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The Free Market City:

Latin American Urbanization in the Years of Neoliberal Adjustment*

by

Alejandro Portes

Princeton University

and

Bryan R. Roberts

University of Texas Austin

February 2004

* Data on which this paper is based were collected by the projectLatin American Urbanization at the End of the

Twentieth Century, sponsored by the Andrew W. Mellon Foundation. We thank our collaborators and directors of

country teams without whom this study would not have been possible: Marcela Cerruti and Alejandro Grimson in

Argentina; Licia Valladares, Bianca Freire-Medeiros and Filippina Chinelli in Brazil; Guillermo Wormald,Francisco Sabattini, and Yasna Contreras in Chile; Marina Ariza and Juan Manuel Ramirez in Mexico; Jaime Joseph

and the Centro Alternativa research team in Peru; Ruben Kaztman, Fernando Filgueira, and Alejandro Retamoso in

Uruguay.


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This paper presents results of a comparative study of the character and evolution of Latin

American cities during the last decades of the twentieth century and up to the present. Thecentral hypothesis that guided the study is that something significant has changed in the urban

system and in the character of urban life during this period and that these changes have been

associated, directly and indirectly, with the transformation in the dominant model of economic

development in the region. As is well-known, the development policies adopted by all or mostLatin American governments in the post-World War II period aimed at autonomous

industrialization behind tariff barriers in order to promote sustained economic growth and

modern employment creation. That policy registered notable economic successes during itsearly years, but was gradually compromised by a series of factors. Crucial among them was the

role of multinational corporations (MNCs) which jumped tariff barriers to exercise hegemony

within domestic markets and a capital intensive pattern of industrialization, guided by thestrategies of the MNCs which retarded employment creation and put increasing pressure on the

balance of payments (Filgueira 1996; Quijano 1998).

ISI and the Urbanization Process

This model of development, known as import substitution industrialization (ISI) hadsignificant consequences for the evolution of urban systems and the character of cities and urban

labor markets throughout Latin America. These trends which at the time (read the 1960s andearly 1970s) seemed inexorable comprised the following features:

A rapid process of urbanization, concentrated in one or two cities per country,which were the same as where ISI industries clustered. Massive internal

migration toward these cities led to their extraordinary growth and to theexacerbation of primacy where their population far exceeded the size of

secondary urban centers.

Within major cities, labor demand by ISI industries led to the emergence of amodern, legally protected industrial working-class along with a middle-class

employed in government service and private industries. The imbalance between labor demand created by capital-intensive ISI industries

and the supply generated by massive internal migration in search of such jobsgave rise to an unprotected informal working-class employed in multiple self-

invented industrial and service activities outside the modern sector.

Within large cities, a growing population put upward pressure on land andhousing markets leading to prices that bore no relation to wages either in formal

industry or informal services. The working-classes were thus compelled to create

their own housing solutions in vast and rapidly growing squatter and otherunregulated settlements in the periphery of these cities.

Along with the creation of working-class settlements in vast sectors of the urbanperiphery, elites and middle-classes also abandoned the city center relocating toincreasingly remote suburban areas, away from those occupied by the poor. Theresult was increasing spatial polarization, with de facto segregation between

privileged areas occupied by the elites and middle-classes and the rest of the city.

Despite limited employment creation and growing spatial polarization, sustainedeconomic growth during the ISI period led to multiple articulations between theformal and informal sectors of the urban economy and to a slow, but sustained

upward mobility by the migrant poor. This pattern was evident in their gradual


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access to formal industrial employment and in their eventual acquisition of legal

titles to land and dwellings in regularized, formerly precarious settlements.

Popular social movements during this period aimed at accelerating this process ofupward mobility through better employment conditions in industry and more

government-provided services for peripheral working-class residential areas.

Such movements were articulated by the unions of ISI industrial workers and byorganized land invaders and settlers in the urban periphery. Despite their usually

radical rhetoric, their aims focused on the gradual improvement of work and

living conditions for the urban poor within the existingcapitalist system.

Despite multiple tensions and frequent protests, urban society during the ISIperiod was fundamentally orderly, with different social classes occupyingknown and accepted places in the urban hierarchy and with credible expectations

of gradual upward mobility by formal and informal workers alike. Socialdisorganization in the form of widespread anomic violence and crime was rare

and, when it existed, was commonly confined to certain well-known lumpen

areas, avoided by all.

