Informal economy, wage goods and accumulation under structural adjustment theoretical reflections based on the Tanzanian experience

Economic development in sub-Saharan Africa under structural adjustment witn essed the upsurge of informal sector development-the development of unregul ated labour-intensive activities, in part export-oriented. This paper argue s that two factors played an important role in shaping the dynamics of info rmal sector development: (1) the process of the relative cheapening of wage goods as a result of their importation, partly financed through foreign ai d, thereby lowering unit-labour costs in labour-intensive production, and ( 2) the processes at work of subsidising real wages by other forms of econom ic security as a result of multiple, diversified and spatially extended liv elihood strategies. While these factors undoubtedly brought a new vitality to economic development, this paper questions the long-run sustainability o f this new trend for two reasons. One is its dependence on foreign aid to f inance imports. The other is that it does not appear to propel endogenous i ncreases in productivity by achieving greater synergy in intersectoral link ages between agriculture and industry.