Edition 2 - December  2008 (Updated April, 2010)
Bruce Sundquist

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The informal economy of the developing world is typically composed of very small businesses that are not registered in any way. They are rarely run from business premises. Instead, they are run from homes, street pavements or other informal squatter-like arrangements. They are usually a result of the massive rural-to-urban migration occurring throughout the developing world reflecting a scarcity of undeveloped arable land and divisions of family farms among numerous heirs. They are also a result of "Structural Adjustment Programs" imposed by the World Bank or the IMF or the WTO on most developing nations. The Informal workforce typically survives of barest of subsistence earnings, with few opportunities to accumulate enough capital to move into the stagnant "formal" economy. The informal workforce tends to suffer from oppression at the hands of those in the formal economies via the dominant influence that those in formal economies exert on government policies. For almost all developing nations, the informal economy is the only component of the economy that is growing. This would suggesting that the informal economy will probably grow to something on the order of two thirds of the developing world's economy. The informal economy seems to be blending seamlessly into the caste-, feudal- and slave systems of the developing world. These four systems share a number of key similarities. Analyses here finds that reducing rates of population growth in developing nations could greatly reduce the extreme scarcity of capital. This, in turn, would reduce the relative size of the informal economy. Several technologies developed in the past decade or so offer possibilities for reducing population growth rates inexpensively. The bulk of developing world's governments is now well aware of the economic benefits of reducing population growth. The globalization process appears to be spreading the informal economy into parts of the developed world as well.

Prior Editions: Edition 1 of March 2008


Table of Contents


Some Definitions


The Scale and the Growth of Informal Economies in the Developing World






What It's Like to be Part of the Informal Economy in a Developing Nation


Dhaka - A Case Study


Increasing Poverty in Urban Areas as the Rural-to-Urban Migration Continues


Health- and Related Effects of the Rural-to-Urban Migration in Developing Nations


Could the Rural-to-Urban Migration and the Informal Economy it Produces Threaten the Political Stability of Developing Countries?


The Context of the Rapid Growth of Informal Economies in Developing Nations


Context -- Population Growth in a Developing World that has run out of Undeveloped Arable Land


Context -- Financial Capital Scarcity as a Result of Population Growth


Context -- False Ideologies on the part of the Developed World's Financial Institutions

[D4] Context -- Conversion of Labor-Intensive Agriculture to capital-intensive Agriculture 


Some Effects of Informal Economies on Religion and War - And Vice-versa


The Prognosis


Even though the informal economy and its informal workforce seem destined to become 2/3 of the developing world's economy and workforce, could informalization be but one element of a larger and more global process?


A Caste System for the Developed World? ~[G1a]~Japan, [G1b]~U.S., [G1c]~Europe


Alternatives to the Informal Economy - and their Limitations


Reference List


List of Tables

Table 1.1

The Size of the Informal Economy in various major regions of the world in 2000 (06P1)

Table 1.1a

The Informal Economy as a Percent of the Official GDP (1999-2000) (06R1)

Table 1.2

Informal Employment as a Percent of Non-Agricultural Employment (1995-2000) (06P1)

Table 1.3

Employment in Durbin's Informal Economy (1997-2003) (06P1)

Table 1.4

Cost of Regulation: Requirements to start a Legal Business (06P1)

Table 1.5

Effect of Population growth rate on probability of civil conflict (04P1)

Table 1.6

Populations in Options Available to Developing World Residents - Current and Projected

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Section [A] ~ Some Definitions ~

Since Keith Hart first coined the phrase 'informal economy' in the early 1970s to describe the range of subsistence activities of the urban poor in Ghana, there has been debate about what the term refers to exactly. The South African national statistics agency defines the informal economy as those businesses that are not registered in any way. They are generally small in nature, and are seldom run from business premises. Instead, they are run from homes, street pavements or other informal arrangements (06P1). This is in line with the definition adopted by the International Conference of Labor Statisticians, which uses the term 'informal economy' to refer to employment and production that takes place in small and/ or unregistered enterprises.

Another definition of "informal" economy" is activities involving unreported income from the production of legal goods and services - both monetary and barter transactions - that is, all economic activities which would be taxable if reported to tax authorities (02S1).

Informal employment is generally defined by lack of secure labor contracts, of worker benefits or social protection, both inside and outside informal enterprises (93I1), (02I1). An expanded definition considers informal employment in terms of "all remunerative work - both self-employment and wage employment - that is not recognized, regulated or protected by existing legal or regulatory frameworks as well as non-remunerative work undertaken in an income-producing enterprise" (p.12 of Ref. (93I1)).

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Section [B] ~ The Scale and the Growth of Informal Economies in the Developing World ~

The Context of the Rural-to-Urban Mass Migration in terms of Human Numbers - Past, Present and Future

Between 1920 and 2007, the world's urban population increased from 270 million to 3.3 billion, with:

The world's population is expected to be nearly 50% urban around 2025, and 70% urban in 2050. At that time (2050), most of the urban population will be concentrated in Asia (54%) and in Africa (19%) (08U1).

According to UN-Habitat estimates (08U1):

In 2007 (08U1):

Between 2007 and 2050:

Between about 2007 and about 2025:

Table 1.0 - Percent of Population living in Urban areas in Major World Regions.
Source: UN, World Urbanization Prospects: The 1999 Revision (2000) (00U1).






World as a Whole





Developed Countries





Developing Countries





Sub-Saharan Africa





Asia except Japan





Latin America +Caribbean





Part [B1] ~ Scale ~

Informal employment as a percentage of non-agricultural employment in the four major developing country regions is estimated to be 72% in sub-Saharan Africa, 48% in Northern Africa, 65% in Asia and 51% in Latin America. Wide variations are found among countries in each of these regions (See Table 1.2) (02I1).

This UN study of urbanization (03U1) cites research finding that "informal" economic activity now accounts for 33-40% of urban employment in Asia, 60-75% in Central America and 60% in Africa. In Malawi, only 50,000 people out of a population of 12 million have formal jobs in the private sector (06R1).

Table 1.1 - The Size of the Informal Economy in various major regions of the World in 2000 (06P1)


Informal Economy
as a % of GNP

Informal Economy
Size (US$billion)







Latin America









EIT means Economies In Transition (typically economies that were formerly part of the Soviet Union).

OECD (Organization for Economic Cooperation and Development) refers to a group of nations that are part of the developed (industrialized) world.

Table 1.1a -- The Informal Economy as a Percent of the Official GDP (1999-2000) (06R1).

Sub-Saharan Africa

42 %

Latin America and the Caribbean

41 %

Europe and Central Asia

37 %

Southern Asia

36 %

Middle East and North Africa

27 %

East Asia and Pacific Region

24 %

OECD (high income countries)

17 %

Source: IFC

Table 1.2 - Informal Employment as a Percent of Non-Agricultural Employment (1995-2000) (06P1)



~ ~ Benin


~ ~ Kenya


~ ~ S. Africa




~ ~ India


~ ~ Indonesia


~ ~ Thailand


Latin America


~ ~ Brazil


~ ~ Mexico


~ ~ Peru


This global informal working class is now almost one billion strong: It is the fastest growing and most unprecedented social class on earth. According to the UN study of urbanization (03U1), "informal" workers are now about 40% of the economically active population of the developing world.

During 1994-2000 "informal" employment accounted for 72% of nonagricultural employment in Sub-Saharan Africa (84% of female non-agricultural workers) (05A1).

A comprehensive survey of informal economies in 110 developing-, transitional- and industrialized countries estimated that the average size of the informal economy in OECD countries was equivalent to 18% of their Gross National Income (GNI) in 2000 (02S1). The average size of the informal economy in just the developing nations in 2000 ranged from 26% of GNI in Asia to as high as 40% in Africa (See Table 1.1 of Ref. (06P1)).

In 2002 Thailand's informal economy, including agriculture, accounted for 43.8% of GDP (33.8% excluding agriculture.) (05N1)

Over 92% of India's total workforce (or 343 million out of 370 million) is (in 2005) employed in India's informal economy (05G1). In 1993, around 70% of the workers in the formal sector of India's economy were employed in government-, quasi-government- and public-sector enterprises (94P1). India's private sector thus provided employment to only 30% of the labor force employed in the formal economy in 1993 (06P1). If one makes the reasonable assumption that only 30% of India's labor force was employed in the formal economy in 2005, then the private sector of India's formal economy provided employment for only (100%- 92%) x 30% = 2.4% of India's workforce in 2005.

The share of formal employment in Dhaka is much higher than the rest of Bangladesh at 51% including 14% in the public formal sector and 37% in the private formal sector, meaning that 49% of employment in Dhaka is in the informal sector. For Bangladesh as a whole, 80% of employment is in the informal sector (07B1).

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Part [B2] ~ Growth ~

Evidence from many developing countries shows that the majority of new employment - both self-employment and wage employment - is generated within the informal economies of developing nations (06P1).

The UN study of urbanization (03U1) estimates that 90% of urban Africa's new jobs over the next decade will come from the "informal" sector.

It is estimated that the informal economy will account for over 50% of the urban workforce in the developing world by 2010 (06P1).

In Latin America, both state employees and the more formal work force have declined in every country of the region since the 1970s while the "informal" sector of the economy has dramatically expanded (03P1). If someone is looking for a cause of the leftward drift of Latin American politics in recent years, they might want to ponder the effects of the growth of the informal sector there.

The informal economy has been one of the few areas of employment growth in post-apartheid South Africa (06P1). In Durbin (a large urban area in South Africa) the Durban Economic Development Department (2000) found that only 33% of economically active residents are employed in the formal economy. It also found that formal jobs in Durban are being lost at a rate of 1.5%/ year. Particularly hard-hit have been industries like clothing, footwear and textiles in the face of rapid tariff liberalization in the post-apartheid period. Evidence suggests that some of these industries are falling into the informal economy (06P1).

Table 1.3 - Employment in Durbin's Informal Economy (1997-2003) (06P1)


Number of workers













The city of Dhaka in Bangladesh attracts 300,000-400,000 new migrants each year. Population projections indicate that Dhaka is expected to grow to about 20 million in 2020, making it the world's third largest city. Its population is currently around 12 million (07B1). New migrants typically become members of the informal economy. Between 1995 and 2000, Dhaka grew at an average rate of 4.24%/ year. Much of its growth stems from migration, with 46% of its 1991 population born outside the metropolitan area. Rural-to-urban migration is attributed to extreme rural poverty and landlessness, and large urban-rural wage differentials (07B1) (04U1). Much of the urban-rural wage differentials is probably illusory, reflecting the fact that most developing world farmer families grow much of their food and livestock for their own consumption or for barter. Such consumption and barter are not counted as wages. As farm sizes shrink due to continually dividing the farm up among numerous children, an increasing fraction of farm outputs become self-consumption.

It is estimated that the current rate of urbanization, about one-third of the entire population of Bangladesh will move to urban areas by 2010. As Dhaka is one of the main destinations for migrants, the city is projected to grow by 7 million people to 19.5 million by 2017. One of the main reasons for this dramatic growth is the constant influx of rural migrants. Previous estimates show that rural-to-urban migration contributed 60-67% of the urban growth rate in Bangladesh. The rural-to-urban migration rate reached 4.9%/ year during the 1980s and 5.9%/ year during the 1990s (07B1). The bulk of the new arrivals to the urban scene wind up in the informal economy since the formal economy grows very little.

The informal economy in Latin America has undergone steady growth over the past quarter-century. Tokman (Ref. (01T1), p. 20), estimates that over 46% of urban employment in Latin America is now informal, and that, of all new jobs generated since 1990 in the region, 60% were informal. This growth in the informal sector is the likely result of a combination of macro-economic and social conditions in the region, including rapid urbanization, a severe economic crisis in the 1980s, and neo-liberal economic reform in the 1990s. (The severe economic crisis of the late 1980s was a severe currency devaluation that affected most of Latin America including Mexico, Southeast Asia and other regions. It inflicted extreme hardship on the people. It was a result of globalization-related trade agreements allowing external sources of capital to withdraw their investments very rapidly. Countries like Chile avoided the crisis by ignoring the edicts of the trade agreements.)

In Peru, most estimates place the size of Lima's informal economy at 50% or more of the city's workforce. Of the roughly 3.5 million economically active residents in Lima, at least 1.75 million work informally. According to the International Labor Organization in 2000, for example, the percentage of the workforce employed in Lima's informal economy grew from 37.9% in 1984 to 50.8% in 1997 (06P1).

Mexico's informal 'sector' has not been growing at a higher rate than the rest of Mexico's economy over the past decade (06P1). This is one of the few instances in the developing world where those in the formal economy are not being forced into the informal economy. A possible reason for this is US investments in manufacturing facilities in northern Mexico. This may change however, since Mexico is now losing jobs to nations in Eastern and Southeastern Asia where labor is much cheaper. Also, northern Mexico is suffering from increasing scarcities of water as rivers and aquifers are being drained.

The informal economy in Nairobi (in Kenya) expanded considerably in the 1980s and 1990s due to harsh economic circumstances, including a suspension of World Bank loans and assistance. Unemployment and inflation both worsened significantly during that period, leaving as many as 16.8 million Kenyans below the poverty line of US$1/ day. The "structural adjustment policies" (SAPs) imposed by the IMF, the World Bank and the WTO led to massive lay-offs in the formal employment sector. (See Section [D3]) Rising poverty in rural areas resulted from the agricultural system being forced to become part of the global agricultural marketplace where it had to compete with heavily subsidized developed world agricultural exports. This further exacerbated the problem since it drove migrants from rural areas to cities such as Nairobi, where no employment was readily available. In 1999, it was estimated that street-based workers (invariably in the informal economy) in Kenya numbered more than 415,000. Nairobi accounted for about 200,000 of these (04W1).

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Section [C] ~ What It's Like to be Part of the Informal Economy in a Developing Nation ~

This is not the first time that the developing world's work force was "informalized." During the late Victorian globalization (1870-1900) a huge number of subsistence peasantries of Asia and Africa were forcibly incorporated into the world marketplace. Millions died of famine, and tens of millions more were uprooted from traditional lifestyles. Latin America saw the creation of a huge class of increasingly wretched semi-peasants and farm laborers who lacked any sort of secure means of subsistence (01D1). The previous "Informalization," like the current one, took place during a period of globalization, and could probably be blamed directly on the globalization process. The role of the current globalization on the current "informalization" does not appear to be quite as direct. Pushing developing world farmers into a global agricultural economy dominated by heavily subsidized developed world agribusiness clearly played some role in the current "informalization," but other factors are also playing a significant role.

