Informal Manufacturing and Environmental Sustainability

Based on an in-depth literature review, this chapter aims to examine impacts of informal economy on the glocal sustainable and inclusive development and sustainability from the political economy and ethics perspectives. This chapter examines drivers for and causes of the informal economy from the perspective of the sustainability's three pillars. Furthermore, this chapter examines opportunity cost of the informal economy. It highlights informal economy's impacts on fair competition, circular economy, factors of production, and socio-economic aspects. Furthermore, this chapter discusses the informal economy from an ethical perspective. It highlights informal employment, its impacts on sustainability, and sustainable and inclusive development. This chapter provides recommendations on how to enhance glocal sustainable and inclusive development, and sustainability through reduced informal economy and its adverse impacts.

The informal sector contributes significantly to the growth of the Nigerian economy, accounting for over 40 percent of the annual growth of the gross domestic product and employing a majority of the nation's workforce. Indigenous manufacturing in the informal sector, which affects all spheres of the economy, can be deployed to promote sustainable development in Nigeria. Nigerian informal manufacturing is largely based on the use of indigenous technology, and as a result, this provides an opportunity for such players in the sector to consider the role their operations could play in promoting sustainable development in the country. This, they can realize by keying into the principles of sustainability and moderating the impact of their operations on the environment, society, and the economy at large. Nigeria, among other African countries, has persistently suffered the adverse effects of pollution and abuse of the environment in terms of flooding, deforestation, and desertification, among others. Those employing indigenous technology in manufacturing in the informal sector should therefore be encouraged to take the lead in Africa in order to promote and guarantee environmental sustainability, biodiversity and sustainable development in general by imbibing the culture of waste recycling, waste reduction, waste conversion, using green energy and the application of environmental and related resources with moderation, taking into consideration the interests of the future generation. In general, efforts should be made towards modernizing the application of indigenous technology in informal manufacturing in order to enhance sustainability in the country.

This chapter conducts a comprehensive examination of the influence of Foreign Direct Investment (FDI) on the manufacturing sector in India, with a particular focus on the informal manufacturing sector's growth and expansion through subcontracting mechanisms. This analysis employs a general equilibrium approach to explore the ramifications of FDI inflows on the dichotomous sectors of manufacturing: the formal and informal. The influx of FDI into the formal sector is identified as a catalyst that propels these firms to enhance production and adjust their factor utilization, which in turn leads to an escalation in contractual employment. However, this surge encounters resistance from labour unions, which compels formal sector firms to enter into subcontracting arrangements with entities within the informal manufacturing sector. This transition proves to be advantageous for the informal sector, witnessing an uplift in both output and employment levels, thereby contributing to a decrease in overall unemployment rates and a potential uptick in wages. Moreover, this pivot towards subcontracting practices is posited to result in reduced carbon emissions emanating from the larger entities within the formal manufacturing domain. This chapter elucidates the dynamic interrelation between India's formal and informal manufacturing sectors as significantly impacted by foreign capital influx, emphasizing the critical role of subcontracting in enhancing the productivity and output of the informal sector. It advocates for governmental policies to support and bolster this interconnection. It also paves the way for future empirical investigations into the intricate dynamics of FDI, subcontracting, and their broader socio-economic impacts on the Indian economy.

This chapter seeks to develop a one-commodity two-sector model, much in line with optimal growth theory tradition owing to Ramsey (1928), Cass (1965), and Koopmans (1965) to overhaul into the dynamic interaction between the formal sector manufacturing activities and environmental quality, assuming an informal sector producing intermediate goods for the formal sector given and thus underline the potential challenges to the conservation of nature in less developed countries. It is thus presented herein, that the in presence of one-sided environmental regulation on the formal sector in exception to the informal sector, economy's long-run equilibrium in terms of consumption, informal sector employment, and capital stock accumulation in the formal sector will dynamically unstable, in what is fundamentally attributable to the switching of environmentally sensitive components of production to informal sector from formal sector, as matter of such partial environmental enforcement.

This chapter explores the transformative potential of green innovation within the informal manufacturing sector of Bangladesh. It presents an empirical analysis aimed at uncovering the economic benefits derived from integrating green innovation practices into informal enterprises. Through a comprehensive field investigation, the study highlights how green initiatives can act as catalysts for enhancing economic performance, promoting sustainability, and improving competitiveness in a market increasingly conscious of environmental impact. The research adopts a qualitative methodology, engaging with a variety of stakeholders including small-scale manufacturers, local entrepreneurs, and policy-makers within the Comilla district of Bangladesh. It identifies key challenges and opportunities faced by informal enterprises in adopting green technologies and practices. The findings suggest that, despite existing barriers, there is a notable enthusiasm and potential for green innovation as a means to achieve economic growth and environmental sustainability simultaneously. Key insights reveal the importance of supportive policies, access to green finance, and the need for awareness and training programs for the needs of the informal sector. This chapter argues that fostering a conducive ecosystem for green innovation not only contributes to the economic enhancement of informal manufacturers but also aligns with broader national goals of sustainable development. This analysis contributes to the discourse on environmental sustainability and economic development by providing evidence-based recommendations for integrating green innovation into the informal manufacturing sector of Bangladesh, offering a scalable model for similar economies globally.

