ABSTRACT
Modernisation theory assumed that the informal part of the economy would gradually disappear with industrialised growth and that the unorganised sector of labour would be incorporated into the formal working class. Initial studies on the informal economy were focused on the urban sector. The Washington consensus was manifested in the form of 10 policy recommendations, imposed on particularly debt-ridden Third World countries, by international financial and lending institutions. Among these recommendations were the following: trade liberalisation, clearing all hurdles to foreign direct investment, privatisation, deregulation, strengthening property rights, and tax reforms. The mid 1990s were to witness a sharp swing in the mood of international trade and financial institutions. The rhetoric of these institutions was to move away from an emphasis on a free and untrammelled market, to the idea that both the market and the generic processes of globalisation had to be governed.