Incomes generated from informal enterprises in developing countries usually cannot support anything beyond the most minimal standard of living. Informal enterprises involve little capital investment, virtually no skills training, and few opportunities for expansion into a viable business since the needs of bare subsistence require any capital that is created. Economists puzzle over how "informal" workers manage to survive. As the developing world continues to become more urbanized, the "informal" sector of the developing world's economy continually increases in size, as do all the social, economic and political factors associated with the informal sector and the rural-to-urban migration. Almost half of the 750 million sub-Saharan Africans survive on less than $1/ day (06R1). The bulk of the informal workforce in sub-Saharan Africa falls within this category. Many sub-Saharan African cities have fallen into a serious state of disrepair since the 1970s under the strain imposed by rapid population growth, scarce foreign investment, and government mismanagement (97R2). Rapid population growth in largely agricultural economies characterized by a lack of undeveloped arable land is one of several key factors (described in Section [D3] below) that drive the rural-to-urban migration. That creates huge and impossible demands for capital to finance the infrastructure growth that rapid urban population growth demands. This, in turn, creates an extreme scarcity of financial capital that creates social, political and economic instabilities that discourage foreign investment and makes sound government an unaffordable luxury.

A large group of developing nations, from Latin America to Africa to the former Communist countries has experienced a quarter-century of decline or stagnation, punctuated by civil wars and international conflicts. They experienced deterioration in living standards as key social services became privatized and more costly (e. g. water in Cochabamba, Bolivia and Trinidad, and electricity in Argentina and Chad). To add insult to injury, Western pundits often arrived in developing nations by jet, stay in luxury hotels, and hail the obvious worsening of economic and social conditions as a step toward better lives and international integration. For many people in Latin America and Africa, globalization appears to be nothing more than a new and more attractive label for the old imperialism or for re-colonization. The recent leftward tilt of Latin American politics may be one byproduct of this (06M1).

The main feature of being part of the informal economy in a developing nation is the extreme poverty characterizing virtually everyone in the informal economy - earnings typically on the order of $1/ person/ day, barely enough for the essentials needed for survival, and rarely enough to save any money for possibly buying some land or investing in human capital creation (education) or paying the costs or starting up a formal enterprise that are required by government regulations. Table 1.4 below gives some costs of starting up a formal enterprise for various regions of the world. Clearly, for someone earning barely enough to survive, such costs are prohibitive. The origin of these regulations might reflect the desire of businesses in the formal economy to reduce competition. In essence it has all the characteristics of the early stages of a Caste system that creates a permanent under-class from which there is no escape. It has been noted (05L1) that Latin America's economy has always been mainly natural-resource oriented, so there has always been a public policy of keeping public education standards low in order to maintain abundant supplies of low-cost labor (05L1). So Latin America's de facto Caste system probably pre-dated the current explosive growth of their informal economy precipitated in part by "Structural Adjustment Programs" described in Section [D3] below.

Table 1.4 - Cost of Regulation: Requirements to Start a Legal Business (06P1)


Number of Procedures

Duration (Days)

Cost (% of GNI/ Capita)





South Asia




East Asia and Pacific








Latin America/ Caribbean




Sub-Saharan Africa




** MENA = Middle East - North Africa
* OECD (Organization for Economic Cooperation and Development) refers essentially to the bulk of the countries in the developed ("first") world.

The half of the world's population that works in informal economies generally lack birth certificates, legal addresses or, crucially, deeds to their shacks and market stalls. Without legal documents, they live in constant fear of being evicted by local officials or landlords. As a result, the poor are unable to invest in, or even plan for, the future. In many countries, 80% of homes and businesses are unregistered, while about a third of the developing world's GDP is generated in "informal economies." Would-be entrepreneurs in developing countries often face a tangle of bureaucratic requirements and high fees that discourage them from seeking legal status. As a result, these small-scale business owners can't obtain legal loans, enforce contracts or develop their businesses beyond a narrow sphere (07A1).

National governments and municipal authorities in many countries generally treat the urban informal economy as undesirable. They often target punitive or restrictive policies specifically at informal enterprises. Small and micro-entrepreneurs intent on setting up and operating new businesses are usually subject to complex regulatory barriers. On top of raising production costs and reducing competition in the formal economy, such policies contribute to informal economy growth in developing countries. As Table 1.4 shows, the average cost of regulation as a proportion of Gross National Income (GNI) per capita is considerably higher in developing regions or groupings than in those more developed countries (06P1). In Africa, 83% of countries have/ had policies to reduce rural-to-urban migration, as do 73% of those in Asia and Oceania. The second most common policy aims at reducing migrant flows to large cities. Since 1976, the percentage of developing countries with such policies rose from 44% to 74% in 2007. In Oceania, 83% of countries have such policies, in Africa 78%, in Asia 71% and in Latin America and the Caribbean, 68% do (08U1).

In 2005 Zimbabwe destroyed the informal shacks and markets proliferating in its cities. About 700,000 people had their homes or market stalls destroyed. Most are still waiting for the replacements that they were promised by the government (07U1).

The Zambian government is now threatening to tackle urbanization in much the same way as Zimbabwe. In March of 2007, some illegal houses were razed in Lusaka, Zambia's capital, and officials have threatened to intensify the "cleanup" and extend it nationwide (07U1).

African cities are struggling to cope with an unprecedented influx of people from rural areas. Making a living plowing tiny and shrinking plots of arable land is hard, and cities offer more hope of jobs (07U1).

Luanda (in South Africa) was built for 0.5 million people, but now has at least 4 million. Many of them fled to Luanda during Angola's horrific civil war (07U1).

In Johannesburg, South Africa's business capital, over 20% of Johannesburg's population is thought to live in shacks. Johannesburg cannot build cheap houses fast enough (07U1).

In Alexandra (one of Johannesburg's townships) shacks have been built dangerously close to the river and people drown when it swells (07U1).

In Johannesburg's old central business district, for years the city has been evicting poor people who had moved into the many abandoned buildings, claiming that they are unsafe. Property developers are turning decrepit buildings, abandoned when most businesses fled a crime-wave for the northern suburbs in the early 1990s, into swanky apartment blocks, and property prices have been rocketing. In downtown Johannesburg, those who have lost their homes often move to the next derelict building to stay close to their livelihood. In Luanda (in South Africa?), people are coaxed to leave their shacks and move to new houses, but many move quickly back into town. The new houses are too far out, with no adequate public transport, and they are sometimes built before water, electricity or schools get there (07U1).

About 1/3 of the world's urban dwellers live in slums. The UN estimates that this fraction will double by 2030 as a result of the rural-to-urban migrations that are producing rapid urbanization in developing countries (07R1). Latin America is the most urbanized region in the developing world (07R1). Rural areas of Latin America have long been poor, probably reflecting a combination of the typically low fertility of tropical soils (08S1) and the typically natural-resource basis of Latin America's economy (05L1). This rural poverty has fueled migrations that turned regions that were predominantly rural in 1950 into regions that, today, are about 75% urban (07R1). Latin America hosts a number of economies that are growing and doing well, but the way Latin American economies are growing is generating more shantytowns. According to a senior advisor on Latin America and the Caribbean for the UN Human Settlement Program, this mode of growth "is a growth that is just generating wealth for those who have it (07R1)." Buenos Aires (Argentina's capital) is recovering from a devastating economic crash in 2001, and its economy has grown by more than 8%/ year during the past 4 years. However, population growth in Buenos Aires is fastest in its shantytowns (07R1). City agencies estimate that 300,000 to 500,000 people in Buenos Aires (with a total population of 3 million) live in slums (07R1).

Workers in India's formal sector are engaged in factories, commercial and service establishments and their working conditions, wages and social security status and entitlements are legally protected. The wages of formal sector workers are substantially higher than those in the urban informal sector. Formal sector jobs are protected by a range of labor laws that guarantee permanent employment and provide for retirement benefits. Workers in the informal economy are not entitled to most of the benefits, nor to the degree of job-security enjoyed by formal sector workers. Informal jobs are insecure as most labor legislation gives them no protection. Although labor laws in India are supposed to apply to all sections of industrial labor, some in-built provisions exclude large sections of the labor force (06P1). This situation is not unique to India; it is common throughout the developing world. Thus, not only are members of the informal economy wretchedly poor, but they also suffer from the lack of all sorts of legal protections enjoyed by members of the formal economy.

Part [C1] ~ Dhaka - A Case Study ~

Life in Dhaka (in Bangladesh) is increasingly characterized by large slums, poor housing, extremely high land prices, traffic congestion, water shortages, poor sanitation and drainage, irregular electric supply, unplanned construction, increasing air pollution and poor urban governance. All this results in growing problems of law and order (07B1).

Close to 80% of Dhaka's slums are located on privately owned land, invariably meaning that residents are neither owners nor renters. They are therefore subject to eviction at any time. Housing structures tend to lack access to basic infrastructure services. For the poorest quintile, only 9% of households have a sewage line, and 27% obtain water through piped supply (compared with 83% of the wealthiest). Spatial mapping shows that only 43 of the 1925 identified slums of Dhaka have a public toilet within 100 meters. An estimated 7600 Dhaka households live in slums that are within 50 meters of the river and are therefore at risk of flooding (07B1).

Under-employment affects 20% of Dhaka's households. Approximately 20% of all children between ages 5-14 work. Most child workers are 10-14 years old. In the poorest households with child workers, earnings from the children represent about one third of total household income (07B1).

Dhaka has emerged as a city of crime, insecurity and political unrest, violence, theft, robbery, looting, murder, hijacking, arson, throwing of acid on innocent females, raping of minor girls, possession and use of illegal arms, illegal rent/ toll collection, frequent traffic congestion, etc. All this has phenomenally increased over the years and has now become a way of life in Dhaka city, especially for those in the informal economy (00S1) (07B1).

About 93% of respondents in a Dhaka survey report that they had been affected by crime and violence over the last 12 months, with 33 different types of crime identified by the respondents. Among the most commonly reported crime and violence are toll collection, mastaan-induced violence, drug and alcohol business, land grabbing, gambling, violence against women and children, illegal arms businesses, arson in slums, murder and kidnapping, and domestic violence (07B1). (Mastaans are essentially thugs who carry out the orders of landowners against squatters, etc.) About 60% of crime victims state that the incidence of crime and violence is not reported to anyone. When reports are made, it is to community leaders and family members. Only 3% say that they reported the incident to the police, and even fewer incidents get reported to Ward Commissioners. The survey indicated that the police took action against a reported perpetrator in only 1% of all cases (07B1).

About 79% of slum formation in Dhaka takes place by squatters occupying privately owned land (79%), and 18% takes place by squatters occupying government-owned land (07B1). Residential land values in Dhaka make it impossible for the poor to purchase land in the open market within the Dhaka City Corporation area. The smallest lot Dhaka grants building permission for (1050 square feet) would cost US$12,600, which is equivalent to nearly 20 years of income for an average poor household. The cost of housing would be additional to the lot price. Consequently, it is estimated that 97% of the urban poor in Dhaka do not own any land (07B1). Hence they must be squatters on other people's land and be subject to eviction at any time. 70% of urban development in Dhaka is informal. This results in large-scale evictions of slum dwellers with no relocation plans, and building on environmentally sensitive public lands such as flood plains or retention ponds (07B1).

Only 40% of the heads of Dhaka's poor household have achieved more than 5 years of schooling (07B1).

About 70% of Dhaka households under the poverty line ($1/ person/ day) do not have access to piped water, and use tube wells as their main water source. About 90% do not have access to a sewage line. Only 43 of the 1925 identified slums of Dhaka are within 100 meters of a public toilet (07B1). The largest slum, Korali Basti in Banani, with more than 12,000 households, does not have a single public toilet or health clinic. Problems of poor sanitation are made worse by the high population density in slums. This results in transmission of communicable diseases and other problems (07B1). Tube wells are being built by the millions in India and Bangladesh. They are being abandoned almost as quickly due to the aquifers they are tapped into being drained of their water (07S7). Surface waters, too, are being threatened by vanishing glaciers in the Himalayan Mountains, threatening the continuity of the surface water supplies of two billion people (08S1).

Only 7.3% of Dhaka's slums have a public health clinic, and 26% have a government (public) school (07B1).

Part [C2] ~ Increasing Poverty in Urban Areas as the Rural-to-Urban Migration Continues ~

The World Bank estimated that, in 1985, 330 million urban poor people lived in developing countries, defined by an income cut-off of US$370/ year (about $1/ capita/ day). The World Bank estimates that, in 1994, roughly 450 million urban dwellers (25% of the developing world's 1994 urban population) lacked access even to the simplest latrines. The UN Population Fund concluded in 1996 that 28% of urbanites in developing countries were living in poverty, including 41% in sub-Saharan Africa (96U1). Yet these estimates may be too low. The World Health Organization (WHO) and the UN Center for Human Settlements have endorsed a 1990 estimate based on dozens of national- and city studies that determined that 600 million urban dwellers (42% of the 1990 urban population in developing nations) live in "life- and health-threatening" homes or neighborhoods (90C1).

Urban poverty appears to be increasing in developing countries. In Latin America, urban areas contained 36% of that region's poor in 1970, but 60% in 1990, even though the pace of urbanization was considerably slower during this period. The World Bank estimates that by 2025, the majority of the world's urban population will be living in poverty (96M1) (99W1). (In developing countries, that fraction will, of course, be larger.)

Some More Data on the Scale and Trends for Slums Ringing large Urban Areas in the Developing World:

Part [C3] ~ Health- and related Effects of the Rural-to-Urban Migration in Developing Nations ~

In most countries, the rural population has the highest fertility, the lowest level of contraceptive use and the highest level of unmet need for family planning. Usually, the urban poor (essentially the informal economy) exhibit levels of fertility, use of modern contraceptives and unmet need closer to those of the rural population than to those of the urban population who are better off (07U3).

The urban health advantage, however, masks enormous disparities between the urban poor (typically the members of the informal economy) and their more affluent neighbors. A study in Bangladesh in 1990, for example, found that in three low-income urban areas between 95 and 152 infants per 1000 live births died before the age of 1; in a middle-class area, 32 of 1000 births died. Infant mortality in the urban slums was higher than in rural Bangladesh. In Porto Alegre, Brazil, the infant mortality rate in the early 1990s varied from more than 60 deaths per 1000 live births in the city's poorest districts to less than 5 in the wealthiest. Research in Quito, Ecuador, uncovered infant mortality rates of 129/1000 live births within families of manual workers in squatter settlements vs. 5 in upper-class districts (95H1). All this would suggest that the health benefits of migrating from rural areas to urban areas in developing countries that have been alleged by some sources (08U1) are largely illusory.

About 71% of urban residents in Kenya live in slums. These slums are characteristically unplanned, and their residents are largely under-employed and poor. Recent research shows that Kenya's urban poor fare worse than their rural counterparts on most health indicators (08K1). This is probably due to less pollution of air and water in agricultural environments.

Recent studies find that the deterioration of mental health and increased rates of psychiatric disorders and deviant behavior are associated with degraded living conditions, overcrowding, and rapid social and cultural change typical of poorer urban areas in developing countries. Depression is projected (by the WHO) to become the leading disease burden in developing countries by 2020, when more than 50% of that region will be urban (97T1). In rural areas of the developing world, such health effects are not known to exist to any significant degree.

