Title: The Informal Sector in Venezuela:
1The Informal Sector in Venezuela A Public Policy
Agenda
Econ. Wladimir Zanoni zanoni_at_cedice.org.ve
CENTRO DE DIVULGACIÓN DEL CONOCIMIENTO
ECONÓMICO www.cedice.org.ve Caracas. Venezuela.
2The main question
?
What public policies should be implemented in
order to reduce the informal sector in Venezuela?
3Why is it important to design public policies?
Formal and informal labor ( labor force
1969-2003)
Employment structure (2º semester 2003)
53
Aprox. 5.000.000
32
Source INE
Aproximately 30 of the informal workers are
street vendors
4Why is it important to design public policies?
- 1.- Relationship between informality and poverty
- 2.- Informality and economic growth
- Human capital and informality
- The tendency to informalize formal activities
Worker
Private enterprise
Instituional counterpart Links with the set of
formal rules in the society
Labor relationship
Economic counterpart Wage and social security
5Why is it important to design public policies
here?
- 3.- Informality and the democratic process
- Weakening property rights
- Absence of the rule of law
- Individuals loose political incentives to
participate - Entrepreneurial vs. rent seeking political
behavior
6Our research and development project
- Street vendors in SABANA GRANDE
- 8 mm people 1.5 mm cars monthly (2.160 mts.)
- Cultural and Urban importance
- 14 of informal commerce in Caracas
An iceberg tip
7Street Vendors in Sabana Grande
- Why did we need researching?
- Absence of information
- Qualitative
- Quantitative data
- Information as a device to gain credibility and
acceptance - Agents were reluctant
- Information is a requirement of people
8Street Vendors in Sabana Grande
What did we find?
Reducing informal commerce
Enforcing property rights
Lowering the cost of doing business
Human capital
Avoiding public servants corruption Enforcement
mechanisms and capacities Agencies members
incentives
Back to the initial question What public
policies should be implemented?
9Lowering the cost of doing business
- Access to capital
- The lender faces the moral hazard problem
- Lack of high quality physical assets
- Social networks as social collaterals
- 62 of the credit based upon
- Informal networks
Policy advice enhance private formal
micro-lending
10Lowering the cost of doing business
- Labor
- High transaction costs because of the Labor Law
- Self employment and family labor
- Paying percentage of sales diminishes supervision
costs
Labor force in age ranges
Rangos de edades
Formal rules must take into account the already
existent institutions
11Enforcing property rights
Low cost of doing business
High cost of doing business
Bribes
Bribes
?
N of votes
N of votes
1) The higher the bribes the lesser the
political support
2) The higher the bribes the higher the
political support
- Infinite bribes amount cero
corruption
12Enforcing property rights in other words
- A direct relationship between the political and
the economic markets for renting the streets - The higher the political willingness to enforce
property rights the higher the bribes will be - Lowering the political and economic incentives
to rent the street as a complementary policy - Paying according performance
- Information on political support as a policy
device
13Human capital investment
- Complexity of achieving agreements
- Political polarization
- Venezuela as a battlefield
- Lack of human capital
- Entrepreneurs
- Street vendors
- Investment in human capital Lowering TC
anti-corruption policy reducing street vending
14CEDICEs Strategy to Promote Reforms
Meetings and presentations with
- Public servants
- Local Alcaldia Libertador (Executive and
Councilmen) - Regional Alcaldia Metropolitana (Executive and
Councilmen) - National Production and Commerce Ministry
Officials - Formal Sector
- Commerce Consecomercio, Camara de Comercio, and
local associations - Real state National Chamber of Building and
local - Banking Citybank, Plaza, others
- Touristy Hotel Melia Caracas, F. A. Bello
15CEDICEs Strategy to Promote Reforms
Meetings and presentations with
- Street vendors
- 8 associations, CTV
- They demand reliable information
- Partnership with some other organizations
(Fundaempleo) - Neighbors
- Parroquia El Recreo
- Asociacion de vecinos Sabana Grande
16CEDICEs Strategy to Promote Reforms
8 months weekly round table
- Street vendors, Neighbors, Public servants,
Formal Sector, ONGs - Achievements
- Despite their political and ideological
differences CEDICE contributed to meet all
members and to keep them working together for 8
months - Subscription of a public policy agreement
- Lowering the costs of doing business
- Day of parade
- Building up social networks to enhance
democratic participation
17CEDICEs Strategy to Promote Reforms
Interviews, Forums, Conferences and Meetings
- Interviews
- National several radio, TV and press interviews
- International NPR, Florida Sun, Veneconomia
- Conferences and forums
- Universities, Entrepreneurs Chambers, and
Associations - Experts consultation
- Permanent discussions with experts both national
and internationally
18CEDICEs Strategy to Promote Reforms
The future
- To extend the research and development project to
other strategic areas of Caracas (other
municipalities) - To promote CEDICE as a source of reliable and
actualized information concerning the street
vendors problem - To publish the results of the project in a book
(almost ready)
19Políticas la oferta de derechos de propiedad
Es el postulado Mayores sobornos más apoyo
político del buhonero siempre válido en un
contexto de bajos CT?
Encuentran los buhoneros incentivos positivos
para moverse del comercio informal a otras
actividades?
Depende del path dependency!!!
20La Pregunta Inicial
Qué políticas son apropiadas para reducir la
economía informal en Venezuela?
Políticas anti-corrupción y pro enforcement
Reducción del Comercio Informal
Reducir el costo de hacer negocios (crédito,
registro, trabajo,etc.)
Capital Humano Entrepreneurs-survivors
- Marco de reglas formales
- Mecanismos de forzar cumplimientos
- Incentivos de los funcionarios públicos
- Bribes measurement
21La Economía Informal en Venezuela
Las preguntas y los grandes temas
- Se supera la economía informal con expansión
fiscal? - Es la solución un plan de empleo?
- Lo es un programa de microempresas?
- Son suficientes mejores políticas públicas?
- Será la alternativa el crecimiento de la
economía privada?
22 23Qué dicen las investigaciones sobre el tema?
- De soto DDPP y costos de hacer negocios
(Cartaya, CONAPRI, World Bank, Alayón) - Microempresarial y de capacitación Clustering
advantages (Márquez, CESAP) - Macroeconomía ausencia de crecimiento económico
- (Freije, Márquez)
24Acceso al capital
Con qué capital financiero continúan?
Con qué capital financiero se iniciaron?
Base cálculos propios
25Comercio informal en Sabana Grande
Características relevantes
La Investigación
- ACCESO AL CAPITAL
- ESTRUCTURAS DE COSTOS DE TRANSACCION
Base cálculos propios
26Características relevantes
Experiencia en buhonería
Educación promedio
I
C
T
Base cálculos propios