How informal economies are shaped by global capital

What is it about?

This article compares informal work in Mexico City and Freetown, Sierra Leone, to explain why people in different cities earn a living in different ways. Informal work includes jobs without legal protections or employment benefits, such as street vending, domestic work, and unregistered employment. The article argues that these differences reflect each city’s place in the global economy. Freetown’s economy centers on exporting natural resources, such as minerals and timber, which creates relatively few stable jobs. Consequently, approximately 91% of workers are informally employed, and many survive by selling basic goods on the street. Mexico City’s economy, by contrast, revolves around finance, real estate, tourism, and consumer services. Although roughly half of its workers are also informally employed, they are more likely to work for businesses, wealthier households, or industries serving consumers and tourists. The article challenges the idea that informal workers exist outside the global capitalist economy. Instead, it argues that their labor is essential to how that economy functions. Street vendors, domestic workers, and other informal workers provide inexpensive goods, services, and labor that help businesses operate and keep wages low. The differences between Freetown and Mexico City therefore cannot be explained simply by local culture or individual choices. They reflect broader global patterns of investment, resource extraction, economic inequality, and the organization of work.

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Photo by Carl Campbell on Unsplash

Photo by Carl Campbell on Unsplash

Why is it important?

This article is important because it challenges the common assumption that informal workers, such as street vendors and domestic workers, operate outside the modern global economy. Instead, it shows that their work is shaped by and essential to global capitalism. Informal workers provide inexpensive labor, goods, and services that support businesses, sustain households, and allow larger economic systems to function. Recognizing this connection changes how we understand poverty, inequality, and work in cities across the Global South. The article also explains why informal economies differ from one city to another. By comparing Mexico City and Freetown, it demonstrates that a city’s position within the global economy influences both the kinds of work available and the conditions under which people survive. Financial investment produces one pattern of informal labor; dependence on natural resource extraction produces another. This perspective helps researchers and policymakers see that precarious work is not simply the result of personal choices or local circumstances, but is connected to wider structures of economic development, global inequality, and political power.

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