This panorama of Latin American urbanization was described in detail by the socialscience literature of the time and was buttressed by numerous empirical studies.1

The

convergent and cumulative findings from this literature made these features of Latin American

urban society appear to be set for the indefinite future. This landscape was to change rapidly,however, in the wake of major changes in the insertion of these countries in the global economy

and the consequent shift in their models of development.

End of ISI and Arrival of the Markets

The abrupt end of the autonomous industrialization project promoted by ISI in the early

1980s is a familiar tale that need not be repeated here. So are the characteristics of the anti-statist, market-friendly model that substituted it. Just to lay the groundwork, the principal

features of the new model may be summarized in seven key programmatic thrusts:1. Unilateral opening to foreign trade.2. Extensive privatization of state enterprises.3. Deregulation of goods, services, and labor markets.4. Liberalization of the capital markets, with privatization of pension funds.5. Fiscal adjustment based on drastic reduction of public expenditure.6. Restructuring and downscaling of state-supported social programs, focusing on

compensatory schemes for the neediest groups.

7. The end of industrial policy and any other form of state-sponsored enterpriseand concentration on macro-economic management (Diaz 1996; Portes 1997:

238).

Such momentous policy shift could not but have major consequences on society ingeneral and on urban society, in particular. As a prelude to the presentation of our empiricalfindings, it is worth considering the possible affinities or discrepancies between the process of

urbanization, as described previously, and the implications of the new model of development.

To begin with, the rapid removal of trade barriers had a direct impact on formerly protected ISIindustries, threatening their existence and promoting a process of de-industrialization in many

countries (Klein and Tokman 2000; Galbraith 2000). This trend would impinge, in turn, on the

pull exercised over internal migrants by primate cities where these industries concentrated.


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The export-oriented activities promoted by the new model need not concentrate in these cities

since their markets are located abroad and since costs are reduced and profits increased bylocating near them

2. The diminished attraction of primate cities as sources of employment and

the emergence of new growth poles associated with exports and tourism would have a direct

bearing on the character of urban systems.

Urban labor markets could also be expected to be transformed under the new model forseveral reasons. Market-friendly policies privileged deregulation and the shrinking of the state,

with a consequent stagnation or decline of the public sector which had been previously a key

source of middle-class employment. Simultaneously, as formerly protected ISI industries closedtheir doors because of their inability to compete with cheap imports, the formal working-class

employed by them could also be expected to decline. The new model predicted that the slack in

labor demand would be taken up by competitive export-oriented industries. To promoteinvestment in this sector, governments adopted labor flexibilization policies that removed a

number of legal protections from workers. As a result, the former sharp separation between a

protected, formal working-class and the informal proletariat became increasingly blurred (Diaz1993; Filgueira 1996; Portes 1997).

In theory, a market-friendly environment with less taxation and regulation wouldstimulate capital investments producing, in turn, a surge in labor demand. As labor markets

tighten under this pressure, wages and work conditions would improve naturally without need forstate intervention (Williamson 1994; Balassa et. al. 1986). This trickling down effect is the

principal mechanism through which neoliberal policies are expected to reduce income

inequalities. On the other hand, if the expected wave of private investments does not materialize,the contraction of the public sector and reduction in formerly protected industrial employment

could lead, alternatively, to open unemployment and/or a significant rise in the informal sector.

Even if labor demand materializes under conditions of widespread deregulation, the new jobsmay be of poorer quality than those lost, as they lack a number of benefits including a measure

of protection against arbitrary dismissal (Diaz 1996; Salinas and Wormald 2003). Though legal,these precarious jobs would come to resemble those formerly labeled informal.

