Impact of Growth of Informal Manufacturing Activity on Environmental Sustainability and Aggregate Economic Activity: Global Perspectives

Abstract

The paper provides a critical analysis of the relationship between the growth of informal manufacturing activities and environmental sustainability. The research is grounded in the context of global economic trends, focusing specifically on the impact of these activities in India. The study highlights the significant role of unorganized manufacturing enterprises in the Indian economy. These enterprises, while contributing notably to the GDP, also lead to increased material and energy use, raising concerns about environmental sustainability. The paper underscores the trade-off between economic growth and environmental sustainability, particularly in the context of informal sector industrialization. The findings suggest that higher economic growth, driven by the informal manufacturing sector, correlates with greater environmental degradation. This relationship is primarily due to increased energy consumption and carbon intensity. The paper posits that the growth of the informal manufacturing sector, especially in developing countries like India, leads to higher CO₂ emissions and environmental un-sustainability. This is exacerbated by the sector's significant reliance on energy sources like kerosene, contributing to higher carbon emissions. The analysis indicates a significant negative correlation between the growth of informal manufacturing activities and GDP, highlighting the environmental costs of such economic activities. The paper emphasizes the need for policy interventions to address the challenges posed by the informal manufacturing sector. It calls for policies that balance economic growth with environmental sustainability, considering the significant role of the informal sector in countries like India. The research presents a nuanced understanding of the complexities involved in achieving sustainable economic growth in the face of growing environmental concerns.

Citation

Banerjee, S. and Banerjee, A. (2024), "Impact of Growth of Informal Manufacturing Activity on Environmental Sustainability and Aggregate Economic Activity: Global Perspectives", Pal, M.K. and Das, P. (Ed.) Informal Manufacturing and Environmental Sustainability, Emerald Publishing Limited, Leeds, pp. 221-233. https://doi.org/10.1108/978-1-83549-998-620241016