The changing nature of the informal sector in Karachi as a result of global restructuring and liberalization

This paper describes how much of Karachi’s population has relied on informal settlements for housing, informal infrastructure for water and sanitation, informal services for health care and education and informal enterprises for employment. These have filled the gap between what large sections of the population needed and what neither government nor formal private enterprises provided. The paper then discusses the changes that global restructuring and liberalization have brought, which include inflation (as the rupee devalued) and the decline of light engineering industry (unable to compete with cheap imports), and carpets and textiles production (in part because of greatly increased electricity charges). It suggests that, while the communications revolution helps fuel aspirations, the informal organizations and the middlemen that manage them will no longer bridge the gap between needs and aspirations for most of the population. Since there is no sign of new private investment, the result is also growing unemployment and widening inequalities. As yet, there is no research on the long-term effects of liberalization on this city with some 10 million inhabitants.