Land and housing markets could also be expected to change under the new regime. The

neoliberal philosophy toward these markets is that urban land is not necessarily a scarceresource and that the private play of supply and demand should lead naturally to a re-ordering

of urban space according to individual capacity to pay (Sabatini 2000; Kowarick and Campos

1990). According to proponents of this policy, the city and its benefits should be for those who

deserve it. The rest should either leave or accept minimum shelter in government programslocated in the cheapest land possible. Such emergency programs are inevitably located in remote

areas of the periphery, effectively segregating the poorer urban sectors from the rest of the city

(Raczynski 1987; Razetto 1985; Eckstein 1989).Finally, the end of subsidies for items of popular consumption and the disappearance of

programs for social protection at a time when large numbers of formerly protected workers and

new entrants into the labor force are forced to sink or swim in deregulated markets canpromote new forms of social instability. When jobs are not available or are of such poor quality

as too keep those holding them in permanent poverty, former workers or new entrants into the

labor force may resort to alternatives to destitution, in a pattern which can be labeled enforcedentrepreneurialism. Informal economic activities can be expected to rise but other, less

conventional modes of coping with the absence of employment opportunities may also emerge.

Various criminal activities including drug selling, robberies, and kidnappings for ransom can


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be interpreted, from this perspective, as one such mode in which the perpetrators seek to avail

themselves of the material resources denied to them through legal channels.Mertons (1968) classic analysis of the origins of social deviance is singularly appropriate

to the conditions seemingly promoted by the application of the neoliberal model to Latin

American urban society. A rise in expectations promoted by a consumer culture fostered by

mass advertising and the visible presence, in stores and streets, of all kinds of desirable importeditems occurs at a time when vast sectors of the population may lack the means to support

themselves, much less to acquire such items legally. Young people, in particular, are those most

subject to the pressures of consumerism and relative deprivation and, simultaneously, to theabsence of suitable employment opportunities both to survive and to reduce such pressures.

Resort to unorthodox means in order to escape poverty and to attain the new culturally desirable

goals is one likely outcome. Various criminal activities offer ready forms for enforcedentrepreneurialism.

The Study

The above considerations represent hypotheses in need of validation. To see the extent to

which these relationships actually hold in reality, we conducted a comparative study of six LatinAmerican nations that jointly comprise over 80 percent of the regions population. The study

was based on collaborative agreements with research teams in these countries that conducted aninquiry into each substantive topic based on a common methodological framework. This

framework included analysis of census data and existing surveys along with fieldwork in

selected urban settlements deemed as emblematic of patterns of popular mobilization anddemand-making. Progress seminars conducted during the course of the project brought together

the six national teams with the principal investigators served to sharpen the focus and make more

comparable individual country reports. The substantive areas analyzed by the study include, butwere not limited to, the following:

Urban systems and urban primacy

The evolution of urban labor markets The evolution of urban poverty and inequality Crime, victimization, and urban insecurity

These are the five areas on which the previous discussion concerning potential effects ofthe shift in models of development on cities focused. Final reports for each country contain the

most up-to-date information available to date on these topics. The following sections summarize

findings and compare them with the above set of hypothesized relationships.

Urban Systems and Urban Primacy

Table 1 presents the integrated set of results for the six countries which show two

manifest tendencies: First, the continuing growth of the urban population that now comprises, insome countries, 90 percent of the total. Second, within this urban context, the gradual decline in

the relative size of the primate city or, in the case of Brazil, cities (Rio de Janeiro and Sao Paulo).

The trend is apparent in various indicators, including percent of the urban populationconcentrated in primate cities, the index of urban primacy (the ratio of the size of the main

metropolitan area to the sum of the next three), and the evolution of urban and metropolitan

growth rates.3

Everywhere the growth of primate cities slows down and their relative

dominance over the national urban system, though still overwhelming, tends to decline.


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In Argentina, for example, metropolitan Buenos Aires concentrated close to half of the

urban population in 1970, a proportion that declined to 37 percent in 2002. Its growth ratedeclined continuously to drop to less than 1 percent in the last intercensal period. In Mexico, the

metropolitan area of Mexico City the second or third largest city in the world (United

Nations 2002: 12) reduced its participation in the urban total from over one-third to about one-

fourth in the same period and its growth rate declined markedly to become much lower than thatof intermediate cities. As a result of these trends, the sharp drop from the primate city to the rest

of the urban system when these systems are plotted along a logarithmic scale, began to give way

to a pattern resembling the straight downward line common in the developed world (Berry 1973;Berry and Kasorda, 1977; Portes and Johns 1989). Figure 1 portrays this change for Chile,

comparing the rank-size of its cities in 1970 and in 2002. Figure 2 shows the same pattern for

Brazil between 1980 and 2000. In both countries, the distance between the primate city or cities(in the case of Brazil) and the next largest has been significantly reduced, beginning to

approximate the straight rank-size rule of more mature urban systems.

