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In XE #50 Robert Neuwirth told us the global informal economy (System D) was the 2nd largest economy in the world, valued at approximately $10 trillion each year and smaller than only the economy of the US. In a country like Pakistan, the informal sector is almost as large as the entire ‘formal economy’. According to Pakistani officials,”our formal GDP is half our actual GDP.”
In 2012 climate change has taken center stage on the world scene with horrific droughts, wildfires and record flooding across the planet. I can’t help but think that with the size of the informal sector, how many greenhouse gases go uncounted in official climate models?
Even more stunning is that Pakistan’s 91.4% informal economy number is based on data from 2007-2008. After the global financial crisis hit diminishing activities in textile factories I wonder if the informal economy overtook GDP. Over the last year, Pakistan has been plagued by blackouts and chronic electricity shortages. With traditional GDP growth stifled by energy problems, the informal sector is likely growing far faster than any other portion of the Pakistani economy at the moment.
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