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The Informal Sector of the Cochabamian Economy

The Effects of Neoliberal Policies in Cochabamba

By Sabine Lucile ScottPublished 4 months ago 4 min read
Cochabamba, Bolivia

Cochabamba is the fourth-largest city in Bolivia and is located in a valley in the Andes mountain range. In Owners of the Sidewalk: Security and Survival in the Informal City, Daniel Goldstein writes about the people who had to relocate to the city from the agricultural lands and mining towns due to the effects of neoliberal reforms. In 1993, Planning Minister Gonzalo Sanchez de Lozada was elected and soon after, the laws concerning imported food were changed such that the Bolivian farmers, who had lost their government-provided subsidies, could no longer compete with foreign farmers. (Goldstein 2016, 37). According to Cultural Anthropology: A Toolkit for a Global Age, by Kenneth Guest, “ Stratification and inequality became more pronounced in industrialized capitalist economies over recent centuries, and this uneven development appears to be accelerating under forces of globalization” (Guest 2020, 345). As the nation globalized, the city’s informal economy grew.

Neoliberal policies were eagerly accepted, partially because their advocates promised that the economy would flourish under capitalism and problem of poverty would shrink. Also, the promoters of new policies promised a reduction in the illegally employed ambulantes. (Goldstein 2016, 19-20). Instead, the new policies had the opposite effects and the number of informal workers ended up increasing, as did the population of the slums.

Ambulantes sell small appliances, clothing, foods, and toiletries but they do not formally provide the city nor state governments with documentation of their sales’: “ All of the ambulantes’ transactions go unrecorded, and they pay no taxes on anything they sell” (Goldstein 2016, 21). The state does not have official data about the individual sales made by ambulantes. The ambulantes do not register with the the city and work outside of the law: “People become informal to escape legal regulation, de Soto suggested, setting themselves up outside the law because the law and the legal bureaucracy are so onerous that they discourage people from operating legally (Goldstein 2016, 20). In a manner of speaking, the city has encouraged the growth of the local, informal economy. Partially, the way in which the city has encouraged the survival of the informal sector of the economy by making it impossible for the poor to live while operating inside the law. This unofficial support is probably because in Cochabamba, the ambulantes are necessary despite being illegally employed: “Nowhere on earth does the informal economy play such a significant role in the survival of the national population as it does in Bolivia” (Goldstein 2016, 40). The city is a microcosm of the nation’s reliance on the informal transactions of land, housing, and street salesmanship.

At the end of the nineteen-hundreds, the city of Cochabamba made a law concerning the width of the streets relative to how far they were from the city center. This law meant that the streets near the central plazas would be narrow, but outer streets could be wider which meant they could be used by ambulantes. This “suggests the city’s willingness to allow growth on its periphery in exchange for preserving the colonial order and aesthetic of its central core” (Goldstein 2020, 48). There is a trade off that the city government has to make in order to keep the informal and illegal economy on top of which the rest of the city is balanced: some architectural laws have to be different in the areas where ambulantes work.

Goldstein implies that the informal economy is unofficially supported by the city government. The city is, of course aware of the illegal housing, land sales, and street salespeople, but does not shut these systems down. This is an indicator either that the city does not have the resources do so, or, what is more likely, individuals involved in the management of the city are benefiting directly from the informal economy.

Goldstein (2016) describes another aspect of life that goes unregulated: the housing for the very poor. The ambulantes are part of the poor population of the city which resides in the slums, which go unregulated. The slums are sometimes built by the people living in them and are sometimes illegally built on public land, or they are sometimes built privately purchased land which was still outside of the normal and legal residence developments in and around the city. (Goldstein 2016, 20).

Works Cited:

“Cochabamba.” Wikipedia. Wikimedia Foundation, September 16, 2022.

Goldstein Daniel M. Owners of the Sidewalk: Security and Survival in the Informal City. Durham, NC: Duke University Press, 2016.

Guest, Kenneth J. Cultural Anthropology: A Toolkit for a Global Age. New York, NY: W.W. Norton & Company, Inc., 2017.


About the Creator

Sabine Lucile Scott

Hi! I am a twenty-nine year old college student at San Francisco State University majoring in Mathematics for Advanced Studies. I plan to continue onto graduate school in Mathematics once I am finished the plethora of courses which remain.

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