_____________________________Figures 1 and 2 about here

_____________________________

Reasons for this change appear increasingly clear. Primate cities have lost much of theirlure as an economic magnet for internal migrants and, in the case of Buenos Aires, for

international ones as well. Since fertility rates in metropolitan areas are generally lower than in

smaller cities, the shift in relative growth rates in favor of the latter becomes an arithmeticcertainty. That loss of attraction of major cities, in country after country, is the first tangible

consequence of the end of the ISI era. During the latter, the growth of the formal protected

proletariat and the urban middle-class was accompanied by their overwhelming concentration inthe major cities. Consequences of the decline in public employment and in protected ISI

industries were transmitted quickly to migratory networks that ended their previous near-exclusive orientation toward these areas.

Evidence for this interpretation comes from data on fertility and migration rates for

Argentina and Chile. As seen in Figure 3, fertility rates in Argentina drop significantly fromcities of 50,000 and those in the more underdeveloped regions in the interior of the country to the

federal capital, a pattern that would necessarily lead to a slower growth rate in the latter in the

absence of migration. Results from Chile show clearly the drop in migration to the primate city

which went from absorbing 41.2 percent of all internal migrants between 1977 and 1982 to just28.3 percent in 1997-2002 (Wormald et. al. 2003). Indeed, there were more departures than

arrivals to metropolitan Santiago in the last intercensal period (1997-2002), leading to a negative

migration balance of about 15,000._____________________________

Figure 3 about here

_____________________________

There is additional evidence that not only have migration flows toward primate cities

become feebler, but that they have been frequently re-channeled toward smaller cities,compounding the effects of differential fertility rates. In some cases, reasons for these new flows

are not clear and stand in need of additional investigation. In many other instances, however,

there is an evident connection between the emergence of new growth poles associated with


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export agriculture, export industries, or new tourist ventures and secondary city growth.

Whenever large export production zones (EPZs) created under a favorable tax and labor regime,are sited away from the primate cities, they inevitably trigger vigorous labor flows toward them

(Lungo et. al. 1992; Portes et. al. 1994; Lozano 1997). The policies under which EPZs and other

export-oriented growth poles have been created reflect, of course, the new model of development

which can be credited, at least in part, with the re-orientation of urban systems away from theinexorable primacy of the past.

The Mexican Border Industrialization Program, established in the 1960s and expanded

subsequently, stands as a textbook example of these trends. As is well-known, thousands of in-bond industries in the textile, garment, footwear, domestic appliances, electronics, and other

sectors emerged in Mexican border cities, employing cheap Mexican labor to produce

commodities for the U.S. market (Fernandez-Kelly 1983; Shaiken 1990, 1992). An immediateconsequence was the re-channeling of domestic migrant flows and the rapid growth of these

cities. As Ariza (2003: 12) notes, Tijuana and Ciudad Juarez are essentially maquiladora cities,

which have exhibited the best economic performance in Mexico during the last decade; theyhave simultaneously experienced a population boom far exceeding the growth rate of the federal

district. Merida, at great distance from the capital city, has also received a vigorous demographicimpulse due to maquila employment; while Veracruz, a port city, has experienced rapid growth

due to exports and tourism.In Chile, as we have seen, migration flows have been re-channeled away from the largest

city toward secondary ones, leading to a decline in primacy. Not all secondary cities have

grown, however, and growth has not been uniform but has been linked to the creation and thefortunes of new export industries:

Notable cases have been the strong growth of Iquique,

Copiap, and La Serena-Coquimbo in the intercensal periods1970-1982 and 1992-2002; of Rancagua between 1970 and 1982;

Curic between 1982 and 1992; and Temuco, Arica, Punta Arenasand Calama between 1970 and 1982. These periods of growth are

explained by economic upsurges linked with local export booms

(Wormald et. al. 2003: 20).Lastly in Brazil, the same dynamics is apparent in the relative decline of the axis Rio-Sao

