Mexico Tradition: Vibrant Informal Economy

The Mexican government recently released an interesting statistic. A full forty-three percent of the Mexican economy is 'informal', which is to say that the business activity is neither registered with the government nor is it taxed.  To my way of thinking, forty-three percent is a pretty big number, but given what we observe here in Pátzcuaro and in our travels around the country, the number is credible.

The entrepreneurial ingenuity of the Mexican people never ceases to amaze us. Evangelina is a good example.  She helps me with the house. It is our custom to begin her day with a cup of Urúapan coffee in the kitchen. Leaning against the counter, we gossip, trade notes and observations on life.

Early in her marriage Evangelina realized that her life would be hard and, in her words:

"I could either get depressed, or I could decide what I wanted to do with my life.  I decided that even if I couldn't go, I would make sure that each of my children went to school."

And that is exactly what she did.  One daughter works for the government dealing with exports; another is a social worker; a third teaches school. Her son is a bookkeeper in Los Angeles.

In Mexico, parents pay a lot of public school expenses, so it wasn't easy.  But as Evangelina tells it:

"If a child needed a new uniform—that's okay, I'd take some of the eggs from my chickens to sell in the market. If another needed books or to pay for dance, that's okay, I'd sell extra avocados from my tree."

The informal economy at work!

What I pay Evangelina is part of the informal economy—as are our cash payments to the gardener and the various, occasional handymen who help us maintain Casa Mariposa.

I guess Reed and I are becoming acculturated because we're no longer surprised by the vendors we encounter nearly everywhere. As Reed puts it:

"At any given event, people are there selling something."

Holy Week is approaching.  One of the processions will go up to Calvario Church on Good Friday.  Along the procession route, homeowners will offer food and drink for sale. Some homeowners will offer to rent chairs on their balconies to visitors who desire a better view.

Our young adult friends needed to make extra money for a special project. So they hit upon the idea of preparing tacos a vapor (delicious steamed tacos) to sell on Sunday mornings in the market. Thanks to the informal economy, they were able to finance their project!

Pátzcuaro's mercado (open air market) is a combination of formal (government registered, tax-paying) and informal businesses. As examples of informal 'businesses', I have in mind the traditionally dressed indigenous women from the pueblos who, seated on their petates (woven grass mats) on the ground, offer garden herbs and vegetables for sale.

But I'm also thinking of the numerous 'regular' street vendors, who spend their days walking around Plaza Grande offering their wares—traditional baked goods, herbs, candies, carved crosses, rebozos, pottery. And this list doesn't even take into account the street musicians! Wherever we go in Mexico, the vendors are there ahead of us.

It occurs to me that perhaps one way to understand the informal economy is as a coping strategy for Mexico's ordinary people. The employment situation in Mexico is difficult. There just aren't enough jobs to go around. The social safety net is weak at best.


In this context, it is reasonable to view the informal economy as a creative response to life's challenges. Aguante (persistence) is a primary cultural value. I'm reminded again of our friend Norma's comment: "We Mexicans are like our burros; we just keep going."

The entrepreneurial ingenuity,  energy and persistence of our Mexican neighbors in the face of daunting economic realities never ceases to amaze and awe us.

Here's an article about the informal economy in a Mexican urban setting that Reed posted yesterday on the Americas Blog.