Summary
Increased production of goods and services is conducted from state and market-based structures. The above illustration addresses formalization thesis from a definition point of view. However, this assumption is considered a fact when factors influencing informal economy remain constant or in a dwindling state (Williams 2007, p. 14). The article emphasizes on the significance of formalizing economy using an example of work and leisure.
This differentiation implies that social interaction determines whether the work is formal or informal (Williams 2007, p. 14). From this example of informal and formal work, one understands the significance of formalizing the economy. In fact, this forms a credible platform for a credible argument.
To ensure that the argument is credible, the author uses the examples of work, economies and to illustrate formalization. Therefore, readily available data on the employment rate is instrumental in distinguishing formal and informal economies (Williams 2007, p. 14). This is evidenced in data extracted from both developed and developing countries.
From the article, self-provisioning, paid informal exchange and unpaid community work are categories of the informal work (Williams 2007, p. 14). From these categories, it is evident that social interaction exhibits formalities and informalities embedded in the work.
Depiction of first, second and third worlds is a convenient way of understanding how formalization increases production of good and services (Williams 2007, p. 16). Moreover, the development and production of goods and services among first, second and third worlds exhibits formalization progress.
In addition, progression and development in a first world is exemplified by increased emphasis on formalization (Williams 2007, p. 17). This evidenced by state and market-based policies that represent modern practices and structures in production of goods and services. Third world countries represent informal economies with no state or market-driven policies.
A negative association with informal sphere of the economy is a common perspective in the formalization thesis. The author emphasizes that formalization thesis can be contested on feasibility and validity since it is based on assumptions (Williams 2007, p. 17). Therefore, a need to conduct further investigation about the significance of formalization thesis is critical.
Questions
Formalization is the process of using policies, structures and predetermined rules to execute an activity. For example, work can be formalized through a contract that outlines the nature of operations, hours, salary and allowances. Formalization thesis is justified by the fact that economies are advanced from a development perspective (Weiss 2000, p. 42).
Examples of work, countries and economies justifies why progression towards formalization is integral in improving production of goods and services. The author’s arguments are credible irrespective of their lack of justification from an empirical study. However, the author’s arguments are sensible as they are based on commonly held facts. For example, production of goods and services is conducted from a formal setting.
An example of such is a company that employs people on permanent and contract basis. This justifies an existing market-driven goal predetermined by a known economy or state. Nonetheless, existence of leisure and informal work are based on personal interest. On the other hand, using data to measure work is a sensible perspective on formalization.
Informal organizations rarely keep data especially on the amount of work accomplished. In addition, the example of economic development justifies the significance of formalization thesis in product and services production (Weiss 2000, p. 23). Developed countries like the United States and Britain emphasize on structures and market-driven policies.
This is to achieve a predetermined economic goal as can be evidenced from large-scale industrialization. Perhaps this justifies the reason why most of the multinational companies emanate from first world countries.
On the other hand, second world countries like India are known of their historical informal industries until the recent formalization of the country’s Information Technology and automobile industries. This depicts why formalization is now considered the future of world economies in improving providence of goods and services.
References
Williams C C 2007, Rethinking the future of work: directions and visions, Palgrave Macmillan, New York.
Weiss, L 2000, Developmental states in transition: adapting, dismantling, innovating, not ‘normalizing’. The Pacific Review, vol. 13. no. 1, pp. 21-55.