Paulo and the rapid growth of a number of cities between half-million and five million

inhabitants. In every instance, such growth is attributable to the re-channeling of migration

flows in response to new industrial and export-linked investments in cities scattered throughoutthe national territory:

In the South and Southwest, Belo Horizonte (metallurgy,

transport equipment, and the Fiat industrial pole); Campinas,Santos, Curitiba, and Porto Alegre (diversified industries)

benefited from industrial de-concentration and the new pattern of

investments. In the Northeast, Salvador also gained from thedevelopment of the petrochemical and automobile complex of

Ford. Manaus received a great growth impulse from the

installation of assembly industries for exportThis group of cities,which had the largest growth rates during the last two decades,

forms part of what may be labeled second rank metropolization


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consolidating a more balanced urban system (Valladares and

Preteceille 2003: 9).The single exception, among countries studied is Peru, where indicators of urban primacy

barely changed during the last two decades. The dominance of Lima over the national system

did decline during the 1980s only to reassert itself in the following decade. The civil war

suffered by Peru during this time is a key factor accounting for this exceptional pattern. Theconflict reached its peak during the early 1990s leading to mass internal displacements toward

Lima and, simultaneously, to strong disincentives for new entrepreneurial investments (Mendez

et. al. 2003). No new growth pole emerged in Peru to reorient internal migration flows. Thegeographic location of the country plus widespread violence disqualified the country as a

suitable export platform for labor intensive industries. Thus, the same factors that led to

industrial decentralization and a decline in primacy in other countries played themselves, inreverse, to consolidate urban primacy in Peru (Roberts 2001).

4

In synthesis, the impact of the new export model of development on the urban system has

been significant leading, in country after country, to a gradual decline of primacy. Whileexceptions exist, as the case of Peru attests and while primate cities continue to exercise strong

hegemony over national urban systems, it is undeniable that major changes have taken place inthe process of urbanization of Latin American countries, corresponding and reflecting their novel

insertion into the global economy.

The Evolution of Labor Markets

As noted previously, expectations stemming from the Washington consensus were thatlabor markets would respond quickly to the stimulus provided by new capital investments,

leading to sustained declines in unemployment and underemployment. The reality during the

last decades bears little relationship to these expectations. In country after country, rates of openunemployment and informal employment either remained stagnant or increased significantly.

These national trends were quite apparent in the major cities where large proportions of therespective populations continued to live.

Table 2 presents the relevant information for the six countries included in our

comparative study. There are significant variations among them although in no country, with thepartial exception of Chile (to be discussed below) are there visible signs of labor market

improvement. The countries of the River Platte have been the most visibly affected by declines

in formal protected employment. In Argentina, the open unemployment rate doubled during the

1990s and in Buenos Aires, it went from just 3 percent in 1980 to over 20 percent in 2001. Thisdramatic deterioration of labor market conditions is graphically portrayed in Figure 4. Its

evolution in time coincided perfectly with the period of strict application of neoliberal policies to

the Argentine economy. As noted by various observers, no other Latin American countrywitnessed a more fervent implementation of the open markets model than Argentina during the

years of the Menem presidency (Sunkel 2001;Altimir and Becarria 2001; Grimson 2003).

_____________________________Figure 4 about here

_____________________________

During the same period, employed workers also experienced a significant deterioration intheir work conditions. The formal protected working-class employed by large firms in the

Buenos Aires metropolitan area declined from close to half of the economically active

population (EAP) in 1980 to less than one-third in 2001. On the other hand, the informal,


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unprotected working class rose from 13 percent to 34 percent of the EAP during the same period.

As a result the index of labor vulnerability rose from one-third to one-half of the metropolitanlabor force during these two decades.

5Nationwide, the informal proletariat reached 44 percent

of the total Argentine labor force in 2001.