Urban areas of developing countries are also prime locations of HIV/AIDS. In sub-Saharan Africa, where about 80% of all AIDS deaths have occurred, HIV infection is much higher in urban areas than in rural areas, in some places by a factor of four (94U1).

Urban areas also had higher death rates than rural areas during the boom period (1875 to 1900) of urban growth of many countries in Europe and North America. The urban health services and sanitary infrastructure were not able to keep up with the demand generated by rapid in-migration. In the US in 1900, for instance, for every 1000 children born, 177 died before age 5 in rural areas, compared with 215 in urban areas in general, and 237 in New York City in particular (99P1). In Prussia in 1875, the infant mortality rate was 190 in rural areas and 240 in urban areas. High population densities also led to high levels of tuberculosis in urban areas of Europe and the US in the late 19th century (00V1).

Part [C4] ~ Could the Rural-to-Urban Migration and the Informal Economy it is Producing Threaten the Political Stability of Developing Countries? ~

In the 1990s, many political scientists grew concerned that rapid urbanization and city growth in developing countries, coupled with its tendency to increase urban poverty, often led to civil violence in cities that threatened national political stability (93H1). Some analysts predict that urban poverty will become the most significant and politically explosive problem in the 21st century. Without policies that redress social inequalities, claim some demographers, urban areas will experience escalating crime and violence punctuated by sporadic riots and increased terrorism (92H1).

The U.S. CIA (00C1) concluded that a key driving trend for the Middle East in the next 15 years will be population pressure. They point out that, even now, in nearly all Middle Eastern countries; over half of the population is under age 20. "In much of the Middle East, populations will be significantly larger, poorer, more urban and more disillusioned" (00C1). The CIA report concludes that "linear trend analysis shows little positive change in the region, raising the prospects for increased demographic pressures, social unrest, religious and ideological extremism and terrorism directed both at the regimes and at their Western supporters" (00C1). It seems unlikely that a military approach is likely to make the youth of the Middle East richer, less urban, less disillusioned, or less hateful of the West (08S3).

The 1979 Islamic Revolution in Iran is frequently cited as an example of how urbanization can generate political turbulence. In the decades preceding this revolution, population growth rates in Iran were several times higher in urban than rural areas, mainly because of rapid rural-to-urban migration. Young migrants became more educated yet remained poor, creating a large population of frustrated urban youth, who mobilized to overthrow the Shah in a dramatic revolution. A similar scenario has been envisioned for African countries (96K1). Part of this problem stems from the fact that people in urban areas are better situated to riot than people in rural areas.

Most urban growth in developing countries in recent decades has been attributed to natural (birth) increase. Nonetheless, the population policies to reduce urban growth in most developing countries have focused almost solely on restricting in-migration and, indirectly, altering the geographic distribution of populations. Such migration-oriented policies have included eligibility requirements that limit people's ability to move (in China and Ethiopia, for example), rural development schemes to encourage people to stay in rural areas (Malaysia and Vietnam), and land colonization schemes meant to attract settlers to newly developed areas (as in Brazil and Indonesia). With rare exceptions, such as South Africa under apartheid, these migration-oriented policies have failed to curb the pace of urban growth. In contrast, policies that accommodate migrants from the countryside and assimilate them to the more modern social norms and behaviors of urban areas have more effectively curbed urban growth by reducing migrant fertility (98B1).

This more optimistic perspective maintains that any urban area with good management capabilities can absorb large population increments without diminishing human welfare or the quality of the environment (94C1). The key to success is a commitment to adopt policies that, among other things, maintain infrastructure, increase productivity of the labor force, and alleviate poverty. A frequently cited example of urban managerial success is Curitiba, in Brazil, which through innovations to encourage use of buses rather than cars, land use regulations that conserve green space, and other measures, has avoided the degradation experienced in most other cities of comparable size in developing countries (92R1). This perspective may be less than realistic. Maintaining infrastructure in situations of rapid population growth creates huge demands on financial capital that are impossible to accommodate in most developing countries (08S5). In situations where population growth is driven by wretched rural farmers driven off the land into rural slums and from there into the informal economy, the demands for infrastructure growth needed to meet the needs of population growth are virtually assured to be impossible to meet.

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Section [D] ~ The Context of the Rapid Growth of Informal Economies in Developing Nations ~

Informal economies have been around for countless decades. What is different today is the huge scope of the developing world's informal economies. In general terms, roughly half of the world's population works in informal economies. Also, formal economies in developing nations tend to be either stagnant or growing much slower than informal economies. The world's population is expected to increase by roughly 50% by 2050, at which time population growth is expected to slow to near zero. If this situation continues, simple arithmetic suggests that two-thirds of the world's population to be working in informal economies by 2050. Those working in informal economies tend to suffer from a significant amount of deliberate oppression and abuse at the hands of those in the world's formal economies via the dominant influence that those in formal economies exert on government policies. It is thus easy to foresee major increases in social, political and economic instabilities resulting from the evolving world order. It is clearly important, then, to identify and understand the processes that lie behind the growth of the world's informal economies. By doing this we can put ourselves in a better position for developing strategies for reducing the rate of growth and the sheer size of the developing world's informal economies. In this section we attempt to identify and understand the processes behind Informalization. Then we develop strategies for improving on the prognosis for this "disease."

Part [D1] ~ Context - Population Growth in a Developing World that has run out of Undeveloped Arable Land ~

Rural-to-urban migration (also called "urbanization") on a massive scale is now a well-documented global-scale phenomenon (00B2). It is not limited to developing nations. People do not migrate from rural areas to urban areas on a massive scale without a good reason that is broadly applicable to a significant fraction of the population. In the developed world the conversion from labor-intensive agriculture to capital-intensive agriculture has dramatically reduced the amount of agricultural labor required per unit area of land. The "Green Revolution" and the development and rapidly expanding rates of consumption of chemical fertilizers and the expansion of irrigated lands made it possible to satisfy the developed world's food needs without the need to expand agricultural lands areas in parallel with population growth. Only a few percent of the population of the developed world is now needed to produce the food required for consumption within the developed world and for export to developing nations. Thus the number of agricultural jobs available in rural areas of developed nations has fallen (and is falling) accordingly. This explains the rural-to-urban migration in developed nations. The explanation for nations of the developing world is almost totally different.

Hundreds of millions of people in developing nations are hungry and, in many cases, starving to death. But in order for the developed world to produce the surplus (exportable) food required to feed the hungry and starving in developing nations requires capital-intensive and natural-resource-intensive agriculture. It also requires labor inputs that earn at least a factor of ten higher wages that those typical of developing nations. So the capital- and labor inputs required for producing exportable crops and livestock in developed nations requires food prices that the hungry and starving of developing nations cannot afford - even with the huge subsidies that developed nations worldwide bestow on their farmers, or more correctly, on their agri-businesses.

In developing nations the rural-to-urban migration on a massive scale entails typically migration from rural (i.e. agricultural) areas to the wretched slums ringing most of the large urban areas of the developing world - and then becoming part of the informal economy and all the wretchedness, instability and hope-deprivation that entails (See Section [C]). No one is likely to do this unless their rural lifestyle entails an environment that is even worse. Since the scale of the rural-to-urban migration in developing nations has been growing rapidly and is now huge, one must assume that rural (agricultural) life in developing nations has gotten really bad. There seems to be only one possible way this could have happened. The supply of undeveloped arable land has effectively vanished (08S1). If this were not the case, as population growth continued and as family farms kept being subdivided among multiple heirs, farm families would simply meet their growing food needs by expanding their plots of land to take advantage of the increasing amount of labor available and nothing would change. Obviously things are changing. It doesn't have to be just population growth butting up against a finite supply of arable land that is the problem. The capital intensiveness of developing nations' agriculture is also increasing - but more slowly than in developed nations because the low price of labor does not justify high levels of capital intensiveness. The results of increasing capital intensiveness of agriculture in an environment of limited supplies of arable land are much the same as population growth under the same circumstances. Another problem with the same consequences is the conversion of vast areas of arable land in developing nations to grazing lands for raising cattle for developed world consumption (07S5). This is an especially serious problem in the tropical rainforests of Latin America. Adding insult to injury, the labor requirements of a given area of cropland are hundreds of times greater that the labor required by the same area of grazing lands. Thus the conversion of croplands to grazing lands in developing nations reduces the land available for cropland, reducing local food supplies, and pushing more rural people into wretched informal economies that they have no experience in dealing with. That migration often includes a stopover in the form of attempts to farm previously undeveloped steep, rocky hillsides. Unfortunately there is little, if any, hope of conducting agriculture in such an environment in a sustainable fashion. As a result, such stopovers typically last for only a decade or two.

The contention that the supply of undeveloped arable land in developing nations is essentially negligible is controversial (08S1). The FAO and others point to aerial photos and other data suggesting that the supply of undeveloped arable land in developing nations is at least as large as the current area of developed croplands in those nations. This contention seems to be incompatible with numerous on-the-ground observations. The situation for shifting cultivators in the world's tropical rainforests can easily be seen to be a problem of too little arable land relative to the population of shifting cultivators. The result is reductions in fallow periods from around 20 years to 3-10 years - much too short for the land to restore its nutrient levels. (See Section (G) of Chapter 1 in Reference (08S1) for lots of data and analysis relevant to that issue.) Even in the case of developed nations there is much evidence that the supply of undeveloped arable land is extremely limited. Such phenomena as:

all offer evidence of a developed world with relatively minor reserves of undeveloped arable land. The issue is examined far more fully in Section (D) of Chapter 1 of Reference (08S1).

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Part [D2] ~ Context -Financial Capital Scarcity in Developing Nations as a Result of Population Growth

Population growth requires financial capital to pay for the expansion of infrastructure required by the additional people. "Infrastructure" includes the educational-, industrial-, commercial-, and transportation- systems, plus housing, land development, judicial- and other governmental agencies, utilities etc. Economist Lester Thurow (95C1) estimated that each 1%/ year of population growth requires an expenditure of 12.5% of the GDP to pay for the additional infrastructure required. The population growth rate of the developing world is about 1.4%/ year. Their 1997 GDP was $5800 billion (00W2). Extrapolating at a rate of 2%/ year gives a 2007 GDP of $7070 billion. The Thurow correlation thus indicates that about $1240 billion/ year is required for the developing world to pay for the needed additional developing-world-class infrastructure. The median earnings of people in the developing world is less than $2/ person/ day. This is essentially subsistence level. Paying for an additional $1240 billion/ year is thus something that the people of the developing world cannot afford. As a result, much of this infrastructure growth comes in the form of unmet need, meaning an ever-diminishing per-capita infrastructure. This results in an extreme scarcity of financial capital and hence of human capital and other forms of capital. That scarcity produces the bulk of the differences between the developing world and the developed world.

This scarcity has all kinds of ramifications. For example, the cost of imported chemical fertilizer in sub-Saharan Africa is about six times the price in the EU, due largely to the lack of (and the low quality of) transportation systems (02F1). On the basis of the hours of labor required to purchase a ton of imported fertilizer, the cost of chemical fertilizer in sub-Saharan Africa is thus about 60 times that in the EU. The result is a very low level of consumption of chemical fertilizer, meaning that Africans must "mine" the nutrients from their typically low-fertility tropical cropland soils (02F1). This explains why food productivities of sub-Saharan Africa keeps dropping, and why the per-capita food productivity keeps dropping even faster, and why there is so much hunger in sub-Saharan Africa.

With extreme scarcity of financial capital comes increasing desperateness in the pursuit of basic human needs. This translates into escalating competition between national, ethnic, religious, class and racial groups for basic necessities The resultant armed conflicts greatly increases the risks associated with capital investments, and this results in an even greater scarcity of financial capital. This means that the developing world must spend about $273 billion/ year on military expenses for its numerous civil wars (1999 data, CIA World Fact Book, 2000). This amount does not cover losses of capital facilities that occur as a result of war and terrorism. Extreme scarcity of financial capital also translated into huge unmet costs of stemming the degradation of its agricultural systems, fisheries and water supplies (08S1)). Also external debt, and debt payments thereon, must become even larger and more unmanageable. Also, these social, political, economic and military instabilities diminish the safety of capital investments, and this can only magnify whatever financial capital scarcity problems exist. It is this environment that contributes to the huge and rapidly expanding informal economies that characterize so much of the developing world today.

Recent research (05M2) has examined the more common theories as to why the poorest countries of the third world have been falling further behind the rest of the world economically during 1980-2002. The median per-capita growth of the poorest countries during that 20 years has been zero, but positive everywhere else. The research found that only one theory offered a statistically significant explanation as to the cause of this failure - involvement in wars and civil conflicts. This, of itself, is not a useful conclusion. However the research failed to consider high fertility rates as a possible explanation. Nor did it examine what possible effect high fertility rates may have played in the greater likelihood of poor countries being involved in wars and civil conflicts. Fortunately a later study made the relationship between fertility rates and the probability of civil armed conflict fairly quantitative. The results of this study are summarized below.

Table 1.5 - Effect of population growth rate on probability of civil conflict (04P1)

Births per 1000 per year






Probability of Conflict*






* Likelihood of an outbreak of a civil conflict in a given decade

The combined results of these two studies show that significant reductions in fertility (an inexpensive process) would greatly decrease the incidence of civil conflict and provide significant economic benefits to the developing world. This, in turn, would greatly reduce another major drain on developing world capital creation. It would also make the developing world a safer place for capital investments. This would reduce, still further, the scarcity and cost of financial capital and generate major improvements in developing world agriculture.

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Part [D3] ~ Context -- False Ideologies on the part of the Developed World's Financial Institutions
The International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) used the leverage they had via their loans to developing nations and globalization trade agreements to impose extreme hardships on deeply indebted developing nations. They forced these nations to devalue currencies, privatize state infrastructure and services, remove import controls and food subsidies, charge consumers the full cost of health- and education services and generally downsize the public sector. These imposed policies are often collectively termed "Structural Adjustment Programs" - SAPs. They devastated rural smallholders (farmers) by eliminating government agriculture subsidies and pushing them into global commodity markets that were dominated by developed world agribusinesses (that are heavily subsidized by developed-world governments) (00B1). For the typical developing nation with an economy that is 50-70% agriculture-based, this is no small matter. Cambodia and similar developing nations in Southeast Asia illustrate the point. About 80% of Cambodians work in agriculture - typical of poorer developing world countries. Before it joined the WTO in 2004, impoverished Cambodians agreed to expose their farmers to more competition that the wealthy EU and the US were willing to accept for theirs (06W1). Unfortunately the poorer of developing nations lacked both the negotiating skills and political clout to pull this off, and their staggering external debt gave them a weak hand to start with. The Internal Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) have overwhelming influence over countries with large external debts, and these organizations take a dim view of tariffs, thus giving the US and EU the upper hand in any trade negotiations. The results of all this were huge trade deficits that poorer developing nations like Cambodia cannot afford (06W1). (They cannot afford to subsidize their agriculture to anywhere near the extent to which the US and the EU subsidize theirs.)

