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Co-optation, Competition, and Resistance

The growth of the urban informal economy in Latin America has generally been attributed to the failure of economic policy initiatives to stimulate sufficient job growth in the region to match the rapid increase in the urban labor supply. As import substitution, protectionism, and state ownership reached their limit in the late 1970s and early 1980s, a series of economic crises halted and even reversed the trend toward steadily increasing living standards that had been marked, for example, by the "Mexican Miracle" of the 1960s. Economic restructuring, initiated under pressure from the International Monetary Fund and similar international agencies, required that these nations follow a very different economic logic-privatization, export orientation, and the reduction of subsidies, sometimes referred to as "neoliberalism" (Roxborough, 1992). Although debate still rages about the longterm effect of these changes, there is little doubt that in the short term this period saw a tremendous growth in the informal sector as a growing proportion of the population searched for subsistence opportunities outside the stagnant formal sector. Although academic and governmental interest in the informal sector has focused primarily on its economic causes and effects, there is growing interest in its political implications. Defined as economic activity outside the normative regulatory system of the state (de Soto, 1989; Portes, Castells, and Benton, 1989), informality implies a series of strategies of evasion or resistance on the part of participants in the informal economy, who carry out their activity in the face of state indifference at best and state repression at worst. The significance of these strategies has often been overlooked, the assumption being that the state, unable or unwilling to enforce its regulations,