El Salvador and its Informal Commercial Activity

Nvard Patrikyan, Mario Martinez

Geographical Map of El Salvador

• Total population 7,066,403• Language: Spanish• GDP per capita: $6,400 • GDP (Purchasing Power Parity): $45,34 Billion • Budget:

– Revenues: $3.928 Million– Expenditures: $4.226 Million

• Unemployment rate: 6.3%• Inflation rate: 4.7%• Balance Account: (-1.119 billion)• Exports: $4.55 billion• Imports: $9.74 billion

E.S. Census, CIA fact book 2008Est. 2008

• Reason for establishing an informal shack • Street Invasion• Municipal Challenges• Obtaining city permits• Conflict of Interest• Dangers• Opinion about informal trading

• Reason for establishing an informal shack

- No employment, family trait, little education, better earnings than a regular job, less labor work

• Street Invasionhttp://www.youtube.com/watch?v=qd_lVPgT0PQ

• Municipal Challenges

- Displacement, confiscation of merchandise, difficult to obtain temporal permission to have public sale on the street

• Obtaining city permits

-No permits, tedious procedures to come up to agreements, deal with bureaucracy, syndicate governance

• Conflict of Interest

- Political parties influencing in lieu of promises

- Police corruption or abuse

• Dangers

-“Renta” group of individuals who enforce a monthly fee to merchants in order to protect them from criminals.

- Robberies

- Unsafe structures 

1. What made you establish this business? Unable to find employment for five years.

2. Do you generate enough money and how much do you make a day? Just enough to survive, $6 dollars a day.

3. Do you need permits to conduct your business? Yes, with cooperatives and syndicates

4. Do you have problems with any legal authority? Yes, with CAM (Cuerpo de Agentes Municipales)

5. How much investment did you need to open up the business? $1,350.00 Dollars.

6. Do you have credit? Yes, with a financial cooperative.

7. If you had the choice to have a formal business, would you do it? Yes.

8. Why you don’t want to become a formal business owner? Rental units or overhead is too expensive to maintain.

9. What are the advantages or disadvantages of this business? Advantages: I am my own boss; some days I make good money. Disadvantages: Exposed to robberies; no business while it rains.

1. What made you establish this business? Because there is no work

2. Do you generate enough money and how much do you make a day? Just enough to survive

3. Do you need permits to conduct your business? No, I don’t have one

4. Do you have problems with any legal authority? Yes, with CAM (Cuerpo de Agentes Municipales)

5. How much investment did you need to open up the business? $400.00 Dollars

6. Do you have credit? Yes, only with vendors

7. If you had the choice to have a formal business, would you do it? Yes, but depending on the price of the unit

8. Why you don’t want to become a formal business owner? Rent is too expensive and I can’t afford it

9. What are the advantages or disadvantages of this business? Advantages: I am my own boss; choose own schedule Disadvantages: Exposed to robberies; risking my life out-here on the street.

1. What made you establish this business? Because there is no work

2. Do you generate enough money and how much do you make a day? Just enough to survive about $35 a day

3. Do you need permits to conduct your business? Yes, with city hall

4. Do you have problems with any legal authority? Yes, they have confiscated my merchandise

5. How much investment did you need to open up the business? $500.00 Dollars

6. Do you have credit? Yes, with vendors

7. If you had the choice to have a formal business, would you do it? Yes

8. Why you don’t want to become a formal business owner? It is too expensive to lease

9. What are the advantages or disadvantages of this business? Advantages: I have my own schedule and make more money than a regular job. Disadvantages: Exposed to robberies, loss of merchandise, and possibility of closing the vending shack.

• Opinion about informal trading

- Government efficiency

- Providing source of employment

- Education

- Occupational training

- Social services

- Adjust minimum pay rate

- Increase exports

- Reduce imports

- Increase investing

- Reduce excessive credit consuming