sale to tourists. The optimists regarded it as a temporary phenomenon. The individuals comprising it might never be able to escape from it, for lack of education and skills, but the growth of the modern sector would eventually deny it new entrants and henceforward it would diminish by attrition.

The recognition in the early 1970s that much of the growing labor force would have no alternative than to be consigned to the informal sector happily coincided with the execution of research which painted an altogether different picture of it. The landmark ILO study Employment. Incomes and Eguality: A Strategy-for Increasing Productive Employment in Kenya, published in 1972, had an especial impact.

This research demonstrated that the informal sector was much more diversified than had popularly been supposed and that much of its activities were anything but marginal. At one extreme one did indeed have the petty vendors and the seasonal production of goods and services by households whose principal activity was farming. But in addition to these one found innumerable small enterprises engaged in construction, the production of clothing and footwear, the processing of food, the production of household and farming equipment, and repairs to all kinds of equipment from automobiles to radios, as well as the inevitable petty services and trade, utilizing equipment which ranged from simple hand-tools to sophisticated power-tools (often rented by the hour), depending on the occupation and the country.

The single most striking finding of the research is that many such activities are the counterparts of similar activities in the industrialized countries and as such an integral part of the economy. It is true that they cater mostly to local needs and hence their scale depends, through a multiplier effect, largely on the consumption expenditure of the recipients of exogenous sources of income--non-subsistence agriculture, public service, other modern sector employment--but this is equally true in the industrialized countries. And of course it is true that productivity is lower than in the industrialized countries, but this may be regarded as a rational adaptation to different factor prices and to the limited scale of local markets in developing countries. If one looks back two or three generations in the developed countries, the differences often disappear.

Not the least impressive aspect of the informal sector is the scale of its contribution tc economic activity. In sub-Saharan Africa, for example, enterprises employing fewer than 50 workers account for more than two-thirds of industrial employment, with most of the employment being concentrated in firms employing fewer than 10 (Liedholm and Mead. 1986).

The reassessment of the informal sector ha. been essentially one of perceution, for the activities themselves are typically well-established, stretching back to pre-colonial times in the more traditional ones like blacksmithing. Why were they hidden before?

One answer is that the enterprise survey is often the only reliable source of information concerning economic activity in developing countries and they typically exclude establishments not employing a minimum criterion number of workers. Even if this minimum is set as low as five, it will systematically eliminate the great majority of enterprises in existence. If

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