The concept of informal sector was first put forward by Hart in 1971, and then was used in a governmental report of ILO in the next year. Since the 1970s, the research on the informal sector rose rapidly overseas, which focused on the developing countries and regions initially. It was found that the informal sector also existed in the developed countries and regions as the research was carried out deeply. But it was different from the developing countries and regions in the way of existence and the mechanism of forming. The research on the informal sector overseas had formed a set of theory system and achievements, which included the characters, spatial agglomeration and differentiation of the informal sector, the relationship with the formal sector, the impacts, and the policies.
The abroad research showed that the informal sector was marginal, heterogeneous and complicated. This economic activity had different intension and extension under different economic, social and systematic conditions. The spatial distribution of the informal sector took on unbalanced state and concentrated in the urban high intense activity area. Different types of the informal sector had spatial variations due to the suburbanization, the inner city decline, and the immigrants.
The theories of the informal sector mainly included the poverty employment, the dual economy, the regulation, and the embeddedness theory. The poverty employment theory, also called the social marginalization theory, pointed out that the rural people were obliged to take the informal activities because they immigrated into cities more rapidly than the formal sectors could create the employment opportunities. The dual economy theory put forward that the upper circulations and the lower circulations were two opposite sectors of the urban economic activity, and the informal sector was one of the lower circulations. But the dual structure of the urban economy was changing with the urban development. Based on the poverty employment theory, the regulation theory considered that the informal sector attributed to the excessive regulation rather than the labor surplus. From the point view of structuralism, the embeddedness theory argued that the informal sector was not only a form of making a living but also embedded deeply in the modern economic network.
The informal sector was related with the formal sector in the process of production, distribution, and supply. They were competitive and reliant with each other. The informal sector had effect on the GDP, and was the important income source of the urban poverty. However, it would bring on the social polarization. Most researches indicated that the informal sector was still the important part of present urban economic activity, and it was hardly formalized due to lack of the capital, system, technique, and so on. Hence what the government could do was to induce it reasonably.
Although the abroad research had gotten remarkable achievements, it was lack of the spatial characters of the informal practitioners, the comprehensive angle of view, the impacts on the region space, and the comparative and quantitative studies.