All this was apparently designed to make developing world economies more "efficient" and thereby enhance the economic well being of the citizenry involved and thereby enhance the prospects that the developing world's several trillion dollars of external debt might some day be repaid. The results achieved were the opposite of those apparently intended. Some nations (e.g. Chile, China, Viet Nam) were able to avoid serious economic harm by instituting policies that ran counter to the "free trade" spirit and intent of globalization treaties and to the demands of the IMF et al. Other nations were devastated. Note that protectionist tariffs and subsidies were the mechanisms used by today's wealthy nations to climb from agriculture-based economies (typical of today's developing nations) to economies based on urban, high-value goods and services (03C1).

The UN's major study of urbanization (03U1) concluded that the single main cause of increases in poverty and inequality in developing nations during the 1980s and 1990s was the "retreat" of the state (i.e. privatization imposed by SAPs). The middle class disappeared. The brain drain to oil-rich Arab countries and to the West increased dramatically (95B1). In Africa, SAPs resulted in capital flight, collapse of manufactures, marginal or negative increases in export income, drastic cutbacks in public services, soaring prices, and steep declines in real wages (97R1). Developing world economies tend to be predominantly (e.g. 70%) agriculture-based. Hence, during the past few decades, SAPs were one of several key causes of mass migrations to the wretched slums that ring nearly all of the large urban areas in developing nations. There the ex-farmers found themselves in the informal economy - something they had no experience in dealing with.

In South America during 1970-1990, per-capita food supplies increased by almost 8%; yet the number of hungry people increased by 19%. In South Asia during 1970-1990, per-capita food supplies increased by 9%; yet the number of hungry people increased by 9% (00R1). In contrast, China (which was able to avoid being affected by SAPs), the number of hungry people dropped from 406 million to 189 million during 1970-1990 (00R1). Argentina has always thought of itself as Latin America's model for egalitarianism (08L1). In the 1990s its public sector was privatized (by "Structural Adjustments Programs" (SAPs) imposed by the World Bank, the IMF and the WTO) and the economic situation began to deteriorate. The financial crisis of 2001 (the rapid currency devaluation that also devastated much of southeast Asia and much of Latin America - except Chile that rejected SAPs) pushed 50% of Argentina's population into poverty. Argentina's national currency collapsed; savings accounts were wiped out. All this made Argentina much more like the typically "segmented" (stratified) societies common in the rest of Latin America. Some attribute Argentina's lingering income disparities to a decline in the quality of public education. At the peak of the 2001 crisis, half of all jobs in Argentina wound up in the "informal" sector. As was the case elsewhere in the developing world, few jobs in the informal sector provided benefits, protection, or true prospects for mobility. The situation could be permanent; since privatization of the public sector (imposed by SAPs) in the 1990s usually changes public education to private education. Students' families must therefore pay directly for their children's education or see their children remain uneducated. Today, 25% of Argentina's population lives in poverty -quite a comedown for a nation that once prided itself in an egalitarian ethos (08L1).

The major UN study of urbanization (03U1) concluded that, in modern times, instead of becoming a source for growth and prosperity, SAPs and trade liberalization (globalization) have caused cities of developing nations to become "dumping grounds" for surplus populations working in unskilled, low-wage "informal" service industries and in trades without any protection that labor laws and standards would normally provide. The huge growth of this "informal" labor sector was concluded to be a direct result of trade liberalization (globalization) (p. 40 and 46 of Ref. (03U1)).

It might not have been so bad had some economic efficiencies actually been produced as the World Bank, the IMF and the WTO allegedly intended. But their imposed privatization was frequently accomplished by selling off state-owned industries to people who were well connected politically. These individuals frequently became billionaires as a result of their ownership of a monopoly. Carlos Slim, owner of Mexico's Telmex, is the world's richest man ($59 billion). Mexicans pay well above average for landline-, cell phone- and Internet-access. Numerous other Mexican industries have also become monopolies, with similar effects on Mexico's consumers (07P1).

One should hasten to note that the developing world's subsidies of food, education, health-care, utilities, etc. had been financed largely by borrowing from external sources. Hence they were not sustainable and were bound to collapse anyway. The real mistake was that the IMF, World Bank and WTO viewed these subsidies as "bad economics" caused by "bad government" (at least according to one author of Reference (03U1)). They therefore concluded that, by removing these subsidies, developing world economies would become more "efficient." This, they allegedly believed, would improve the lives of developing world people. The real cause of the external loans and the subsidies they financed was the extreme capital scarcity cause by the costs of infrastructure growth necessitated by population growth. (See Section [D2] above.) So it would have been just as hard for developing world people to pay the unsubsidized cost of food, health care, education and utilities as to repay their massive external debts. Both options were impossible, so SAPs and trade liberalization simply bought the non-sustainability issue to a head sooner, but otherwise accomplished nothing for those nations having little to offer the global marketplace but unskilled labor earning subsistence wages and agricultural products that cannot compete with heavily subsidized agricultural products from developed nations.

Attributing the developing world's ills to "bad governments" (like the IMF, World Bank and WTO did) is a commonly encountered false ideology. In reality, the developing world's ills are the cause of that world's "bad governments." Cause and effect have been interchanged. Population growth in developing nations produces a need for about $1.2 trillion/ year to finance the infrastructure growth needed to accommodate population growth. This drain on financial capital leads to human capital scarcity, increasingly desperate (and bloody) struggles for basic human needs, political-, social- and economic instabilities, increasingly greater (and more expensive) difficulties in administering basic government functions, and hence brutal leadership and "bad government." (For a far more detailed analysis of this issue see Chapter 4 of Ref. (08S5)) Billions of people have been paying a terrible price over the past two decades for this largely ideology-based error. What is even more tragic is that population growth and the resultant developing world's ills could have been greatly reduced by relatively small investments in contraception, family planning, and the marketing of the virtues of small families etc (07S2). All this would have greatly increased the probability of the external debts of developing nations being paid off. Substitution of ideology for analysis has almost certainly contributed significantly to developing world environments dominated by wretchedness and hope deprivation - environments where terrorists are easy to recruit, and where armed conflicts are more likely to develop (04P1).

The question remains, however, as to whether the SAPs imposed on the developing world by the IMF, the World Bank and the WTO were honest errors that unfortunately needlessly caused hundreds of millions of developing world people to be locked in a wretched existence in informal economies - or was it not a mistake at all, but a successful, deliberate process that resulted in the desired end, perhaps motivated by a desire to maintain ample supplies of cheap labor and/or to maintain ample supplies of natural resources. That question is a difficult one for someone not closely involved with any of these three organizations to answer. However there is some evidence that should be considered by anyone pondering the question. The evidence known to this author is given in the following three paragraphs. Readers can draw their own conclusions.

The increasingly heavy-handedness of developed nations, via the WTO, in imposing their versions of the trade rules defining modern-day globalization on the developing world has been documented in a book by Jawara and Kwa (03J1). These authors compiled interviews with 33 WTO diplomats and 10 organization employees. They claim that industrialized nations (Canada, Japan, Australia, New Zealand, South Africa, and countries in Western Europe) used bribery and dissemination of fear to convince developing countries to make agreements on international trade. The authors said that developing country ministers had been physically barred from participating in negotiations related to their countries, and that developed countries had threatened to stop offering aid to those developing nations if they did not sign the agreements. The book says that six WTO ambassadors from developing countries were removed from their posts in Geneva after disagreeing with diplomats from developed countries on the Doha Round of WTO talks, which were held in 2001. The book presents an official document written by US trade representative Robert Zoellick, demanding that developing countries change their positions regarding some trade negotiations or face inclusion on a US list of "enemy countries." (03J1). It is interesting to note that the developing nations that ignored the globalization rules that the developed world was attempting to impose (e.g. China, Viet Nam and Chile) did quite well in the overall globalization process.

A more recent book by John Perkins (04P2) describes US dealings with developing nations in a similar vein. Perkins, a former chief economist at Boston strategic-consulting firm Charles T. Main, worked for 10 years helping US intelligence agencies and multinationals cajole and blackmail foreign leaders into serving US foreign policy. His economic projections cooked the books to convince foreign governments to accept billions of dollars of loans from the World Bank and other institutions to build dams, airports, electric grids, and other infrastructure he knew they couldn't afford. The deals were smoothed over with bribes for foreign officials, but it was the taxpayers in the foreign countries who had to repay the loans. When their governments couldn't do so, as was often the case, the US or the World Bank or the International Monetary Fund would step in and essentially place the country in trusteeship, dictating everything from its spending budget to security agreements and even its UN votes (04P2).

A similar analysis was written by George Monbiot (05M1). He noted that a past president of the World Bank, Robert McNamara, concentrated almost all the World Bank's lending on vast prestige projects - dams (04I1), highways, ports - while freezing out less glamorous causes such as health, education and sanitation. Most of the major projects he backed have, in economic or social terms or both, failed catastrophically (96C1). (Note: The World Bank is controlled to an overwhelming degree by the US.) McNamara argued that the World Bank should not fund land reform because it "would affect the power base of the traditional elite groups" (96C1). Instead, it should "open new land by cutting down forests, draining wetlands, and building roads into previously isolated areas" (96C1). He bankrolled Mobutu and Suharto (both corrupt, despotic rulers), deforested Nepal, trashed the Amazon and promoted genocide in Indonesia (Recall Indonesia's "transmigration" program, first funded by the World Bank in 1976). The countries in which he worked were left with unpayable debts, wrecked environments, grinding poverty and unshakeable pro-US dictators (05M1). What is so tragic in all of this is that the World Bank was once a leader in bringing family planning and contraception to the developing world. Around 1980 a major political change occurred in Washington and the new powers-that-be had a dim view of contraception and family planning, so the World Bank changed accordingly and adopted the "bad government" theory of the developing world's ills, plus the environmental policies, population policies and foreign policies that came with it, all of which turned out to be disasters.

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Part [D4] ~ Context – Conversion of Labor-Intensive Agriculture to Capital-Intensive Agriculture ~

The International Food Policy Research Institute (IFPRI) estimates that 300,000 km2 of the world’s cropland is at stake in the global rush by investors, hedge funds, and governments to purchase cropland. The World Bank estimates that 10 to 30% of the world’s available arable land could be up for grabs (09K1).

The World Bank estimates that only 2 to 10% of the land in Africa is formally owned or leased, and most of that land is in urban areas. So a typical African farmer may have lived on, or occupied, a piece of land for decades without having any proof of ownership. This makes his land easy for a capital-rich nation to acquire at minimal cost. Because more than 50% of Africans are small farmers, large-scale cropland acquisition by wealthy foreign nations can be disastrous for the farmers over a wide area. Those who lose their fields lose everything, and can’t even afford to buy the food produced by the capital-intensive agriculture on the land they were forced off of (09K1). Their only option is to migrate to the urban slums ringing most of the developing world’s large urban areas and to become part of the informal economy.

The largest land fund in southern Africa (financed by developed world capital) owns 1500 km2 of (crop) land, located mainly in South Africa, Zambia and Mozambique. The fund pays $35,000-$50,000/ km2 for cropland in Zambia. This is about 10% of the price of (crop) land in Argentina or the U.S. (09K1).
US investment management company Black Rock has established a $200 million agriculture fund and has earmarked $30 million of this fund to acquisition of farmland in capital-starved developing nations (09K1).
Renaissance Capital (a Russian investment company) has acquired more than 1,000 km2 of cropland in Ukraine (09K1).
Governments like South Korea, oil-rich Gulf States, Kuwait, Egypt and South Africa are also acquiring land in other countries – invariably capital-starved developing nations (09K1).
Egypt plans to grow wheat and corn on 8,400 km2 in Uganda (09K1).
In Mozambique, foreign demand for cropland is more than double the existing cultivated farmland, and the Mozambique government has allocated 40,000 km2 to investors. Half of these investors are from abroad, e.g. South Korea that is capital-rich but land-poor (09K1).
The Ethiopian prime minister said that Ethiopia is "eager" to provide access to thousands of km2 of farmland (09K1). The Turkish agriculture minister announced "Choose and take what you want." (09K1)
The Democratic Republic of Congo offered to lease 100,000 km2 to South Africa. (South Africa is the only sub Saharan African nation that produces a food surplus.) (09K1)
The Sudanese government leased 15,000 km2 of prime farmland to the oil-rich, water-poor Gulf States, Egypt and capital-rich, land-poor South Korea for 99 years. (Sudan is the world’s largest recipient of foreign aid, with 5.6 million Sudanese dependent on food imports.) (09K1) 
An American business leases 4,000 km2 of prime farmland in the southern part of capital-starved, food-deficient Sudan (09K1).
Oil-rich Saudi Arabia grows rice in hunger-stricken Ethiopia for consumption by Saudis (09K1).
Oil-rich Kuwait has leased 1,300 km2 of rice fields in poverty-stricken Cambodia (09K1).

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Section [E] ~ Some Effects of Informal Economies on Religion and War - And Vice-versa ~

Large-scale informalization of the developing world's labor force and economies is even affecting the religious makeup of much of the developing world. The more established Christian, Muslim and Jewish religions might want to take note of the rapid growth of the "informal" sector of economic activity in developing nations - and of the religion that provides hope, help and strength to these ill-treated people. The three long-established religions got their start by providing "safety nets" where none existed before. Modern-day fundamentalist Christian churches have, to a significant degree, forgotten their early, brother's-keeper-oriented roots, despite the admonitions of over 2000 verses in the bible. Latin America's Catholic church seems more concerned about the welfare of the quasi-feudal landlords than the region's wretched, hope-deprived peasantry and squatters. The more fundamentalist and evangelical churches in the US seem more concerned about issues such as the legitimacy of gays and family planning - issues their Bible scarcely mentions. Perhaps as a result of the tendency of established fundamentalist churches to take leave of their roots, a relatively new Protestant Christian denomination, Pentecostalism, has evolved. Pentecostalism has been growing into the largest self-organized movement of urban poor people on the planet - the "informal" work force of the developing world. Much of Pentecostalism's appeal comes from people helping each other survive in the lowest economic levels of the developing world where even the median income is barely at subsistence level. Some may express repugnance at the blue smoke and mirrors, speaking in tongues and similar avenues of religious expression common among Pentecostalists. But considering the educational level of the bulk of the developing world's "informal" labor, this sort of expression seems appropriate.