Governments of the developing countries across the globe have been serious in designing social protection policies to address vulnerabilities faced by workers in the informal sector. Such a form of public intervention is expected to preserve livelihoods of these workers while mitigating the negative impacts of environmental degradation which exposes them to risks on which they do not have any control. This chapter develops a tractable theoretical framework to analyze the efficacy of Unconditional Cash Transfer (UCT), a popular form of social protection, in addressing both the issues affecting the well-being of the informal sector workers. A simple three sector trade theoretic general equilibrium structure is constructed with an informal manufacturing sector producing a pollution intensive commodity. UCT given to the informal sector workers is modelled to improve the efficiency of these workers which again is negatively related to the output of the informal manufacturing sector. In such a setup, contrary to the conventional wisdom, UCT can depress livelihood opportunities while raising pollution at the same time since direct effect of the transfer on efficiency of the workers will dominate over the indirect effect generated through exposure to pollution. A negative impact of UCT on livelihood of workers can be avoided using an accommodative investment policy, however, it will call for more pollution.

The Unorganised Manufacturing Sector (UMS) in India is a diverse and vibrant segment of the economy, encompassing a wide array of enterprises that vary significantly in terms of input base, financial resources, and technical expertise. This sector is responsible for producing a broad spectrum of products, ranging from traditional clay pots and intricately embroidered garments to sophisticated mobile chips and essential motor vehicle components. This production not only caters to the consumer goods market but also supplies intermediate products to larger manufacturing industries. Furthermore, many of these products are integral to the global value chain, highlighting the sector's extensive reach and significance. Over the past three decades, the UMS has navigated through two distinct policy landscapes: a ‘protectionist’ regime until the mid-1980s and a ‘liberalised’ regime commencing in 1991. Recognising the challenges these units face in the competitive landscape ushered in by economic liberalisation, the government has implemented various direct policy measures since 2000 aimed at supporting the sector. Against this backdrop, this study aims to scrutinise the growth performance of the UMS in India focussing on employment, gross value added, and labour productivity at the two-digit activity level utilising unit-level data from the National Sample Survey Office (NSSO) spanning from 1984–85 to 2015–16. It also seeks to classify these activities based on their performance in terms of labour productivity and employment generation. Furthermore, the study endeavours to identify distinguishing characteristics of activities that have been successful in generating new employment in recent years.

Unorganized manufacturing enterprises form a pivotal component of India's socio-economic framework, with the food and beverages micro enterprises (MMEs) standing out within this sector. Utilizing secondary data from the National Sample Survey Organization (NSSO) and comparing survey rounds from 2010–2011 to 2015–2016, this study assesses the unorganized food and beverages MMEs' growth dynamics among 25 industries. It examines their status in terms of enterprise numbers, employment share, and Gross Value Added (GVA), alongside estimating the Annual Average Growth Rate (AAGR) across major Indian states based on these parameters. The findings reveal a trend of expansion exceeding stagnation or contraction in both enterprise numbers and per enterprise GVA during the periods studied. Additionally, labor productivity appears to positively correlate with enterprise growth, with establishments and urban-based enterprises showing a higher tendency toward expansion. This analysis demonstrates a significant growth trajectory in the unorganized micro food and beverages sector from 2010–2011 to 2015–2016, marked by increased enterprise numbers, employment generation, and output across major states. This chapterconcludes by underscoring the sector's vital contribution to employment and output generation, offering insights for policymakers and stakeholders focused on fostering this sector's development. This growth trend not only showcases the sector's resilience but also its potential as a driver of socio-economic progress during the observed periods.

