Informal manufacturing enterprises form the majority of the country’s industrial
firms. Although the formal manufacturing sector began to show signs of decline in
the latter half of 1990s after a successful turn in the first half of the decade, the larger
impact was possibly mitigated by the growth of the informal manufacturing sector.
How sustainable is this growth? Is the growth of small units in this sector a sign
of distress or is it a manifestation of the adoption of more flexible production
systems that help firms to reduce costs and undertake customised production?
Overall there is plenty of empirical evidence to challenge the notion that the
informal sector cannot achieve productivity nor create jobs. A comprehensive policy
that addresses the problems of specific industry groups and resolves the many
structural issues is required. All the tables are available at the end.