According to Wagner (97W1) "In all of human history, no other non-political, non-militaristic, voluntary human movement has grown as rapidly as the Pentecostal-Charismatic movement in the last 20 years." Pentecostalism has grown to include 25% of Christians worldwide - about 0.5 billion people (06G1). "Renewalists" (an umbrella term covering both Pentecostalists and Charismatics) now comprise 49% of the population of Brazil, 30% of Chile, 60% of Guatemala, 56% of Kenya, 26% of Nigeria, 34% of South Africa, 44% of the Philippines, and 5% of India (06G1). The growing popularity of groupings like Pentecostalism is only a reflection of what people do naturally as their situations grow more wretched and more hope-deprived -they seek out groupings of similarly situated people in hopes of bettering their condition by helping each other (e.g. courses in business and managing money) (07L1). They also see Pentecostalism as a means of gaining strength in numbers for use in redressing their real or imagined grievances. In other words, they resort, out of desperation, to a brother's-keeper strategy - an approach that over 2000 verses in the Bible would appear to favor. The ultimate outcome of all this is hard to predict. Informal labor tends to be treated harshly by developing world governments, and needless restrictions are imposed to make sure no one escapes into the formal economy where they might compete for jobs and customers. However the informal work force is projected to become about 2/3 of the developing world's work force. If Pentecostalism provides a mechanism for uniting and organizing these people, this might create serious problems for those in the formal economy as they struggle to keep control of government policies and thereby insure abundant supplies of cheap labor and natural resources.

We might look to the Middle East for hints as to how informalization might play out. The Muslim world's militaristic organizations such as Hamas (one of many spawned over the past several decades by the Muslim Brotherhood) derive much of their rapid growth and popular appeal by providing social services, food etc. where wretchedness and hope-deprivation are extreme, and where "safety nets" don't exist - similar to the strategy that the peaceful Pentecostal Church employs for its growth among the rapidly expanding world of "informal" labor. Palestinians and others join (and vote for) Hamas as a means of gaining the strength in numbers that they need for redressing their real or imagined grievances - like those in the informal economy who join the Pentecostal Church. Western powers-that-be (be they in established governments or established religions) have apparently never considered using "brothers' Keeper" strategies for competing for hearts and minds - whether they are dealing with Hamas or the Pentecostal Church. In the case of militants like Hamas or any number of others, the West seems to favor the more expensive, more risky, strategy of beating wretched and hope-deprived people further into submission through military means in the apparent expectation that they will more passively submit to their ever-worsening condition. This strategy is not likely to work, as the Russians who fought in the battles over Grozny will attest. The West's sophisticated military hardware and expensive lives are ill suited to dealing with the developing world's increasingly urbanized environments (00N1) where life is cheap, lines of sight are short, and differentiating between friend and foe is difficult at best. The U.S. CIA (00C1) concluded that a key driving trend for the Middle East in the next 15 years will be population pressure. They point out that, even now, in nearly all Middle Eastern countries, over half of the population is under age 20. "In much of the Middle East, populations will be significantly larger, poorer, more urban and more disillusioned" (00C1). The CIA report concludes that "linear trend analysis shows little positive change in the region, raising the prospects for increased demographic pressures, social unrest, religious and ideological extremism and terrorism directed both at the regimes and at their Western supporters" (00C1). It seems unlikely that a military approach is likely to make the youth of the Middle East richer, less urban, less disillusioned, or less hateful of the West.

In Ref. (08S3) an analysis of armed conflicts over the past century has found that armed conflicts are almost always initiated in environments of extreme duress. Such environments provide fertile ground for people like Hitler, Lenin, the Taliban and the like who are always in plentiful supply and who just wait in the wings for an opportunity to enhance their wealth and power. As informal economies expand to a large fraction of the developing world's economy, this creates a huge number of people in a state of great duress. As noted in Section [D], the bulk of this duress can be traced to extreme shortages of financial capital bought upon by the needs for infrastructure expansion resulting from population growth. Much of this growth problem, in turn, reflects the views of religious fundamentalist leaders of nearly all the world's major religions who see family planning and contraception as something to oppose. Though justified on religious grounds, these viewpoints probably date back to ancient times when the fortunes of any given religion and its leaders depended on how much cannon fodder or spear power one could field. Such views are obsolete. Today's wars are far more capital-intensive than the wars of old, and population growth creates extreme scarcities of capital as noted above. The inverse relationship between family size and financial wealth has been increasingly evident in the Christian world for nearly half a century. This explains why the developed world's fundamentalist Christians are increasingly ignoring their religious leaders' views on contraception. This same process is beginning in the Muslim world (07S4). This perhaps explains why Christian nations engage in capital-intensive wars while Muslim nations remain mired in low capital-intensity wars, often referred to as "terrorism." Another possible explanation is that Christian nations tend to occupy the lands with newer, more fertile soils, while Muslims occupy the sites of ancient civilizations which have extracted heavy tolls from the land in terms of soil erosion, overgrazing, deforestation, and irrigation-system salinization - processes that have turned vast areas of green into equally vast areas of brown (subsoil) and white (salt flats of abandoned irrigation systems).

Eventually some significant body of government leaders might come to the realization that nipping large environments full of extreme duress in the bud is vastly cheaper than fighting the wars that such environments tend to precipitate. Ref. (08S3) refers to this strategy as "preemptive brothers' keeper." Several thousand verses in the Christian Bible would appear to recommend this approach also. In today's environment in nearly all of the developing world, the cost of the "preemptive brothers' keeper" approach has fallen to extremely low values - just a few dollars to avert a birth, or a few hundred million dollars per year to eliminate all of the population growth in the developing world. The technologies that have precipitated these cost reductions are discussed in detail in References (07S2) and (07S3).

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Section [F] ~ The Prognosis ~

It is easy to be pessimistic about the future of a developing world where the informal economy is growing so rapidly and to such a large fraction of the overall economy. If one examines the various contexts of the informal economy as described above, one would be inclined to see the underlying causes of informalization in terms of population growth. One might also see a context that apparently arose out of some serious misconceptions, false ideologies or hidden agendas (04P2) (05M1) on the part of the World Bank, the IMF and the WTO. But closer inspection suggests that the World Bank/ IMF/ WTO context is really just one more ramification of population growth. The World Bank, the IMF and the WTO imposed their SAPs in response to the fact that the developing world was financing a large fraction of its subsidies of food, education, health-care, irrigation water, water supplies etc. with money borrowed from external sources, e.g. the IMF. Any banker will tell you that borrowing financial capital to pay for current consumption or operating expenses is the road to disaster. So in a sense, all the SAPs did was to bring the inevitable disaster to a head sooner rather than later. The tragedy is that the disaster could have been avoided by a relatively small investment in contraception and family planning.

The developing world is so financial-capital deprived because people earning $2/ day cannot afford to pay the annual trillion-dollar-plus cost of the infrastructure growth needed to accommodate the yearly 75-million person expansion of that world's population. So a financial-capital-starved developing world must also become human-capital-starved and unable to offer the global economy anything but unskilled labor whose subsistence wages don't earn enough to generate any financial capital. As struggles for basic essentials grows more desperate they also grows bloodier. Social-, political-, and economic instabilities set in, creating an increasingly risky environment for financial capital, making such capital even scarcer. The cost of maintaining law and order escalate even as the money available to pay these costs shrinks. Brutal dictatorships evolve because they can maintain law and order more cheaply if less fairly. Thus the developing world tends to be seen as a world of "bad government." Developed world governments then mistakenly see "bad governments" as the cause of the developing world's ills instead of seeing the developing world's ills as the cause of "bad government."

The net result of all this is that the developing world's population growth produces, by a variety of mechanisms, the process we label "Informalization." The developed world responds, not by addressing population growth directly, but by addressing the symptoms of population growth, e.g. lending financial capital for building huge dams, irrigation systems, etc. The problem is that developing nations subsidize the purchase of irrigation water and the consumption of food produced by these irrigation systems. Thus there is no generation of funds for repaying these external loans, and the developing world winds up several trillion dollars in debt to external sources of financial capital. The developed world supplies roughly $60 billion per year in development- and humanitarian aid to developing world governments. About 97% of this is spent on accommodating population growth and only about 3% is spent on reducing population growth. Then developed world legislators wonder why the developing world doesn't show any significant benefits of such aid. What the developed world's legislators don't realize is that they are throwing 97% of $60 billion/ year at a $1.2 trillion / year problem (the cost of the infrastructure that population growth calls for). No wonder the beneficial effects of development- and humanitarian aid are so hard to identify. Had the developed world spend a small fraction of the $60 billion in development- and humanitarian aid on effectively addressing population growth rather than the symptoms of that growth, developing world population growth could have been largely eliminated, along with most, if not all, of the ills we attribute to "Informalization."

That's not all that could have been accomplished. A large fraction of the developing world's food and natural fiber productions are operating on a highly non-sustainable basis (08S1). Most of this non-sustainability is a result of the developing world's dire shortage of financial capital (at least in theory). Developing world people are, perhaps justifiably, too concerned about the here-and-now to be concerned about the future. For example, the reason why Africans are starving is that their transportation infrastructure is so bad that the price of importing chemical fertilizers is about 60 times greater than in the EU (in terms of the number of hours of labor required to earn enough to purchase a tonne of fertilizer). The result: Africans are mining the nutrients from their soils. Also the organic matter content of their soils is dwindling because manure and crop residues must be used to provide fuel for cooking etc. as the ring of deforested land expands ever outward from urban areas and as the price of charcoal escalates. The financial capital freed up by inexpensively reducing population growth could be spent on making the developing world's systems for producing food-, natural fiber and freshwater far more sustainable, thereby increasing the hope for a better future for the informal economy and the other economies of developing nations.

What most people don't yet realize is that technological advances have reduced the cost of averting a birth in recent decades by about an order of magnitude - to only a few dollars (07S2). Future advances (awaiting Phase III approval) are likely to lower the cost still further and make female sterilization affordable and available to even the poorest and most remote women in the developing world (07S3). (Currently about half the women in the developing world have no access to female sterilization when they no longer want - or can afford - any more children.) Also contraceptives are becoming more reliable and more readily available, and religious taboos against them (and abortion) are being increasingly ignored -even in the Muslim world (07S4) (where population growth rates are among the world's highest). As a result of all this, total fertility rates and population growth rates are falling virtually worldwide except for a few dozen nations. As noted earlier, the probability of civil armed conflict has been shown to be directly proportional to fertility rates (04P1) suggesting a decreasing likelihood of armed conflicts as fertility rates decline worldwide. It has also been shown that the reason why the world's poorest nations keep falling behind the rest of the world economically is because of the higher frequency of wars (05M2). Declining rates of armed conflict are also likely to reduce demands on financial capital in the developing world and decrease the risks associated with financial investments - making financial capital even less scarce. All this would suggest that developing world wretchedness - and the size of its informal economy - might both diminish over time if the developed world can just be made to understand the crucial issues involved.

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Section [G] ~ Even though the informal economy and the informal workforce seem destined to become 2/3 of the developing world's economy and workforce, could informalization be but one element of a larger and more global process?

You will note from the above that being part of the informal workforce in the developing world is a wretched condition to be in. What you earn is probably close to subsistence level, meaning that accruing some capital to enable you to get into the formal economy is difficult at best. To make matters worse, barriers get put in your way that make it a lot harder or impossible. (See Table 1.4) This is probably to prevent you from competing for the few available jobs with others already in the formal economy - or for their customers. Remember that the formal economies in developing nations are usually stagnant, with little if any job creation. In many urban areas, land prices are at developed world levels, meaning it may take someone in the informal economy 20 years of wages to buy the smallest parcel.

What appears to be happening is that a de facto caste system is being created - not formally as in India but by your being trapped in the informal economy without any realistic hope of accumulating any capital, financial or human, and hence no realistic hope of escape. It could be worse. You could be lured into a situation with a promise of a better job and then find yourself spirited off to some foreign land, e.g. the EU or the US (slave population: 200,000 (07L2)), and be sold into slavery. Women and children are the most likely to encounter this, in part because their incomes are often well under what is required for bare subsistence, making them more desperate. Slavery is a $12 billion/ year "industry." The world's slave population is about 27 million (05A2). In Brazil (slave population: 40,000 (07D1)) what you produce is often sold to large U.S. corporations (06S2) much like the slaves in China's prisons. Working in remote locations means that escape is impossible and not allowed because you allegedly owe your owner some sort of financial debt.

In India's Hindu caste system, more than subsistence earnings limit your options. If you are in the lowest caste but somehow manage to acquire some human capital (education) and earn something beyond subsistence level, a group of people of a higher caste will slaughter you and your family. Their motive is apparently to maintain an abundant supply of extremely cheap labor and/or an abundant supply of natural resources - the usual motive for a caste system or a slave system, or possibly for the informal economy and its workforce. Public (free) primary education in India exists in name only (08S2), so you are liable to remain illiterate unless you can somehow afford a private education. This is essentially impossible for someone on subsistence level earnings that, for the lowest caste, is the only option. You don't even need to be at the bottom of India's caste system to be subject to extreme abuse. The more traditional Indian family farmers must borrow money from private lenders at 130-460% interest and go to jail when they default. Yet corporations getting into agriculture in India receive tax-holidays, cheap credit, highly subsidized land, and excise duty relief. About 200,000 Indian farmers committed suicide in the 12-year period 1995-2006 (08N1). High suicide rates and rural despair helped to topple the Indian government in 2004 (06S3). India has 550 million farmers and another 200 million agricultural workers. Conversions to capital-intensive agriculture typically reduce labor content by on the order of 95%. This implies an eventual mass exodus of roughly 700 million Indians to the rings of slums surrounding India's major urban areas, and from there into India's informal economy. (About 2/3 of India's population lives in the countryside (06S3).) This could be the largest forced migration of people in all of human history.

In Pakistan the government is largely controlled by wealthy landowners appropriately termed "the feudals" by the bulk of the population (98P1). In one of Pakistan's agricultural district there are 50,000 slaves chained to their beds at night (99U1). Opportunities for education are limited. Pakistan is short about 60,000 middle schools. If you are fortunate enough to get into a public school you could discover that the bulk of your primary education entails memorizing a large portion of the Koran (not very conducive to getting you a job). Or it could mainly be learning to recite "hate America" slogans - also not conducive to expanding job opportunities (03U2). About 60% of Pakistan's population can't read or write, according to official figures. The average Pakistani boy receives 5 years of education, and girls get half that; 1/3 of Pakistani children never attend school at all (05L2). Apparently religious fundamentalists are still influential in Pakistan.

Much of Latin America suffers from an extreme scarcity of people in the middle class. In parts of Latin America wealthy holders of large tracts of land maintain their own "death squads" to prevail over the local populace. Because of an abundance of natural resources and a large indigenous population, Latin American nations grew up relying on raw materials, cheap manual labor to exploit them, and low government taxation. The system concentrated land ownership and wealth in a few hands, deprived governments of money to spend on education and offered little incentive for the elite to invest in human capital or technology. Latin America has also historically relied on monopolies and franchises, leaving few opportunities for entrepreneurs to advance through hard work and innovation (05L1). Brazil only recently made primary education mandatory. The clergy of the dominant fundamentalist religion in Latin America typically sides with the wealthy holders of large tracts of land rather than the typically impoverished landless in any difference of opinion regarding public policies. Limiting access to modern contraception also helps to maintain high earnings on capital and abundant supplies of cheap labor and natural resources. A strong focus on family planning in recent decades in Mexico, Chile and more recently in Brazil is creating the early beginnings of a middle class in these nations (06K1). There is a long way to go before substantive results are shown in this attack on poverty however.

