Urban Planning and the Informal Sector in Developing Countries

Rather than seeking to eliminate the presence of the informal sector, urban planning should seek to accommodate this important component of urban economies.

3 minute read

May 7, 2007, 7:00 AM PDT

By Deden Rukmana

Photo: Deden RukmanaUrban planning in developing countries -- particularly in cities with rapid urbanization -- is facing a problem with the informal sector. The businesses that comprise the informal sector, typically operating on streets and in other public places, are often seen as eye-sores and undesirable activities. Thus, conflicts arise between urban authorities trying to keep their cities clean and the urban informal sector operators who need space for their activities.

In many cases, authorities forcibly evict informal sector activities in the name of urban order and cleanliness. Yet, such eviction does not address the problem with the informal sector. It only relocates the problem and even exaggerates the conflicts between urban authorities and the informal sectors. Often many operators return to their places a few days after being evicted by the urban authorities.

Should urban planning accommodate the informal sector? Prior to the 1970s, there was no attention paid to economic activities carried out outside the formal economy. However, a few studies of developing countries began to explore the role of the informal sector, and the concept gained attention after a report by the International Labor Organization in the early 1970s.

Almost 40 years later, it's difficult to ignore the importance of the informal sector in many cities, particularly in developing countries.

In many developing countries in Latin America, Sub-Saharan Africa, Middle East and Asia, the informal sector accounts for most of the total employment. For example, the informal sector in Indonesia in 2004 accounted for 64 per cent of the total employment. The proportion of informal sector employment in urban areas was even higher during the economic crisis in the late 1990s when the closure of many manufacturing and service corporations pushed the newly unemployed into informal sector.

Street Vendors
Vendors line a street in Vietnam (Photo: Kent Goldman)

The growth of the urban informal sector is also nourished by the influx of migrants from rural regions surrounding urban agglomerations in search of work. With the formal sector unable to accommodate such large numbers of workers, the informal sector becomes the primary source of employment. Without the economic opportunities generated by such activities, the poor would certainly become a larger burden for the urban authorities.

It's also important to note that the informal sector is not only the domain of the urban poor. Many middle-class people in urban areas in developing countries greatly benefit from economic activities carried out outside the formal sectors.

The continuing study of urban informality has also revealed the important role of the informal sector in the process of urbanization. By linking various economic activities and urban spaces, the informal sector serves as a mode for urban transformation for many places. These findings seem to point to a need for new urban theories that can fully explain the phenomenon of urban informality in cities -- something mostly absent from urban theories such the urban ecology of the Chicago School and post-modern urbanism of the Los Angeles School, which are both rooted from cities in developed countries.

Yet, understanding the positive impact of the informal sector, many planners and officials still worry about the resulting urban blight. However, from urban environmental perspective, many of the problems associated with the informal sector are not attributes inherent to the informal sector but manifestations of unresponsive urban planning itself. The provision of spaces to informal sectors is an effective measure to reduce the environmental problems associated with such activities.

Accommodating – maybe even welcoming - the informal sectors in urban spaces will not only reduce the conflict between urban authorities and the informal sector, but also reduce the environmental problems associated, and eventually accelerate urban transformation and increase the quality of life in many developing urban areas.

Deden Rukmana, PhD is an assistant professor of Urban Studies at Savannah State University.

Aerial view of homes on green hillsides in Daly City, California.

Depopulation Patterns Get Weird

A recent ranking of “declining” cities heavily features some of the most expensive cities in the country — including New York City and a half-dozen in the San Francisco Bay Area.

April 10, 2024 - California Planning & Development Report

Aerial view of Oakland, California with bay in background

California Exodus: Population Drops Below 39 Million

Never mind the 40 million that demographers predicted the Golden State would reach by 2018. The state's population dipped below 39 million to 38.965 million last July, according to Census data released in March, the lowest since 2015.

April 11, 2024 - Los Angeles Times

A view straight down LaSalle Street, lined by high-rise buildings with an El line running horizontally over the street.

Chicago to Turn High-Rise Offices into Housing

Four commercial buildings in the Chicago Loop have been approved for redevelopment into housing in a bid to revitalize the city’s downtown post-pandemic.

April 10, 2024 - Chicago Construction News

Woman with long hair wearing Covid mask sitting on underground train station bench looking at her watch as subway train approaches in background at Hollywood/Western station in Los Angeles, California.

How California Transit Agencies are Addressing Rider Harassment

Safety and harassment are commonly cited reasons passengers, particularly women and girls, avoid public transit.

April 17 - The American Prospect

Nighttime view of wildfire in Los Angeles hills.

Significant Investments Needed to Protect LA County Residents From Climate Hazards

A new study estimates that LA County must invest billions of dollars before 2040 to protect residents from extreme heat, increasing precipitation, worsening wildfires, rising sea levels, and climate-induced public health threats.

April 17 - Los Angeles Times

Bird's eye view of oil field in New Mexico desert.

Federal Rule Raises Cost for Oil and Gas Extraction on Public Lands

An update to federal regulations raises minimum bonding to limit orphaned wells and ensure cleanup costs are covered — but it still may not be enough to mitigate the damages caused by oil and gas drilling.

April 17 - High Country News

News from HUD User

HUD's Office of Policy Development and Research

Call for Speakers

Mpact Transit + Community

New Updates on PD&R Edge

HUD's Office of Policy Development and Research

Write for Planetizen

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.