_____________________________

Table 2 about here_____________________________

Across the River Platte, labor market conditions were not much better. Although

neoliberal policies were applied in Uruguay with somewhat less enthusiasm than in its neighbor,the labor market results were essentially the same: as in Argentina, there were large declines in

the proportion of workers employed in formal industry and in the public sector and a

concomitant rise in open unemployment. Figure 5 presents the evolution of the unemploymentrate in the Montevideo metropolitan area. Simultaneously, the proportion of the self-employed

and precariously employed also increased, although not as rapidly as the unemployment rate. As

a result of these trends, Uruguay formerly the country enjoying the highest levels of laborprotection and lowest unemployment in Latin America exhibited an index of labor

vulnerability of half of its labor force in 2001, exactly the same figures as in its larger neighbor._____________________________

Figure 5 about here_____________________________

Chile is commonly cited as the success story of the neoliberal experiment and, from a

labor market perspective, there is some evidence backing this assertion. As shown in Table 2,open unemployment declined to just 5.4 percent of the Santiago metropolitan labor force in the

mid-nineties and just 6 percent among males nationwide. However, the figure climbed right

back to close to 10 percent in 2001. The conventional way of measuring the informal sector asthe sum of unpaid family workers, the unskilled self-employed, domestic servants, and workers

in very small enterprises evolved positively showing small but sustained declines in Santiagoand nationwide. However, if the modern definition of the informal sector as workers

unprotected by legal regulation and benefits is applied, the opposite result obtains.

Table 2 indicates that there has been a sustained increase in the proportion of unprotectedworkers, both in the capital city and nationwide, during the 1990s. This rise is attributable to the

rising number of workers in large firms without social security protection. Thus, while the

Chilean economy managed to create sufficient jobs to avoid the record unemployment level of its

neighbors, many of these jobs were of poor quality without protection against arbitrary firingor social services (Wormald et. al. 2003). This trend reflects the policy of labor flexibilization

introduced as part of the neoliberal model. As Chilean sociologist Alvaro Diaz noted at the

height of this experiment:Chilean labor institutions do not protect the workers

especially women, the young, and the aged against recessions,

rationalizations, and productive reorganizations. It does notguarantee labor rights against authoritarian practices, which are the

norm in many Chilean enterprises and that have resulted in a rise in

the intensity of work as well as the rate of work-related accidents.Only a minority of the labor force has gained access to stable and

well-remunerated jobs (Diaz 1996: 25).


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In Peru, the free-market model of development was applied with vigor during the

Fujimori years, coming to resemble the Argentine embracement of the same policies (Mendez et.al. 2003; Saavedra and Nakasone 2003). However, results were not the same, reflecting

differences in national context and levels of development. Whereas in the more developed River

Platte nations, the application of the new model led to record levels of unemployment, this was

not the case in Peru where the unemployment rate remained unaltered. Instead, effects were feltin the form of precarization of employment and a decline in the proportion of formal workers to

just one-third of the EAP. In Metropolitan Lima, the informal sector which, by any standard,

already absorbed half of the labor force in 1986 swelled to approximately 60 percent by the endof the nineties: As elsewhere, Peruvian workers did not see the presumed trickle down benefits

of the new model materialize anywhere. The evolution of informal employment in the city is

graphically portrayed in Figure 6._____________________________

Figure 1 about here

_____________________________

The remaining figures in Table 2 correspond to the two largest regional economies. InBrazil, a more cautious and less orthodox application of neoliberal policies by the two Cardoso

administrations was associated with a less drastic evolution of the labor markets. Unemploymentand informal employment rose nationwide, as well as in the two largest metropolitan areas.

However, the trend was neither as consistent, nor as drastic as in Argentina. From a labor market

perspective, the 1990s were a stagnant decade with little economic progress and a slowdeterioration of employment conditions (Valladares and Preteceille 2003).

In Mexico, the new export-oriented model took the form of entry of the country into the

North American Free Trade Agreement (NAFTA). The increasing use of Mexico as anindustrial export platform for the huge U.S. market resulted in significant labor demand in the

maquiladora sector in border cities, like Tijuana and Juarez, and elsewhere (Ariza 2003). Thisdemand appeared to have partially neutralized the loss of jobs in closing ISI industries (Pozas

2002). Although, like elsewhere in the region, there was a sustained decline in industrial

employment following the application of market-opening policies, the trend was reversed in thelate nineties leading to a level of industrial employment similar to two decades earlier.