Note that the developing world's informal economy and its informal labor force are blending fairly seamlessly into the developing world's caste system, its feudal system and its slavery system. All four have the common features of (1) no realistic options for escape, (2) a purpose of maintaining an abundant supply of cheap labor and natural resources, (3) "earnings" being barely sufficient to acquire the most basic necessities of existence and (4) rapid growth. With the globalization process growing full-tilt and the mobilities of virtually all the components of economic activity growing rapidly, one must ultimately ponder (1) whether the developed world is also undergoing the same (or similar) transition, and (2) if so, how far is it likely to advance. The answer to Question (1) appears to be yes, as the paragraphs below show. As one examines the phenomenology of the transition below, it is clear that the caste system is primarily age-based. Thus it is easy to see how the bottom caste must become an ever-increasing part of the economy, and is likely to expand, at the very least, to roughly the size of the informal economy anticipated in the developing world, i.e. to about 2/3 of the total economy - the answer to Question (2). The paragraphs below cover only Europe, Japan and the US. This is not to be interpreted as the remainder of the developed world being immune to the transition, only that data are lacking.

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Part [G1] ~ A Caste System for the Developed World? ~ [G1a]~Japan, [G1b]~The U.S., [G1c]~Europe

India is noted for its Caste system in which everyone is divided into "castes" from which social norms make escape impossible, regardless of what you do, or what talents you have. Also, as a backup, the system is set up so as to insure you never accumulate enough capital to change castes even if social norms suffer a few lapses. If one examines the EU (See below), Japan (See below), the UK, the US (See below), and Argentina (See above) one cannot help but notice the beginnings of a developed-world caste system. We won't speculate here on whether it might evolve to the degree found in the developing world with its 27 million slaves (05A2) and its feudal characteristics (e.g. Pakistan or much of Latin America). However we summarize, below, some of the evidence for the beginnings of a developed world caste system. The readers are then free to do their own speculating.

Sub-Part [G1a] ~ Japan ~

Japan pays the world's highest wages. Yet it is in the midst of a region of the globe where factory wages are perhaps a factor of 40 lower than Japan's wage scales. Japan would collapse into chaos if it tried to pull off a 97% reduction in wages. In order to survive in a globalizing world, Japan must resort to a policy of covert protectionism. But this is only marginally adequate. This once proudly egalitarian nation is now facing the fact that it has a large and growing number of poor people (10F1).  Almost one in six Japanese (20 million people) lived in poverty in 2007.  Japan’s poverty rate (15.7%) is now comparable to 17.1% in the U.S.  Japanese had previously viewed the glaring social inequalities in the U.S. with scorn and pity.  Japan’s poverty rate has doubled since Japan’s real estate bubble and stock market bubble collapsed in the early 1990s.  More than 80% of those Japanese are part of the so-called working poor who hold low-wage, temporary jobs with no security and few benefits.  Years of deregulation of the labor market and competition with China have created a proliferation of such low-paying jobs.  The poor are unable to pay for cram schools and other expenses that would enable their children to compete in Japan’s high-pressure education system. As a result they are permanently unable to escape from low-wage work (10F1).

Japan's corporate world has become a hell of pressures to produce - and produce efficiently. The Japanese even have a word for death through overwork. Now Japan must go further and create a two-tiered work force (much like Europe is doing). Young Japanese entering the work force can often find only temporary or part-time work with very low pay and few if any benefits. Once Japanese workers accept temporary help status they tend to be discriminated against thereafter. For example, when the Japanese economy began recovering in 2003 and companies needed more full-time workers, they got them by hiring fresh graduates rather than by promoting "temps" (08H1). Japanese "temps" earn 2/3 of what full-timers make, and can often be hired and fired with a few day's notice and receive few benefits. More than 33% of Japan's labor force is now categorized as "non-permanent" (part timers, temps on fixed-term contracts, and people sent to employers by temporary staffing agencies) vs. 23% in 1997 and 18% in 1987 (08H1). Among Japanese workers aged 25-34, about 26% were "temps" in 2006, vs. 14% in 1997 (08H1). By any definition, Japan's reliance on "temps" is among the highest in developed nations (08H1). Below are some details on this second tier.

An estimated 640,000 unmarried Japanese, aged 15-34, dropped out of the work force or failed to enter it in all of 2004 - up from 400,000 in 1993, the first year for which Japan's Labor Ministry has figures (05W1). Even 12% of Japanese between the ages of 35 and 44 lived with their parents in 2004 (06O1). This grouping of people have become of such great concern that they have been given the label "NEETs" - Not in Education, Employment or Training - primarily young people who have given up looking for a job, and who often get financial support from their parents. The term "NEET" comes from the UK where, in the late 1990s, young people started finding it increasingly difficult to find jobs (05W1). In 2004 the NEET population made up about 2% of Japan's 33 million 15-to-34-year-olds. The number of Japanese NEETs is expected to reach 1.2 million by 2020 (05W1). Part of the cause of Japan's growing NEET population is the increasing trend for Japanese companies to reduce full-time hiring and rely increasingly on part-timers and "temps." Once you accept a part-time job (typically for very low wages) you are trapped there for life. Japanese hiring practices make it difficult for people who have hopped from one low-paying job to another to get hired for full-time, long-term company work (05W1). Adding to the problem, many Japanese in their 40s and 50s who sacrificed their lives for stable, but grueling, corporate jobs have become miserable. So they don't want their children following in their footsteps, and encourage their children to pursue "dream jobs" and they are willing to support them in the process (05W1) in the faint hope of success. Young Japanese with full-time jobs are also growing weary of corporate jobs -even full-time jobs with high pay. A recent study by Japan's Nomura Research Institute of 1000 full-time company employees in their 20s and 30s found that 75% of them said they felt unmotivated at work. 50% said they would quit if given the chance (05W1).

It is getting worse for young Japanese in more ways than outlined above. Japan once saw itself as an "all-middle-class society" but in the mid-1990s it began moving toward a more stratified society. This change is now moving faster with the election in 2001 of Prime Minister Junichiro Koizumi who instituted Reaganesque politics of deregulation, privatization, spending cuts, reductions in health- and pension benefits, and tax breaks for the rich, but at a social cost that Japanese are just beginning to grasp (06O1). Koizumi also lifted most restrictions against hiring temporary workers (06O1). The number of Japanese without any savings has doubled to 24% in the past five years, and the number receiving welfare payments or educational assistance is up by more than a third. This, coupled with a huge gap in quality between public and private schools, means that many young Japanese have little or no hope of being admitted to universities since their parents are no longer able to afford the $20,000 or so required for a private junior high school education that is essential for getting into a private high school and into a university (06O1). This makes it difficult or impossible for public high school graduates to get a good, full-time job, and this limits them to temporary work at very low pay with no hope of rising any higher, regardless of their native intellectual abilities or their commitment to their job. This system of education is similar to that in the UK's system of long standing. Japan appears to be returning to the highly stratified society that existed in pre-WWII Japan - a condition that produced leaders prone to military adventures into China, Southeast Asia, Korea and others. There's even a new kind of homeless people in Japan - young Japanese who sleep at Internet cafes (08H1).

The toll of all this stress is wearing on more than just the younger generation of Japanese. Japan is now one of the world’s most suicide-prone nations (09F1). Japan’s suicide rate is again on the rise. The number of suicides in 2009 could approach Japan’s record high of 34,427 reached in 2003. The main cause is Japan’s long economic decline. Suicides first surged to their recent high levels in 1998, when traditional lifetime employment guarantees began to vanish, and they have remained high as salaries and job security continued to erode. The situation has worsened during the recent global financial crisis (09F1). One can only imagine what Japan would be like if it did not resort to a covert system of protectionism to protect itself from the wage scales found in the nations in the vicinity of Japan. 

Sub-Part [G1b] ~ The U. S.

The US does not yet track NEET populations. However in the closest equivalent, nearly 9% of people in the US, ages 16-24, are not in school, not working and not looking for a job (05W1). In 2002, 1.1 million US men and women between ages 25 and 54 described themselves as "retired" (9/2003 study by the US Bureau of Labor Statistics). By comparison, in 1991, 330,000 in the same age group described themselves as "retired" (04H1) -apparently now a code word for being unable to find work for so long that they have given up trying. Japan's trend toward temporary and part-time work without benefits is clearly being replicated in the US (93Z1). Average job tenure in the US was 9 years in 1999, 8 years in 2000 and 7 years in 2001 (From a survey of 2000 laid-off clients of outplacement concern Drake Beam Morin as reported in Wall Street Journal, early in 2002.). The percent of the 503 small US businesses surveyed that hired temporary workers was 22% in 1996 vs. 31% in 1997 (Wall Street Journal, 6/24/98).

Does accepting temporary and part-time work in the US put you in a low caste from which there is no escape? The answer is increasingly becoming Yes. The disparity between wages of college graduates and high school graduates has been increasing rapidly for some years in the US, perhaps because high school graduates tend to compete more directly with developing world labor. (This trend might not last too much longer as nations like China and India add more colleges of science and engineering by the hundreds.) Four-year college graduates in the US in 2000 earned about twice as much as those with high school diplomas - double the 50% premium of 1980 (00M1). In 1980, a new employee with a master's or doctoral degree earned a bit more than twice as much as someone who didn't complete high school. Today that spread is more than 4 to 1 (00M1). Meanwhile the price of college educations in the US is escalating far faster than the rate of inflation, even as wages of the bottom economic fifth of the US population fall, in inflation-corrected terms. Also, federal loans and grants to college students are now being cut in order to pay for wars, tax cuts, etc. Thus the probability that high school graduates will ever be able to afford college educations for their children (or even afford children) grows increasingly remote. This appears to be a significant part of the primary mechanism by which a US caste system is being formed. Below are some data that illustrate this point:

The economic dilemmas facing young US adults were described in two books: "Generation Debt" by Anya Kamenetz and "Strapped: Why America's 20- and 30-Somethings Can't Get Ahead," by Tamara Draut (06B1). Nationally, 34% of those aged 18-34 receives cash, gifts and time from their parents. US parents pay $2323/ year to help support children aged 25-26 years, and $1556/ year to children aged 33-34 years (in 2001 dollars) (06B1). These amounts have been increasing for the past few decades. In addition, time assistance from parents averages 367 hours/ year (06B1).

The following data for young American workers give some insights into the above:

Sub-Part [G1c] ~ Europe ~

In Europe, trends of the same basic nature as those described above for Japan and the US are in evidence. Europe's temporary-labor market is growing by more than 10%/ year (98C1). In France, 86% of new hires are on short-term contracts, usually for 6 months, renewable once, and they frequently have to work nights and weekends (98C1). Europe is better off than the US in the sense that:

However Europeans are paying a high price for this in the form of high (and growing) unemployment in much of Europe, in some cases to socially and politically destabilizing levels. Economic growth rates are low. Some EU nations, particularly Spain, are chipping away at protections of wages and benefits. Also, jobs are increasingly on a contract basis and last for only a matter of weeks or months. Spanish workers on short-term contacts now account for 32.5% of the Spanish labor force, double Europe's average. The proliferation of short-term contract jobs has helped to cut Spain's unemployment rate from 20% to 9.4% over the past decade (05J1). By comparison, Germany's unemployment rate is 11.4%, up from 9.2% in 2001. In France, unemployment increased from 8.3% to 9.9% in the same period (05J1). Economic growth in Spain is also increasing (Economic growth rates in 2005: US 3.5%/ year: Spain 3.2%/ year: Germany 0.8%/ year: France 1.5%/ year (05J1)). However Spanish labor productivities are stagnant, wages are falling to minimum-wage levels, and job benefits are vanishing. Productivity in Spain grew an average of 0.9%/ year between 1995 and 2004, vs. 1.7%/ year in Germany, 2% in France, and 2.5% in the US (05J1). Short-term contracts explain the falling labor productivities. Why should an employer invest in worker training when that worker will be gone soon? Thus workers are frequently "between jobs" and since severance pay no longer exists and wages are meager, "between jobs" often translates to "wretchedness." Short-term Spanish workers often subsist on salaries barely above Spain's gross minimum wage (about $725/ month). The plight of Spain's short-term workers has created a new political buzzword: "precariousness" (05J1). Contract workers in Spain have been known to save money on electricity by feeling their way around their living quarters in the dark, and saving money by cutting back on food items such as bread (05J1).

The Spanish work force is also being stratified - older workers have the long-term, high-paying jobs, while the younger workers (even college graduates) are low-paid contract workers. Over time, competitive pressures and the aging process will decrease the pool of long-term jobs and increase the pool of contract jobs. Currently Spanish workers on short-term contracts are typically between ages 18 and 30 (05J1). Despite all the risks to the future, other European nations are starting to (or trying to) follow in Spain's footsteps. A French decree in August of 2005 allowed companies with fewer than 20 workers to lay off employees within 2 years of their hiring without any justification (05J1). Denmark has also liberalized its hiring and firing policies. Its unemployment rate has fallen 50% over the past decade (05J1). The German government, earlier in 2005, cut benefits to those unemployed for more than a year (05J1). As in many other European countries, Germany's welfare system is in retreat. Germany's poor were formerly unskilled workers with casual jobs. Today, even Germany's blue-collar workers are falling out of Germany's once-broad middle class (07W1). In Germany, temps now make up 14% of the work force, according to the OECD (07H1). The number of volunteer-run food centers that distribute surplus food to Germany's needy increased from 200 in 1999 to 700 in 2007 (07W1). The poverty rate in Germany (expressed an the percent of people living on less than 60% of the median income) has climbed from 12% in 2000 to 16% in 2005 (07W1).

Recent research (06A1) has documented, in greater detail, the price that young Europeans just getting out of school and into the labor market are paying as victims of the economic and social stratification that is occurring in most developed nations. Between the 19th and the mid-20th centuries, the transition to adulthood in Europe became more temporally organized and more predictable. In the 1950s and the decades immediately following, the transition to adulthood continued to occur in a reasonably ordered and predictable fashion, with all the constituent transitions taking place over the space of only a few years (76M1). However, the last decades of the 20th century and the start of the 21st century (start of the current globalization) have seen the transition to adulthood in many EU countries becoming more complex and protracted - often in ways that leave young people particularly vulnerable (06A1). I.e.:

In recent decades, the transition to adulthood in Europe has become more protracted, with many of the traditional markers of adulthood occurring later, sometimes not until the early thirties or beyond. An analysis (04S1) of birth cohorts over a 60-year period show that throughout Europe, the age of leaving school has increased as educational standards have improved - for all groups, but most dramatically for Southern European women, who towards the end of the 20th century were spending around six years longer in education than at the beginning of the 20th century. As a result of this, and also as a result of increasing spells of unemployment among young people, the entry to first employment now occurs later - in France and Italy over six years later at the end of the century than at the beginning. Leaving home is also occurring increasingly late. (See Ref. (01C1) for data on this and other demographic transitions, covering 10 European countries.) An extreme example of late home-leaving is Italy, where the median age for leaving home is almost 30 for men: by age 24, only a small fraction of men have left home. Likewise, in many countries, late fertility is increasingly the norm: in the Netherlands, the mean age for a first birth among women is 29 and only a minority of women (or men) have become parents by their early twenties (02I2) (06A1).

