A New Institutional Economics (NIE) Framework for the Urban Informal Sector in Colombo, Sri Lanka

Shuaib, Ahmed Fikreth (2007). A New Institutional Economics (NIE) Framework for the Urban Informal Sector in Colombo, Sri Lanka PhD Thesis, School of Geography, Planning and Architecture , University of Queensland.

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Author Shuaib, Ahmed Fikreth
Thesis Title A New Institutional Economics (NIE) Framework for the Urban Informal Sector in Colombo, Sri Lanka
School, Centre or Institute School of Geography, Planning and Architecture
Institution University of Queensland
Publication date 2007
Thesis type PhD Thesis
Supervisor Associate Professor John Minnery
Abstract/Summary This thesis is about understanding the Urban Informal Sector (UIS)' phenomenon in Colombo, Sri Lanka. While there has been much debate about the UIS in developing countries, including Sri Lanka, it is evident that there has only limited research into ways to identify its importance and to find pragmatic ways to support it. Nowhere in Sri Lanka is the importance of the UIS more evident than in the urban landscape of Colombo City - the largest urban center and the commercial capital. In fact, the UIS is indispensable to Colombo, so much so that Sanderatne (1 99 1 :7 1) states that 'indeed, without the informal sector, food supply would diminish to famine levels, transport would grind to a halt, and urban basic needs such as food and clothing would be unaffordable for the majority of urban dwellers'. The UIS in developing cities like Colombo has increasingly been recognised as a key to promoting economic growth and employment to reducing poverty. However, at the same time, the UIS also poses serious problems including traffic congestion, public health and hygiene, and it is often seen as an eye-sore. In addition, UIS workers themselves face a number of problems as a result of a hostile institutional environment including: lack of legal status; poor access to resources, markets and services; and harassment and/or eviction. The role of the Colombo Municipal Council (CMC) and its ability to manage the UIS in Colombo City presents similar problems to the sector's management in most cities in developing countries. Much of CMC's problems associated with the UIS emanate from the institutional arrangements. The problems can be identified in the roles of the various 'players' in the city and their rules and regulations, and how these are enforced through incentives and transaction cost which in turn impact on the UIS. Whilst a number of theories are on offer to address these problems, the powerful concepts embodied in the theoretical foundations of the New Institutional ~conomics~ (NIE) provided the most promising framework. These NIE concepts include: 'players of the game' (including their assumptions and objectives); and 'rules of the game' (including their incentives and transaction costs). Based on these concepts, a NIE framework applicable to the UIS was formulated. This thesis adopts the case study research strategy propounded by Yin (2003) which entails a detailed qualitative analysis of selected case studies. Three case studies have been selected in Colombo, viz. street vendors, home-based workers and collectors of recyclable materials (botal pattaray). The qualitative data for analysing each of the three case studies has been derived from two sources. Firstly, through formal interviews and informal discussions with relevant players such as the CMC (eg. Mayor; Municipal Members of Council; and various departments and divisions); nationallcentral and provincial government ministries and departments; non-governmental organisations; media; private sector; trade unions; academic and research organisations; politicians; international organisations; the police; and the general public. Secondly, the results of these interviews have been checked for credibility, and where possible have been supported by, documentary evidence such as policies, regulations and newspaper articles. The qualitative data obtained through this method has then been organised and presented using the NVivo software. This NIE framework was then applied to each of the three selected case studies. The principal findings from the case study analysis are: first, the need to introduce a new assumption (referred to as socio-cultural orientation) that governs player behaviour; second, the distinction between formally espoused objectives and informal objectives followed by the players; third, the emergence of 'informal' players and their informally crafted rules that impact on the UIS; and finally, this study has demonstrated that the ' ~ a l ' rules that govern player behaviour rest in the complex relationship between the formal and informal 'rules of the game', and this relationship between the two sets of rules could be either 'substitutive' or 'complementary'. Using the principal findings from the case studies, the thesis proposes extensions to the NIE framework. The resultant framework from this study has important implications for urban local authorities in developing countries, particularly as an urban planning tool that can be used to understand and successfully manage the UIS. Areas for new research emanating from this study are also outlined.

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Created: Fri, 21 Nov 2008, 15:54:40 EST