The thinking behind the current global enthusiasm to promote informal sector growth is admittedly optimistic. The informal sector is seen as a potential source of dynamism, a breeding ground for entrepreneurs, a possible source of employment for displaced public sector employees, and a potential impetus to private sector expansion. Yet the large rural informal sector in Pacific island countries has often been viewed as traditionalist, anti-entrepreneurial and static. The main questions addressed by this report are why the informal sector in Pacific island societies has not been particularly entrepreneurial, and how its dynamism and productivity can be stimulated. The informal sector is nevertheless large and a critically important source of livelihood in the Pacific.
Most people live in rural villages and depend mainly on farming and fishing for their livelihoods.
As cash becomes increasingly important, this lifestyle is more semi-subsistence than it is traditional subsistence production. This rural economy provides a strong buffer against the economic and social dislocation that unemployment in the modern wage economy would otherwise bring. But in many places, it is coming under increased pressure from increased consumption, larger populations, environmental stress, and growing demands for larger and more secure cash incomes. A smaller number of domestic service providers and small enterprise operators work mostly in the cash economy and are mostly urban-based. Urban informal enterprise is more diverse.