Data from seven countries (France, Germany, Italy, Sweden, the UK, the US and the Netherlands) analyze the economic sufficiency of young people's earnings, and the incidence of poverty on young people (02S3). They find that in all countries, only a minority of young people of either sex in their late teens and early twenties are able to support themselves with their earnings alone. Even when social transfers are taken into account, a significant proportion of young people remain unable to support themselves - and much less, a family -before their mid- to-late twenties. Although income sufficiency increases markedly through the early twenties, poverty rates decline much more slowly over this age group, indicating that young people with low earnings are protected from poverty to a degree because of living with their families of origin (02S3). Simply getting a job is not enough to avoid social exclusion: even if they find a job, those with low educational levels may remain trapped in poorly paid low quality employment (00P1).

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Section [H] ~ Alternatives to the Informal Economy - and Their Limitations ~

Growing population pressures upon the land in environments where there is little (if any) undeveloped arable land, plus degradation/ abandonment of land and fisheries, plus conversions of food/ wood/ freshwater production systems from high-labor-input-low-capital-input to the reverse plus some serious errors by the IMF, the World Bank and the WTO are forcing hundreds of millions, if not billions, of developing world people to migrate from subsistence agricultural and fishery-oriented environments to urban environments. This is no minor issue, because for most developing nations, agriculture and fisheries comprise 50 to 70% of their economy. This could easily be the largest mass-migration in human history. In theory people living in rural parts of developing nations have about seven options:

(1) Staying in rural subsistence-level, labor-intensive agriculture or fisheries;
(2) Staying in rural areas but working as labor in high-capital-input agriculture or fisheries.
(3) Migrating to central cities of developing nations, to jobs producing for the global economy.
(4) Migrating to central cities of developing nations, to jobs producing for the local economy.
(5) Emigrating to developed nations.
(6) Migrating to increasingly environmentally marginal croplands, grazing lands and fisheries where capital-intensive management and sustainable production are not feasible.
(7) Migrating to rapidly expanding slums that ring most cities in the developing world and working in the "informal" economy.

Option (6) (destination: marginal agricultural lands) and Option (7) (destination: urban slums) simply reflect a lack of capacity of (or access to) Options (1)-(5). Option (6) typically involves marginal fisheries or land with steep, rocky hillsides, high erosion rates, low precipitation rates, low productivity, non-sustainable production, high abandonment rates, and high labor inputs per unit of output. Despite what some claim (08S1) (94B1) (96S1), migration to undeveloped land or fisheries of good inherent quality is rarely feasible due to the lack of such resources (see Sections below and/or Chapter 1, Section D of Ref. (08S1)). Option (6) tends to foment social, economic, political, and military instability (90B1) (00N1). Using the rate of agricultural land abandonment (100,000 km2/ year (92P1) (94K1)), and assuming a family of five occupies 2 ha. of land before abandoning it, suggests that 25 million people in Option (6) leave it every year - probably migrating to Option (7). If each marginal farm lasts 20 years before it must be abandoned, then the population of people working marginal agricultural land or fisheries would be about 500 million people.

Option (7) (destination: rings of urban slums and the "informal" economy) also tends to foment social, economic, political and military instability (00N1) and high risks for capital of all types. This is because simple survival in the "informal" economy is a daily, challenging ordeal, and the host cities make it extremely difficult to gain entry into the "formal" economy. Also the formal economy is stagnant in nearly all developing nations. Virtually all economic growth is in "informal" economies. It is easily shown then (See above) that the "informal" economy is destined to become about two-thirds of the economy of developing nations. It becomes highly unlikely, then, that those in the "informal" economy (with all its wretchedness, poverty and hope-deprivation) are going to continue to be willing to put up with the high levels of abuse that they have been subjected to. It seems likely that the bulk of the 826 million chronically under-nourished people in developing countries (1994-96 data) (98U2) are to be found in Options (6) and (7) (marginal/non-sustainable agriculture or the "informal" economy). The fraction of developing-nation residents living in urban settings nearly doubled during 1960-1990 [under 22% to over 40%] and the trend shows no sign of let-up (00W2), (99U2). In the 1980s, almost 75% of households established in urban areas of developing countries were in slums (94L1). One billion people now live in unplanned shantytowns (99R1). This appears to be a reasonable estimate of the population of the "informal" economy. There is much discrimination (and worse) against those working in the "informal" economies throughout the developing world. All sorts of public policies are aimed at making it extremely difficult (or impossible) for someone in the "informal" economy to become part of the stagnant "formal" economy (See above). What is likely to happen when those working in the "informal" economy outnumber those in the formal economy by 2:1 is anyone's guess. It should be noted however that virtually all the world's armed conflicts over the past century or so have originated from situations in which large numbers of people are under extreme duress (08S3).

Option (1) (Destination: labor-intensive agriculture and fisheries) is primarily just a holding pattern until the transformation to capital/ energy-intensive agriculture, forestry and fishing comes along. For the developing world as a whole, the fraction of the labor force directly engaged in agriculture is 60.5% (vs. 2.4% in North America where agriculture, forestry and fisheries operate in a capital-intensive mode) (00F1). This would suggest that their transformation to capital/ energy-intensive agriculture is about 40% complete. The proportion of the urbanized population in the developing world was 40% in 2000. That proportion is growing by 2.3%/ year (UN Population Division statement, 2000). In the developed world, 75% of the population lives in urban areas (UN data, Christian Science Monitor (5/3/01)). This would suggest that the transformation to capital/ energy-intensive agriculture in the developing world is somewhat over 50% complete, with a completion date in roughly three decades. The population of Option (1) is 2.9 billion (60.5% of the developing world population) less 0.06 billion in Option (2) (see below) less 0.5 billion in Option (6) (see above) or 2.34 billion. Essentially all of these people (plus any fertility-driven population growth) will need to migrate to other options over something on the order of 3-4 decades.

Option (2) (Destination: labor in capital-intensive agriculture and fisheries) will likely be viable for no more than roughly 2-3% of the original rural population of developing nations by the time transformations to capital-intensive agriculture/ forestry/ fishing are complete. This is based on the experiences of developed nations, which went through the same transformation early in the 20th century or before. The fraction of the labor force directly engaged in agriculture is 2.4% in North America (00F1). Given the estimate above that the transformation to capital-intensive agriculture is 40-50% complete, gives a rough estimate of the population in Option (2) of 40-50% of 2.4% of the developing world's population, or about 60 million people. This should roughly double as the transformation to capital-intensive agriculture runs its course.

Option (3) (Destination: urban jobs in the formal economy producing for the global economy) plus Option (4) (Destination: urban jobs in the formal economy producing for the local economy) hold a 2002 population of roughly 1.1 of the developing world's 5.0 billion people (02U1) (See data above for Options (1), (2), (6) and (7)). But even Option (3)'s share of this 1.1 billion has produced

This opposition seems motivated mainly by the large differences between wages in developing and developed nations, and suspicions that trends to lower real wages and benefits for labor of developed nations are attributable to imports from developing nations. The huge and rapidly growing trade deficit of the US (over $700 billion/ year in 2005 and 2006) could cause foreign governments that lent the money to finance the US trade deficit to start pulling their money out, causing the dollar to sink, stock markets to plunge, interest rates to rise, and the US economy to grind to a halt (02P1).

The effects of Option (3) on those who chose it have been mixed. In most developing nations, people have left subsistence agriculture, forestry and fishing to move to slums surrounding manufacturing facilities producing for global markets where they receive wages, but must purchase their necessities on the global market, making them only slightly better off and in many ways worse off (See above). This is largely because they must seek employment in an environment where population-growth and the transition to capital-intensive agriculture have created huge labor surpluses that have kept wages at or near subsistence levels. The "Asian Tiger" economies have combined the transformation to manufacturing for the global economy with fertility reduction programs that have been able to reduce fertilities to replacement level or below. This has enabled them to grow their own capital rather than importing it, and to transform themselves, economically, nearly or totally into developed nations (98B3).

"Footprints": Might the remainder of the developing world achieve near-developed-world status merely through the combination of manufacturing for the global economy and fertility reductions to replacement level or below? The answer is No. The ecological "footprint" - the average amount of productive land and shallow sea appropriated by each person from around the world for food, freshwater, housing, energy, transportation, commerce and waste absorption - is about one hectare (2.47 acres) in developing nations, and 9.6 hectares (24 acres) in the US (02W1). For every person in the world to reach present US levels of consumption with existing technology would require five planet Earths (02W1). Some lessons learned: (1) Over-population must be evaluated relative to some assumed standard of living; (2) Developing world folk would need to decrease their "footprint" to zero for the Earth to be within its "footprint" limit if the developed world kept its "footprint" unchanged, and (3) If everyone on Earth had the same standard of living, and the Earth's "footprint" limit were obeyed, that living standard would be roughly 20% of the current US standard of living or 1.9 times the current standard of living of the developing world.

Net Primary Production: An analysis of human co-option of global photosynthesis (net primary production) (the bottom of the world's food chain) produces essentially the same conclusion as "Footprint" analyses. Humans co-opt 90-96% of the Earth's accessible products of photosynthesis (08S4). The population anticipated in mid-21st century (9 billion) would take the 1.9 figure (given in the previous paragraph) down to 1.27. Lack of sustainability in the developing world's food/ wood/ freshwater supply systems would cause 1.27 to fall indefinitely (08S1).

The "China" Problem: China has been moving into Options (3) and (4) in a big way - perhaps 250 million of its total population of about 1.25 billion. India is proceeding along the same path. Because of its essentially inexhaustible supply of unskilled people willing to work for $0.40-$0.60/ hour, China and India have been pulling foreign investments (and the jobs that go with such investments) away from "Asian Tigers" (where unskilled labor costs $2/ hour in Malaysia, $5 in Singapore and $25 in Japan) (02W2). China appears to be advancing economically along the same path as did Japan, South Korea and Taiwan. If it does this to the point of achieving the same level of fish consumption as these nations, the entire sustainable wild fish production of all the world's oceans will be required just to supply China's fish needs (Ref. 40 of (98B2)). Even today, economic growth in parts of China and India is causing significant price increases in numerous natural resources (including fossil fuels, minerals and food as noted above) in the global marketplace.

Option (4) (urban jobs producing for local economies) was the option used by subsistence-level economies early in the 20th century, or before, to achieve developed-nation status. For modern-day developing nations, Option (4) has not been available to anywhere close to a sufficient degree due to a lack of financial capital to work through the huge surplus of subsistence level labor (Chapter 5 of Ref. (08S5)). Problems alluded to in Option (3) (Destination: urban jobs producing for the global economy) are likely to greatly reduce whatever capacity Option (4) may have.

Option (5): Emigration from the developing world to the developed world appears to be no more than about two million/ year - 3% of the developing world's 2002 population growth rate of 71 million/ year (02U1). But even this number is causing backlashes, resulting in all kinds of doors to the developed world being closed. For example, a decade ago, 40% of the 500,000 asylum-seekers seeking refuge in Europe annually were admitted. Today less than 10% are granted asylum (Dana Milbank, Wall Street Journal (11/7/94)). Political parties have been formed throughout Europe dedicated to opposing immigration. The tide of public opinion is turning against immigrants throughout the developed world. For example, 79% of West Germans felt that too many foreigners live in the Federal Republic (George Melloan, Wall Street Journal (11/5/90)). Up to 75% of Americans support cuts in both legal and illegal immigration (Pittsburgh Post Gazette (4/26/96)). Although the human tide seeking permanent entry into the developed world is multiplying, resistance is also expanding rapidly. So significant increases in emigration from developing nations seem unlikely and 97% or so of the developing world's population growth is going to have to remain in the developing world.

Summary: Table 1.6 summarizes the populations in Options (1) through (7) as estimated above, currently and at the completion of the conversion to capital-intensive agriculture.

Table 1.6 - Populations in Options Available to Developing World Residents - Current and Projected ~



Population in 3.5 decades#

























~ ~ ~

# At the completion of conversion to capital-intensive agriculture and fisheries
## 7.2 billion (02U1) less 70 million migrated to developed nations (Option (5))

Table 1.6 makes the central issue clear. Can the developing world really cram 7 billion people into Options (3) and (4)? Extreme shortages of financial capital in the developing world (caused primarily by population growth that requires huge amounts of financial capital to fund the needed infrastructure growth) make significant additions to Option (4) impossible (Chapter 5 of Ref. (08S5)). As shown above, economic problems that would develop in developed nations, and risks to global food/ wood markets make significant growth in the population of Option (3) impossible. Yet, cramming 6 billion people into Options (6) and (7) would produce political, social, and economic instabilities that no government could manage.

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76M1 Modell, J., Furstenberg, F. and Hershberg, T, "Social Change and Transitions to Adulthood in Historical Perspective." Journal of Family History 1 (1976) pp.7-32.
80S1 Nevin S. Scrimshaw, Lance Taylor, "Food", Scientific American (September 1980) pp. 78-88.
80V1 Etienne van de Walle and John Knodel, "Europe's Fertility Transition: New Evidence and Lessons for Today's Developing World," Population Bulletin 34(6) Washington, DC: Population Reference Bureau (1980); and Gora Mboup and Tulshi Saha, "Fertility Levels, Trends, and Differentials," DHS Comparative Studies 28, Calverton, MD: Macro International (1998).
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92H1 Nigel Harris, editor, Cities in the 1990s: The Challenge for Developing Countries New York: St. Martin's Press (1992): p. 201; and Massey, "The Age of Extremes" p. 410.
92P1 Pimentel, D., Stachow, U., Takacs, D. A., Brubaker, H.W., Dumas, A. R., Meaney, J. J., O'Neil, J., Onsi, D. E. and Corzilius, D. B. "Conserving biological diversity in agricultural/ forestry systems", Bioscience 42 (1992) pp. 354-362.
92R1 Jonas Rabinovitch, "Curitiba: Towards Sustainable Urban Development," Environment and Urbanization 4(2) (October 1992): pp. 62-73.

