Role of the Informal Sector in Coping with Economic Crisis in Thailand and Zambia

Abstract: This working paper takes a close look at how people in two countries – viz. Thailand and Zambia – and in particular those working in the informal economy, coped with economic crisis. The methodology borrows from the Sustainable Livelihoods approaches, as adopted by UNDP and DfID among others, and explores the impact of economic crisis on financial, human, natural, physical and social forms of capital. At times of crisis, people turned to their informal networks of family and friends for support. In addition, being a member of a local association was a positive support and tended to provide more economic options for association members. Borrowing also increased at times of crisis, and most of this went into financing household expenditure rather than investment in productive activities. In the Thai context, the effects of the economic crisis on employment showed that there was evidence of women becoming the main income-earners within their families. Children’s education was also adversely affected. Some were placed in “cheaper” schools, while others were put at greater risk as they had to leave school early to assist with their family’s income-generating activities.