Formal sector is more productive than the informal sector because of size, the capital-intensive nature of production, self-selection by more productive employers for formal activities, taxation and productive public distribution to the formal sector .

The formal sector of leading refers to the structured and organized approach to leadership within established institutions, organizations, and businesses. It is characterized by clear hierarchies, defined roles and responsibilities, and a set of rules and regulations that guide the decision-making process. Here are some reasons why the formal sector of leading is considered better than the informal sector:



In the formal sector, leaders have clearly defined roles and responsibilities, which ensure that they are accountable for their actions. This accountability helps in maintaining transparency and fairness within the organization. In contrast, the informal sector often lacks clear accountability, as decision-making and leadership roles may be shared or unclear.



The formal sector follows structured decision-making processes that involve gathering relevant information, analyzing it, and making informed choices. This systematic approach ensures that decisions are well-thought-out and based on objective criteria. On the other hand, the informal sector may rely on personal biases or subjective opinions, leading to inefficient decision-making.



The formal sector provides consistency and stability in leadership. Leaders are chosen based on their qualifications, skills, and experience, which ensures that they have the necessary expertise to perform their duties effectively. This consistency helps in maintaining the overall stability of the organization. In contrast, the informal sector may lack stability, as leadership roles may change frequently without a proper selection process.



The formal sector of leading provides opportunities for professional development and growth. Leaders in formal settings often undergo training programs, attend workshops, and participate in skill-building activities to enhance their leadership abilities. This continuous learning enables them to adapt to changing circumstances and improve their performance. In the informal sector, such structured opportunities for growth may be limited.



The formal sector emphasizes legal and ethical compliance. Organizations in the formal sector must adhere to laws, regulations, and ethical standards set by governing bodies. This ensures that leaders act in a responsible and ethical manner, protecting the interests of stakeholders and the reputation of the organization. The informal sector may lack such regulatory oversight, leading to potential misconduct or unethical practices.

In conclusion, the formal sector of leading is favored over the informal sector due to its clear accountability, efficient decision-making processes, consistency, stability, opportunities for professional development, and adherence to legal and ethical standards. These factors contribute to the overall effectiveness and success of organizations, making the formal sector a better choice for leadership.