Foreword
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The most challenging aspect of putting this issue together was trying to understand what really constitutes "informal" and "illegal" markets. In many cases, the same economic good can be a white, gray, or black market product depending on its specification, location, legal status, and the methodology by which its exchange is measured. It is therefore hardly surprising that even though informal economic activity has been estimated to contribute almost a third of global gross domestic product (GDP) (World Bank, 2010), and the value of illegal criminal proceeds is estimated at 3.6 percent of global GDP (UNODC, 2011), confusion remains about the meaning and implications of these seemingly significant figures. In the interest of expanding scholarship on this little-understood and even misunderstood topic, The SAIS Review presents its latest issue: The Good, The Bad, and The Black: Informal and Illegal Economies Around the World.
To take the issue of definitions head-on, we begin with an interview with Dominik Enste in which he provides a definition of "shadow" or informal economies that has been used as a baseline in a variety of economic studies, discusses the challenge of measuring informal economic activity, and suggests an etiology for its growth. Enste also explains some potential benefits of shadow economies, which can act as "a kind of 'economic buffer'" in the face of large-scale economic disruption. Mohammad Farzanegan expands on this idea by looking at the effects that sanctions have had on the informal sector of the Iranian economy. Farzanegan argues that there is an inverted U-shaped relationship between size of the informal economy and political stability: an initial increase can help ease social tensions by alleviating income inequality, but excessive informal sector growth threatens the socio-political foundations of a country.
Jason Miklian and Scott Carney look at India—one of the world's fastest growing economies—where nearly half of all economic activity takes place in the informal sector. They argue that while corruption may seem like a dysfunctional part of the Indian system, it also aids individuals in navigating a system where playing by the rules often results in interminable delays. In a similar vein, Gavin Hilson turns to Ghana and its gold mining sector, explaining how the government's "costly and complicated" licensing requirements have unwittingly created a booming informal gold mining sector. Robert Neuwirth draws on his personal encounters with street vendors in "System D"—"the economy of self-reliance"—and demonstrates how the response of local governments to the informal sector is actually stifling the creativity and vibrancy that are integral elements of cities like São Paulo, Lagos, Mumbai, and Guangzhou.
Both Peter Andreas and Roman Lobato argue that formal, legal economies are in fact a relatively new phenomenon. Andreas traces the United States' history, illustrating the irony of its initial reliance on illegal trade [End Page 1] and its present role as a global watchdog. Lobato uses the debate around intellectual property rights (IPRs) to illustrate that piracy is not a departure from "the natural state of affairs" and argue that IPRs are a purely political construct requiring special implementation and enforcement.
Friedrich Schneider captures the magnitude of global transnational organized crime, money laundering, and tax evasion to give us a sense of the scope of organized criminal activity. While Schneider looks at the big picture, Merrill Singer, William Tootle, and Joy Messerschmidt, focus in on ordinary drug workers whose lives are often far away from the vast flows of global "dirty money" that help drive global commerce.
Next, Mohamed Mattar discusses the issue of human trafficking, calling for transnational legal cooperation to deal with a crime that is carried out by both individual actors and organized criminal groups across international borders.
The issue also includes reviews of recent literature, such as Vanda Felbab-Brown's Shooting Up: Counterinsurgency and the War On Drugs, reviewed by Adrian Stover, and Merilee S. Grindle's Jobs for the Boys: Patronage and the State in Comparative Perspective, reviewed by Elliot Waldman. Bruce Parrott examines Charles Kupchan's Nobody's World: The West, the Rising Rest, and the Coming Global Turn.
We feature student work in Gabriel Nelson's...
