occident after WWII was accompanied by neoliberal policies based on economic expansion. In the case of Argentina, the country was affected by this neoliberal wave from the seventies on. Globalization provoked a global increase of competition between workers and workplaces. The market knew less and less frontiers which made that intense labour tasks, those which require handwork for example, are shifted to countries or places with lower salaries and poor labour protection. Industrial production suffers from the increasing importance of economic expansion. The existence of sweatshops is directly related to these neoliberal open market policies since this change in the economic scene has a big influence on the clothing industry. Countries start to import cheap prêt-à-porter clothes from Asian countries and force their own domestic clothing industry to lower their prices in order to survive. Some clothing businesses start to outsource the production process by moving it to the informal economy in order to avoid costs. The outsourcing of the production process favours big companies while the working conditions get worse for producers. These changes and economic factors lead to the existence of sweatshops. This research aims at analysing how brands benefit from the informal economy and the use of sweatshops for the production of their clothes and describe the profile of sweatshops in Buenos Aires and their employees. Around 20.000 sweatshops are based in the Argentine capital, Buenos Aires. In these sweatshops, cheap clothes for informal markets as well as expensive clothes for prestigious brands are made, sometimes alongside each other in the same sweatshop. The particular sweatshops based in Buenos Aires are located in small buildings, as houses, where they are invisible for passing citizens. Worldwide there is a trend that most sweatshop workers are migrants, in Argentina most sweatshops workers and heads of the sweatshops are of Bolivian origin. Work conditions in sweatshops are very bad. People often get the feeling of being locked up in the sense that they have no better option or see no way out of the situation, sometimes people are also physically locked up in the workplaces. The fashion industry is always moving, brands require extreme flexibility from their producers. These demands are impossible to achieve by working according to existing labour rights. Brands take advantage of the subcontracting of producers inside the informal economy to meet with the shifting demands of their clients. Sweatshops pay the price of this fast fashion trend throughout the world.Show less
