Mexico City, like many other developing Latin American countries, posseses a two sector economy: the formal and informal sectors. The formal sector activity is regulated by the state while the informal sector is not. In some circumstances, not only is the informal sector unregulated, it's also illegal. Even though the two sectors are interdependent, each relying on the other for customers and resources, their relationship is by no means stable and is in a constant state of change.
In Mexico City the informal sector of the economy is very important. Statistics show that in 1990 this informal sector contributed around 25 to 40% of Mexico's Gross Domestic Product (GDP). It also provided work for approximately 25% of the economically active population.
This informal sector consists of various and diverse small time enterprises, with services ranging anything from repair workshops to shoe shining. The most visible form of informal activity in Mexico City is street trading. Each street trader is part of a larger network which includes suppliers, competitors, money lenders, customers and authorities.
In the 1980s the street trading industry grew significantly larger due to the harsh economic circumstances, including the 1982 debt crisis. Unemployment increased, inflation rose, minimum wage fell by half and in 1987, 41 million people (51%) in the country were below the poverty line. Street trading provided this urban poor with work opportunities, income, and access to essential goods that are at prices lower than the retail shops. Traders sell food, shoes, clothes, toys, household supplies, alchohol, cigarettes and various other goods.
In 1995 there was about 150, 000 street traders in Mexico City (50% of the traders in Mexico). For every one formal trader there are 2.36 street traders. Over 50% of all the street traders in the capital come from the middle class, 60% of these own their own homes, and approximately 65% of the stalls are run by their owner and the owner's family.
This expansion of informal traders directly clashed with the formal traders. One formal trade orgainization called CONCANACO (Confederation of Chambers of Commerce) is concerned with the competition and impact of street trading on its members. They are also frustrated with how much informal trading turn-over evades legal regulation and taxation. Most formal traders are located in permanant built structures and street traders are viewed as intruders. Street traders are mostly located in the main streets and public areas of El Centro (city centre), especially around the main plaza-Zocalo. They usually target the entrances to the metro stations, transport sections, major tourist attraction areas (e.g. cathedral), and business districts.
In response to this street trader controversy, authorities have tried to remove the traders from public spaces of the Zocalo. This removal process was based on the notion that it would relieve congestion, reduce health and fire risks and eliminate unfair competition against the formal sector. CONCANACO believes that the street traders block entrances to the permanant shops and clutter the urban landscape.
Other reasons for removing street traders are food health concerns and crime. Many times food preparation is not sanitary and incidents of food poisoning exceeded one million in 1992. Trading areas are also associated with high levels of crime. Drug dealers and prostitutes concentrate in the street trading areas.
The future of street traders is uncertain. The policies around street trading raise the question of what activity is acceptable in public space and who should decide what happens in that space. Many street traders will loose their stalls and many goods will become more expensive, raising the cost of living for many citizens in Mexico City.
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