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The study analyses the night marked trading in Penang,Malaysia. It assumes that this trading activity is capable of an evolutionary growth if linkages with the formal sector are benign.It allows the potential for capital accumulation and enhances the entrepreneurial development for the hawkers.These issues are analysed in relation to supportive givernment attitudes towards the sector. The reformists believe that the penetration of modem (formal)sectors along with supportive government policies could help the sector to evolve.The Marxists,on the other hand,are sceptical about the growth potential of the sector due to the exploitation by the capitalists.Within the framework established in this research approach three issues emerge as key to understanding the role and the potential of the informal sector:①the linkages with the formal economy,②the ability of the sector to accumulate capital,and③the attitude of the state towards the sector. The analysis is based on data collected from two type of surveys:hawker and management surveys which examine the operational and managerial aspects of this trading activity,respectively.It is also supported by the utilisation of secondary data.The findings of the study indicate that the growth of night markets is involutionary because of the existence of exploitative relations with the formal sector.The night markets do not generate enough surpluses to enable the hawkers to accumulate capital in the long term and enhance their entrepreneurship due to inefficiencies of government intervention as well as of the management system.It is concluded that such implications have restricted the growth of the night market trading in Penang.
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