The economy of cities in the Third World is based
00 peripheral capitalism . This mode of production consists of two interrelated parts: a capitalist sector integrated into the world economy, and a range of petty capitalist forms of production oriented more towards the domestic economy. These have been described as a 'fum-centred economy' and :1 'bazaar economy',' or the formal and informal sectors.2
Santos (1979) refers to the upper circuit and lower rircuit, in order to highlight the dependence of the traditional informal sector upon the modern formal sector.3 The well-being of individuals and house holds is dependent on their position within this dual-sector or bipolar urban economy.
In this chapter we explain the evolution of the two sectors of the Third World urban economy, and we
examine the structure of each circuit, with particular reference to the nature of lower-circuit activity. We consider employment relations and labour market structure and problems ofjob access, and the position of women and children in the urban labour force. We then shift the scale of analysis to examine the house hold economy and the coping strategies of the poor.