Urbanization, The Informal Economy And State Policy In Latin America

Abstract

This paper reviews the historical process of urbanization and industrialization in Latin America stemming from changes in the mode of incorporation into the capitalist world economy from the colonial to the contemporary period. It suggests that the growth of an urban informal economy in contemporary Latin America can be explained in terms of the international division of labor, which has forced many countries to turn increasingly to export manufacturing to relieve their foreign debt and current economic crisis. A review of case studies reveals that much of this export manufacturing is occuring through the informal sector, which is now receiving increased national and international government support. The informal sector is able to produce more cheaply by utilizing more vulnerable segments of the labor force, such as women, and by circumventing labor legislation designed to protect workers such as minimum wages, fringe benefits, and adequate working conditions. Thus, the growth of the informal economy poses a real threat to organized labor in Latin America. Latin America has long been the most highly urbanized region of the developing world. By 1980, the urban population accounted for two-thirds of the total population, while agricultural occupations fell from 53.3% in 1950 to 33.7% in 1980, with secondary and tertiary occupations growing concomitantly. (Rama and Faletto 1985: 134). However, these aggregate figures also conceal wide