The Informal Economy of the BRICS

Examining the effects of trade liberalisation

• Author(s): Girish Mohan Dubey & Akanksha Singh • Published: December 2023
• Pages in paper: 18


This article evaluates the impact of trade liberalisation on the informal economy in the BRICS countries, which have significant unorganised sectors and trade policy changes. The article uses panel data from 1996 to 2015 to measure informality based on the method of Kaufmann and Kaliberda, which estimates the size of the informal sector as the difference between official GDP and electricity consumption. It finds that trade liberalisation has increased informality in the BRICS countries, implying that globalisation and economic growth have not benefited the unorganised sector or reduced inequality and development issues. It suggests that trade policy reforms should be accompanied by measures to improve governance, regulation, social protection and formalisation of the informal sector.

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