93H1 Samuel Huntington, The Clash of Civilizations Foreign Affairs 73 (summer 1993) p.22; Kaplan, "Cities of Despair". (Also see Ref. (96L1))
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94B1 John Bongaarts, "Can the Growing Human Population Feed Itself?" Scientific American, 270(3) (March 1994) pp. 36-42.
94C1 Shabbir Cheema, "Issues in Urban Management," in Cities in the 1990s: The Challenge for Developing Countries, Nigel Harris, editor: St. Martin's Press (1994?) pp. 110-112.
94K1 Henry W. Kindall, David Pimentel, "Constraints on the Expansion of the Global Food Supply", Ambio 23(3), (May 1994).
94L1 Leisinger, K. M. and Schmitt, K., "All our people -Population Policy with a Human Face", Washington DC, Island Press (1994) 280 pp.
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95B1 F. O. Balogun, "Adjusted Lives: stories of structural adjustment," Trenton NJ (1995) p. 80.
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95H1 Trudy Harpham and M. Tanner, editors, Urban Health in Developing Countries: Progress and Prospects (London: Earthscan Publications, 1995); Atkinson, Songsore, and Werna, editors, Urban Health Research in Developing Countries: Implications for Policy (1996); and Trudy Harpham and Carolyn Stephens, "Urbanization and Health in Developing Countries," World Health Statistics Quarterly 44(2) (1991): pp. 62-69.

96C1 Catherine Caufield, "Masters of Illusion: the World Bank and the Poverty of Nations", Henry Holt, New York (1996).
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97R1 Carole Radoki, "Global Forces, Urban Change, and Urban Management in Africa," in Radoki, Urban Challenge (1997) (See Charles Green, editor, "Globalization and Survival in the Black Diaspora: The New Urban Challenge" (1997).
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97T1 I. Tabibzadeh and E. Liisberg, "Response of Health Systems to Urbanization in Developing Countries," World Health Forum 18(3-4) (1997): pp. 287-293; and Ilona Blue, "Intra-Urban Differentials in Mental Health in São Paulo, Brazil," Ph.D. Thesis, London: South Bank University (1999).
97W1 Peter Wagner, forward to Vinson Synan, The Holiness-Pentecostal Tradition, Grand Rapids (1997) p. xi.

98C1 Helene Cooper and Thomas Kamm, "Loosening Up", Wall Street Journal (early 1998).
98B1 Martin Brockerhoff, "Migration and the Fertility Transition in African Cities," in Richard E. Bilsborrow editor, Migration, Urbanization, and Development: New Directions and Issues (1998) pp. 357-387.
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99?P1 Preston and Haines, Fatal Years: p. 91.
99R1 Red Cross World Disaster Report of 6/23/99 (See New York Times of 6/24/99).
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00B1 Deborah Bryceson, "Disappearing Peasantries? Rural Labor Redundancy in the Neoliberal Era and Beyond," in Bryceson, Christobal Kay and Jos Mooji, editors, Disappearing Peasantries? Rural Labor in Africa, Asia and Latin America, London (2000) p. 304-305.
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02F1 Heidi Fritschel, "Nurturing the Soil in Sub-Saharan Africa", IFPRI, 2020 News and Views (July, 2002).
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02S1 Schneider, F. "Size and Measurement of the Informal Economy in 110 Countries around the World", mimeo, Johannes Kepler University of Linz, Austria (2002).
02S2 Shucksmith J, Spratt J. "Young people's self-identified health needs, HEBS Young People and Health Initiative Working Paper", University of Aberdeen (2002).
02S3 Smeeding T, Ross Phillips K. (2002) "Cross-National Differences in Employment and Economic Sufficiency", Annals of the American Association of Political and Social Science, No. 580, pp. 103-133.
02U1 US Census Bureau, International Data Base of 10/10/02,
02W1 Edward O. Wilson, The Future of Life, Alfred A. Knopf (2002).
02W2 Peter Wonacott, "China's Secret Weapon: Smart, Cheap Labor for High-Tech Goods", Wall Street Journal (3/14/02).

03C1 Ha-Joon Chang, "Kicking Away the Ladder: Infant Industry Promotion in Historical Perspective," Oxford Development Studies, 31(1) (2003) p. 21.
03H1 Hammer T., Youth Unemployment and Social Exclusion in Europe, Policy Press, Bristol, United Kingdom (2003).
03J1 Fatoumata Jawara, Aileen Kwa, Behind the Scenes at the WTO:  the Real World of International Trade Negotiations (September 2003).
03K1 Winter King, "Illegal Settlements and the Impact of Titling Programs," Harvard Law Review, 44(2) (September 2003) p. 471.
03P1 Alejandro Portes and Kelly Hoffman, "Latin American Class Structures: Their Composition and Change during the Neoliberal Era," Latin American Research Review, 38(1) (2003) p. 55.
03U1 UN-Habitat (The UN's Human Settlement Program) "The Challenge of the Slums: Global Report on Human Settlements 2003," London (2003) (the first truly global audit on urban poverty).
03U2 "Dollars to Help Pupils in Pakistan", Los Angeles Times (4/14/03).

04H1 Jon E. Hilsenrath, "More Americans Are Leaving The Work Force", Wall Street Journal (2/17/04).
04I1 See for e.g. International Rivers Network, Risky Business for Laos: The Nam Theun 2 Hydropower Project. IRN, Berkeley, California (September 2004).
04L1 John Lyons, "Rich vs. Poor Gap Thwarts Latin American Gains", Wall Street Journal (4/21/04), p. A16. (Reporting on a major new UN report).
04P1 Population Action International, "How Demographic Transition Reduces Countries' Vulnerability to Civil Conflict" in PAI's publication The Security Demographic: Population and Civil Conflict After the Cold War (2/11/04)
04P2 John Perkins, "Confessions of an Economic Hit Man", Berrett-Koehler Publishers (2004) 264 pp.
04S1 Schizzerotto A, Lucchini M. (2004). "Transitions to Adulthood", in Berthoud R. and Iacovou M. (editors), Social Europe: Living Standards and Welfare States, Edward Elgar, Cheltenham, UK (2004) pp. 46-68.
04U1 Ullah, A.K.M.A. 2004. "Bright City Lights and Slums of Dhaka City: Determinants of Rural-Urban Migration in Bangladesh." Migration Letter 1(1): pp. 26-41.
04W1 World Bank (2004) World Development Report 2005: A Better Investment Climate for Everyone, Oxford University Press, New York.

05A1 K. Y. Amoako et al, "Economic Report on Africa 2005: Meeting the Challenges of Unemployment and Poverty in Africa," Economic Commission for Africa (September 2005) P.O. Box 3001, Addis Ababa, Ethiopia.
05A2 Antislavery International, Estimates of the world population of slaves as reported on Nightline (6/2/05).
05G1 Government of India (2005) Economic Survey 2004-2005, Ministry of Finance, Available at hp://
05J1 Keith Johnson, John Carreyrou, "Amid Europe's Gloom, Spain Blossoms with Short-Term Jobs," Wall Street Journal (9/28/05) p. A1.
05L1 David Luhnow, John Lyons, "In Latin America, Rich-Poor Chasm Stifles Growth," Wall Street Journal (7/18/05), p. A1.
05L2 Steve LeVine, Zahid Hussain, "Pakistan's Broad Education Ills", Wall Street Journal (8/19/05) p. A11.
05M1 George Monbiot "I'm With Wolfowitz: Have we forgotten what the World Bank is for?" The Guardian, (4/5/05)
05M2 Branko Milanovic, "Why did the Poorest Countries Fail To Catch Up?" Carnegie Papers of the Carnegie Endowment for International Peace, Number 62 (November 2005) 31 pages.
05N1 NESDB, Documents for the Annual Conference on Strategic Management of the Informal Sector, Bangkok (June 24, 2005) p.10.
05W1 Ginny Parker Woods, "In Aging Japan, Young Slackers Stir Up Concern," Wall Street Journal (12/29/05) p. A1.

06A1 Arnstein Aassve, Maria Iacovou, Letizia Mencarini, "Youth poverty and transition to adulthood in Europe," Demographic Research, 15(2) (7/27/06) Pp. 21-50
06B1 Anna Bahney, "The Bank of Mom and Dad," The New York Times (4/20/06).
06G1 Lauri Goodstein, "Pentecostals booming in developing world," Pittsburgh Post Gazette (10/8/06) (reporting on a survey released on 10/05/06 by the Pew Forum on Religion and Public Life -
06G2 "Over-Work Contributes to Japanese Birth Dearth," Guardian (London) (1/17/06).
06G3 Steven Greenhouse, "Many Entry-Level Workers Feel Pinch of Rough Market," New York Times (9/4/06).
06H1 "Kids Count", a report by the Annie E. Casey Foundation shortly before 6/3/04, as covered by Monica Haynes, "Many young adults jobless, cut off", Pittsburgh Post Gazette (6/3/04) p. A1.
06K1 June Kronholz, John Lyons, "Smaller Families in Mexico May Stir U.S. Job Market," Wall Street Journal (4/28/06) p. A1.
06M1 Branko Milanovic, "Why Globalization is in Trouble - Part II," YaleGlobal (8/31/06) 3 pp.
05M2 George Monbiot "I'm With Wolfowitz: Have we forgotten what the World Bank is for?" The Guardian (4/5/05)
06O1 Norimitsu Onishi, "Revival in Japan Brings Widening of Economic Gap," The New York Times (4/16/06).
06P1 Sachitra Punyaratabandhu, Sharit Bhowmik, Sally Roever et al, "Innovative Policies for the Urban Informal Economy," UN-Habitat, United Nations Human Settlement Programme, P.O. Box 30030 Nairobi 00100 Kenya (2006) 132 pages, 1.99 MB.
06R1 Reuters, "Once again, Africa is listed as the most difficult place in the world to do business. So why are some businessmen happy to be there?" The Economist (9/7/06).
06S2 Michael Smith and David Voreacos, "Slaves in Amazon Forced to Make Material Used in Cars," (Update 2), Bloomberg (11/2/06).
06S3 Somini Sengupta, "On India's Farms, a Plague of Suicides," The New York Times (9/19/06).
06W1 Paul Wiseman, "UN disputes US position on free trade's impact on poverty," USA Today (7/5/06).

07A1 Madeline Albright and Hernando deSoto (co-chairs of the UN Commission on Poverty), as quoted in "Lack of Strong Legal Identity Helps Keep Down World's Poor," Time Magazine (7/16/07).
07B1 Judy L. Baker, Nazrul Islam, Somik Lall, "Dhaka: Improving Living Conditions for the Urban Poor," Bangladesh Development Series Paper No. 17, The World Bank Office, Dhaka (June 2007) 158 pages
07D1 Andrew Downie, "Antislavery efforts imperiled in Brazil," Christian Science Monitor (2/16/07).
07L1 Sara Miller Llana, "How Pentecostalism Is Able to Draw Guatemala's Poorest," Christian Science Monitor, (12/17/07) or Wall Street Journal (12/18/07) p. B10.
07L2 Jane Lampman, "New fight, old foe: Slavery," Christian Science Monitor (2/21/07).
07P1 Eduardo Porter, "Mexico's Plutocracy Thrives on Robber-Baron Concessions," The New York Times (8/27/07).
07R1 Monte Reel, "In Buenos Aires, Neighborhoods of Misery," Washington Post (4/28/07).
07S2 Bruce Sundquist, "Strategies for Funding Family Planning, Maternal Health Care, and Battles against HIV/AIDS in Developing Nations as Options expand, Political Environments Shift, and Needs Grow: A Critique," Edition 4 (August 2007) 28 pages,
07S3 Bruce Sundquist, "Quinacrine Sterilization: The Controversy and the Potential," Edition 1 (January 2007)
07S4 Bruce Sundquist, "The Muslim World's Changing Views toward Family Planning and Contraception," Edition 1 (August 2007)
07S5 Bruce Sundquist, "Grazing Lands Degradation: A Global Perspective," Edition 6 (July 2007)
07S7 Bruce Sundquist, "Irrigated Land Degradation - A Global Perspective," Edition 5 (July 2007)
07U1 (Unknown) "Johannesburg and Luanda: Struggling to cope with too many people," The Economist print edition (3/29/07).
07U2 United Nations The Millennium Development Goals Report 2007. New York: United Nations (2007).
07U3 UNFPA, State of the World Population 2007: Unleashing the Potential of Urban Growth. New York: UNFPA (2007).
07W1 Marcus Walker, "New Trend in Germany: Food Handouts for the Poor," Wall Street Journal (10/19/07) p. A1.

08H1 Yuka Hayashi, "Growing Reliance on Temps Holds Back Japan's Rebound," Wall Street Journal (1/7/08) p. A1.
08K1 Catherine Kyobutungi, Abdhalah Kasira Ziraba, Alex Ezeh, Yazoume Ye, "The burden of disease profile of residents of Nairobi's slums: Results from a Demographic Surveillance System," Population Health Metrics 6(1) (3/10/08).
08L1 Sarah Miller Llana, "Class Divide Hardens for Argentina's Growing Poor," The Christian Science Monitor (1/7/08.))
08L2 Tamar Lewin, "College May Become Unaffordable for Most in U.S." The New York Times (12/03/08). (reporting on the biennial report from the National Center for Public Policy and Higher Education and a report from the National Association of State Universities and Land-Grant Colleges.)
08N1 K. Nagaraj, Farmers' Suicides in India: Magnitudes, Trends and Spatial Patterns Madras Institute of Development Studies (March 2008).
08R1 Robert B. Reich, "Totally Spent," The New York Times (2/13/08).
08S1 Bruce Sundquist, Sustainability of Food-, Natural Fiber and Freshwater Outputs: A Global Analysis, Edition 1 (March 2008)
08S2 Somini Sengupta, "Education Push Yields Little for India's Poor," The New York Times (1/17/08).
08S3 Bruce Sundquist, Could Family Planning Cure Terrorism? Edition 7 (March 2008)
08S4 Bruce Sundquist, Human Co-option of Net Primary Production - The Photosynthetic Limits to Global Carrying Capacity, Edition 2 (April 2008)
08S5 Bruce Sundquist, The Controversy over U.S. Support for International Family Planning - An Analysis, Edition 8 (April 2008)
08S6 Bruce Sundquist, Globalization: The Convergence Issue, Edition 16 (April 2008)
08U1 United Nations Population Division, "An Overview of Urbanization, Internal Migration, Population Distribution and Development in the World," Population Division, Department of Economic and Social Affairs, UN/POP/EGM-URB/2008/01 (1/14/08) 34 pp.

09B1 Patrick Barta, "The Rise of the Underground," Wall Street Journal (3/14-15/09) p. W1.
09F1 Martin Fackler, "At Japanese Cliffs, a Campaign to Combat Suicide," The New York Times (12/18/09).
09K1 Horand Knaup, Juliane von Mittelstaedt, "Foreign Investors Buy up African Farmland," The Economist (8/3/09).
09M1 Dambisa Moya, "Why Foreign Aid is Hurting Africa," Wall Street Journal (3/21-22/09) p. W1

10F1 Martin Fackler, “Japan Tries to Face Up to Growing Poverty Problems,” The New York Times (4/21/10).
10P1 Katharina Peters, “Spanish Youth Part of the Lost Generation,” Spiegel Online (06/08/10).

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