Kerala reported the first COVID-19 case on January 30. In order to stop the disease's spread in a heavily populated nation like India, the government declared a lockdown on 25 March 2020. Unexpected lockout caused wages for workers in the unorganised sector to stagnate, which led to reverse migration in India. During the first round of lockdowns organised by COVID-19, 43.3 million interstate migrants working in the informal manufacturing sector actually went back to their homes. This background encourages us to investigate how the COVID-19 epidemic affected male labour employment, with a primary focus on the unorganised manufacturing sector. The study takes into account the employment situation of male CWS in rural, urban and overall India. To investigate the aforementioned objectives, Poirier's Spline function approach has been used in the study. Relying on secondary data aggregated from ‘The Periodic Labour Force Survey’, Annual Report (2018–2019), (2019–2020), (2020–2021), the research comes to the conclusion that the work scenario for male CWS is more negatively impacted by pandemic in urban than rural areas. The paper ends with appropriate policy recommendations.

Over the last four decades – the 1980s, 1990s, 2000s and 2010s – the share of manufacturing in gross domestic product (at current prices) in India has stagnated, whereas the share of services (construction excluded) has increased significantly. The relatively mediocre growth performance of the manufacturing sector as compared to the services sector in India has emerged as a matter of concern. There has been growing recognition in policymaking circles and academia that India needs accelerated growth in the manufacturing industry in the next few decades, so that India's economic growth is led by manufacturing rather than services. In this paper, a comparative analysis of the growth in total factor productivity (TFP) of formal and informal segments of 10 groups of Indian manufacturing industries is undertaken, which is calculated based on KLEMS data obtained from National Accounts Statistics (NAS), published annually by the Central Statistics Office (CSO) of India. The period covered for the analysis of TFP growth is 1980–1981 to 2019–2020, which is broken into four sub-periods. Year wise total factor productivity growth (TFPG) of different industries for the sample period shows a fluctuating growth rate, which includes both positive and negative trends. Decade wise growth and overall TFPG of the different industries also indicate an oscillating pattern, that is, a mix of positive and negative TFPG. The minimum overall TFPG is observed in the coke, refined petroleum products and nuclear fuel industries, and the maximum in electrical and optical equipment for the period 1981–2020.

Although various studies have shed light on why cities are a primary source of environmental pollution and how it affects climate change, the effects of city-level environmental deterioration on company ownership have yet to be investigated. In this context, our main objective is to investigate environmental pollution's impact on the ownership of informal enterprises in Indian metro cities (1 million or more population). This study considers micro (entrepreneurship-level) and macro (city-level) factors for the analysis by using mainly National Sample Survey unit-level data on ‘Unincorporated Non-Agricultural Enterprises’ in 2015–2016. Micro-level factors include access to toilet facilities, provision for solid waste management, provision for liquid waste management, etc. On the other hand, macro-level factors are the total number of registered motor vehicles (two-wheelers, cars, jeeps, tractors, omnibuses, trucks, taxis, buses, passenger autos and light motor vehicles) and air pollution (e.g. sulphur dioxide, nitrogen dioxide and particular matter emissions). The study explored the impact of environmental pollution on the differences in gender business ownership. According to the findings, both male- and female-owned proprietorships suffer from environmental degradation. Environmental contamination, however, puts female-owned businesses at greater risk than their male counterparts. Because of this, it is crucial to lessen environmental pollution by lowering air pollution and providing improved toilets, water and solid and liquid waste management systems. By reducing poverty and inequality, advancing a society that values equality between the sexes is necessary. Finally, we propose important policies to enable the city environment to improve entrepreneurship activities for sustainable economic development.

Environmental pollution has been a great concern for the government of Bangladesh. Bangladesh was the least developed country, with a lot of financial challenges. The industrial process in Bangladesh has not been able to maintain the directives of the SDGs. The lack of proper industrial policy, technological backwardness and lacunae in implementing environmental governance have affected the environment of the country. The unorganised and informal manufacturing units are often accused of emitting greenhouse gases. Like other South Asian countries, the informal manufacturing sector in Bangladesh has been established without proper planning and environmental guidelines. In Bangladesh, the informal sector includes brick kilns, food processing factories, leather tanning, etc., which are responsible for environmental pollution, health hazards and violations of SDG goals. The issue of environmental pollution by the informal manufacturing sectors of Bangladesh needs to be investigated in the context of the socioeconomic profile of the country and the performance of the government in monitoring the issue. Due to the lack of environmental governance, a high level of pollution has been occurring in the country. What kinds of economic tools and industrial policies are needed to be implemented to avoid environmental hazards? The content analysis method will be applied in this chapter.

