Development that Works
  • About

    This blog highlights effective ideas in the fight against poverty and exclusion, and analyzes the impact of development projects in Latin America and the Caribbean.
  • Tag: informality

    Found 2 posts.

    An informal Uber?

    By - 13 de January de 2015, 12:39 pm


    At rush hour it is virtually impossible to get a cab ride in Bogota or Lima. The last time I went to Bogotá, the line for taxis at the airport was even longer than the queue for immigration. I was tired, it was 10:30 pm and it drizzled. I would have given my kingdom for an Uber, which does charge more if demand is higher. Finally, and after an hour long wait, I got into a dirty taxi after putting my bag in the trunk which was full of packages and at least three opened stale Coca-Cola bottles.

    In the regulated taxi market, the client has little choice, no matter that many are willing to pay more for a cleaner, safer, faster and more punctual service, even if the price fluctuates with the supply and demand tides.

    Taxi fares are typically set by regulation (Cab meters), and the driver cannot negotiate the fare.

    Unless (s)he can, because it is informal. Read more…

    Informal sector: hidden capital or vampire?

    By - 12 de November de 2014, 6:36 am

    informal sector

    In some of the development literature, the informal sector is seen as a locked source of capital and growth. Find the key to unlock it and the dam of repressed innovation will water the fertile fields of formal capitalism. In the opposite view, the informal sector is outright a dangerous parasite that sucks life from the formal sector and hinders economic growth. This is not a trivial question as it is estimated that “in developing countries, informal firms account for up to about half of all economic activity.”

    A new paper takes a different view. Informal firms stay that way, are unproductive and policies designed to formalize them may have the effect of driving them out of business. The only cure is economic growth. Informality will only decline (slowly) with development.

    The paper highlights five facts on the informal economy in developing countries.

    Read more…