Poverty reduction and informal trade

Abstract

This paper analyses poverty reduction though informal trade in Mozambique, using questionnaire data and a logit model. The Mozambique economy is dominated by informal trade. Informal trade is an alternative to inexistent formal jobs and represents a strategy for escaping poverty. Results indicate that informal traders adopt this strategy as an alternative to formal jobs, and that there is an awareness that this strategy is adopted as a means of evading poverty. Other covariates enable the clarification of this relationship in the context of the theoretical background. Policy implications are derived.