This paper examines the effects of informal economic activities on the environmental degradation for the BRICS nations, with emphasis on use of energy, ecological footprints and socio-economic conditions of these nations. The study considers empirical analysis of the BRICS economies, by means of a panel data set for the period 2000–2020, by using important environmental indicators like carbon-di-oxide (CO₂) and ecological footprints (EFs). Long-run associations have been estimated by applying econometric techniques like dynamic ordinary least square (OLS) and fully modified OLS. The study reveals important implications for BRICS economies because in the long-run, the informal activities bear negative impact on environmental quality leading to a fall in the degradational indicators. The study is significant in the sense that it finds that good governance is required along with strong pollution control policies and social reform for the improvement in the environmental quality, so does the emphasis on the use of renewable energy because the use of non-renewable energy hurts the environment in the presence of informal economic activities. Our study has important policy findings as it prescribes that formalization of informal activities along with economic growth and good governance which ensure use of renewable energy can help to achieve green growth and sustainability.

In the Indian economy, informal manufacturing enterprises play a pivotal role within the manufacturing sector, employing a vast workforce and significantly contributing to overall manufacturing output. While the number of these enterprises has risen over time, the exploration of CO₂ emissions from informal manufacturing enterprises is limited, especially in comparison to their formal counterparts. This chapter investigates the relationship between the growth status of informal manufacturing enterprises and their CO₂ emission intensity using the latest four rounds of quinquennial unit-level data from the National Sample Survey Organisation (NSSO). The analysis converts expenditure on electricity and fuel and lubricants into quantities, which are then multiplied by respective emission factors to determine enterprise-level CO₂ emissions. Findings indicate an increase in the percentage share of expanding and other status enterprises from 2000–2001 to 2015–2016, with other status enterprises being the most CO₂ emission-intensive, followed by contracting, expanding and stagnant enterprises. Notably, newer enterprises exhibit lower energy efficiency. Regression analysis further underscores a positive, significant link between growth status and CO₂ emission intensity, attributed to outdated machinery and equipment. Urban enterprises, often engaged in subcontracting activities with formal manufacturing industries, show higher CO₂ emission intensity. Challenges such as power outages significantly contribute to increased CO₂ emissions, highlighting the need for reliable electricity access and a reduction in fossil fuel dependence. This chapter underscores the importance of addressing these issues to align with India's Sustainable Development Goal (SDG) 13 objectives.

The emerging economies of Asia have made remarkable economic progress over the past few decades, primarily driven by rapid structural transformation towards industrialization and manufacturing in particular. The share of informal manufacturing sector value added to GDP and of employment in the informal sector in total employment has increased considerably in these countries. Although this shift from agricultural to industrial/manufacturing may be seen as positive for the goals of poverty reduction, increased standard of living, formation of human capital, etc., its impact on the environment is often not free from contention. The aim of the paper is to examine the impact of informal manufacturing sector growth on environmental degradation in emerging Asian economies. Here, we have used CO₂ emissions as an indicator of environmental degradation. The impact of other exogenous variables, such as population growth, energy consumption, trade openness and foreign direct investment, has also been studied. We have employed the fixed effect model and the random effect model on the data spanning from 2000 to 2022. We have also used the Hausman test to check the suitability of the models. The results of the analysis indicate the presence of a U-shaped relationship between CO₂ emissions and informal manufacturing growth, thus refuting the validity of the Environmental Kuznets Curve hypothesis.

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.

The chapter's scope focuses on examining the manufacturing and consumption practices of plastic-related materials, which are nature-resistant and do not decompose quickly, and the efforts of formal institutions to encourage the recycling of these materials for the environmental sustainability of the metropolis. The chapter examined how effective recycling policies have been in enabling the reuse of plastics and related materials and their effects on the environment. This chapter uses the green theory as a theoretical approach to explain the relationship between man and the environment. The chapter employed a qualitative approach to research with reliance on secondary sources of data. This chapter's findings revealed that while policies are geared towards improving the recycling culture in Lagos, Nigeria, those policies needed to be adequately enacted by the government with the appropriate structure to enable them to achieve the stated objectives, thus rendering them ineffective. In this chapter, recommendation centers, amongst others, that the government of Lagos state, Nigeria, should adopt extended producer responsibility (EPR) to hold manufacturers and importers accountable for the product's life cycle and invest in quality public–private partnerships (PPPs) in recycling to ensure environmental sustainability of the metropolis.

The chapter provides a comprehensive analysis of the interplay between organizational socioecology, green technological innovation, and environmental regulations. It emphasizes the significance of organizational strategies in enhancing performance, particularly in contexts where environmental sustainability is a priority. The research delves into the theory of organizational socioecology, suggesting a convergence with sociological perspectives in organizational research. This approach underscores the interdependence between organizations and society, especially in the realm of environmental responsibility and climate change. A key aspect of the study is the exploration of green technological innovation in product and service development, aiming to reduce environmental impact. The dynamics of adopting green innovation are influenced by numerous factors, including government policies, market conditions, and organizational characteristics. The chapter examines the impact of environmental regulations on organizational behavior and innovation, discussing how these regulations can drive organizations towards green innovation, thus balancing the need for economic growth with environmental sustainability. Furthermore, the chapter addresses the role of government subsidies and incentives in encouraging organizations to adopt green technologies and practices. The effectiveness of these mechanisms in fostering a more sustainable and innovative organizational landscape is analyzed. Additionally, the article provides a comparative analysis of various theories and models related to organizational innovation and sustainability, integrating insights from different disciplinary perspectives. By combining empirical data with theoretical frameworks, the article assesses the effectiveness of organizational strategies in enhancing green innovation and meeting environmental regulations. It offers practical implications for organizations striving to align their practices with sustainability goals, contributing valuable insights for researchers, policymakers, and practitioners in the field of sustainability and organizational change.

Women's entrepreneurship and empowerment play a vital role in enhancing their decision-making abilities, access to information, resource control and economic strength. This study explores the relationship between entrepreneurship and women's empowerment, focusing on West Bengal, India. Primary data were collected from three districts of West Bengal, specifically Paschim Medinipur, Bankura, and Purulia, targeting women as the sample population. Women's empowerment was assessed based on five dimensions, including 20 indicators. Further, a multidimensional women's disempowerment index (MWDI) was also formulated, considering the Alkire Foster methodology to capture its multidimensional aspect. The results show that the majority of the entrepreneurial activities undertaken by the women microentrepreneurs were environmentally friendly. Among the considered indicators of women's empowerment, the percentage share of women who had the freedom to visit markets, health facilities, and banks was the highest, whereas the percentage share of women who had the ability to protest was the least. Further, the percentage share of empowered women was significantly higher among the microentrepreneurs as compared to those who were non-entrepreneurs. As regards the determinants of women's empowerment, education, employment, asset ownership, and entrepreneurship play a crucial role in increasing women's empowerment. However, 30% of the women entrepreneurs faced challenges in running their businesses, whereas financial constraints along with marketing and selling issues, competition from rivals, and regulatory issues turned out to be the major hurdles. To conclude, entrepreneurship plays a crucial role in empowering women by encouraging them to establish micro-enterprises and by helping foster green growth, leading to sustainable development.

This research paper discusses how the tribal people in their everyday practices uphold the principles of green economy and sustainable development. The indigenous lifestyle may be far away from the modern amenities, but they are most close to nature. Unlike, in the name of modernism or post-modernism, they are very responsibly self-content and self-dependent. They follow the principle: contentment is the root of all happiness. Thereby without causing irreparable damage to the mother earth, they live a very sustainable life. They know how to devise out day-to-day necessities. They do not always depend on the industry products. Rather they innovate and produce many things through informal and indigenous manufacturing. This research study aims to critically analyze tribal community participation in informal manufacturing for sustainable development and a green economy, and identify areas of concern within this participation. This paper focused upon the particular examples from their household life which promotes sustainable development in its true spirit; and alongside, it follows the path of green economy. The method of this research work was readings in community-based exploration. Alongside indigenous people were interviewed, and their responses were analyzed critically. The researchers also adopted content analysis regarding the studies, statistics and research reports on the community participation of tribal people through informal manufacturing to earn their livelihood. This study highlights that tribal community life aligns well with sustainability and a green economy though some issues exist that can be addressed through strategic government policies and planning.

Through the course of this chapter, a detailed examination of Bangladesh's informal manufacturing sector, focussing on micro, small, and medium enterprises (MSMEs) devoted to implementing green and sustainable practices, has been explored. This chapter explores and delves deeper into major sectors, notably textiles and garments, to understand the reasons for their growth and their contribution to the development of the nation. This chapter aims to explore the MSMEs of Bangladesh's contribution to the growth of the nation and identify the bottlenecks hindering their development in detail. The informal sector, dominantly ruled by the textile and garments industry, is the main focus of this chapter, which focuses on the investigation of their growth factors. Afterwards, the chapter provides particular recommendations to encourage sustainability in the informal manufacturing sector, focussing on green and sustainable ways. Case studies from the textile and garment industries are provided as benchmarks, proving the importance of technology development and talent cultivation in confronting hindrances. The chapter calls for the design of broad macroeconomic policies intended to promote sustainable practices within the MSME sector of Bangladesh. It highlights the paramount importance of policies that promote greener working methods, especially in the textile and clothing sectors, in tune with Bangladesh's particular economic pathway. This chapter therefore acts as a critical reference to policymakers, researchers, and the private sector, drawing lessons from other jurisdictions as well as from international bodies on the capabilities of the textile and apparel sector of Bangladesh.