Unemployment and informal employment followed an erratic pattern. In the first case,

the pattern is partially attributable to the unique way in which Mexico computes unemployment

statistics, which leads to unreliable figures.6

In the second case, there is a notable gap betweeninformant employment measured traditionally and modern measures that incorporate unprotected

workers. In 2000, the first indicator yielded an estimate of 40.2 percent of the national EAP,

while the second increased it to 45.7 percent (Portes and Hoffman 2002: 52). In the same year,36.7 percent of the urban labor force were characterized as informal by the traditional criteria,

while the definition incorporating unprotected workers increased it to half of the urban EAP

(49.8%) (Ariza 2003: Table 2.6).Hence, even in Mexico, and despite the labor demand generated by export platform

industries, the results of the new model of development were not impressive. Whatever

economic growth there was, it did not translate into a rapid increase in formal employment. Aselsewhere, labor indicators either remained stagnant or declined. By the end of the 1990s, up to

half of Mexican workers continued to survive in precarious forms of employment, at the margins

of the formal economy.


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Poverty and InequalityThe deterioration of labor market condition has not been uniform. Instead, rising

unemployment and informalization has been accompanied, in several countries, by steady or

rising economic inequality where a number of individuals and families have descended into

poverty, while a minority of the population have seen its fortunes rise as beneficiaries of the newmodel. As Polanyi (1957; 1992) demonstrated long ago, free markets are inherently machines

for the creation and reproduction of inequality. The wealth that they create tends to flow

upward, exacerbating pre-existing class differences unless checked by deliberate regulation.In a prior analysis of Latin American class structures, we showed that the dominant

classes composed of large and mid-size employers, administrators and executives of these

firms, and elite professionals compose approximately one-tenth of the Latin American EAPand, in many countries, less than that (Portes and Hoffman 2003). This privileged decile

received average incomes equivalent to 14 times the average Latin American poverty line in the

early 1990s; by contrast, the informal proletariat, comprising approximately 40 percent of theregional EAP had incomes of just twice the poverty line or about half the amount needed to lift

them out of poverty (Economic Commission for Latin America and the Caribbean 2000).

7

These economic differences, which make Latin America as a whole one of the most

unequal regions in the world, tended to become exacerbated during the decade in which theneoliberal model was implemented throughout the region. Table 3 presents the relevant figures.

In Argentina, the average incomes of employers went from 19 times the national poverty line in

1980 to 24 times in 1997. The incomes of informal workers declined substantially during thesame period to below the minimum required to keep these families out of poverty. During the

1990s, the share of the income mass accruing to the privileged decile in metropolitan Buenos

Aires increased by about 4 percent; while that received by the informal proletariat declined by asimilar amount. The percentage of population in poverty, which in 1980 was less than one decile

increased by 2002 to a remarkable 38 percent of the metropolitan population. As a result,Argentina went from being one of the most egalitarian countries in the region to resemble their

neighbors traditional economy inequality. By 1996, according to Altimir, the national Gini

Index had surpassed the .50 threshold. Figure 7 portrays this evolution for the capital city andenvirons.

_____________________________

Figure 7 about here

_____________________________Neighboring Uruguay experienced a similar, although less drastic evolution. For the

country as a whole, inequality increased, with the Gini index reaching .44 in 2000. The wage

share of the dominant classes increased by about 6 percent in the 1990s while that of theinformal proletariat declined accordingly. Nationwide the picture was one of stagnation, with

the incomes of the bottom quintile and of informal workers barely budging during the decade.8

While less dramatic than the situation across the River Platte, the traditionally egalitarianUruguayan society did not make any progress in moving further in that direction, experiencing

instead a reversal toward greater class inequality during the last decades.

Chile is the country that registered best results in terms of sustained reduction of povertyduring the last two decades. As shown in Table 3, the proportion of persons in poverty declined

by more than half between 1987 and 2000: From 45 to 21 percent. Similar declines were

registered for both the poor and indigent population in the Santiago metropolitan area. Informal


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workers, especially the self-employed, saw their average incomes rise significantly, in

correspondence with the economic metaphor of a tide that lifts all boats (Balassa et. al.). Therise was sizable enough to lift the average workers out of poverty. However, this occurred at a

time when the relative income of employers rose even faster, increasing the wage share of the

dominant classes in the capital city by 10 percent and keeping the Gini Index at close to .60,

second only to Brazil in the region. The economic tide lifted some boats higher than others.We conclude from these figures that the Chilean population did enjoy the benefits of

economic growth in the form of higher incomes, but not in terms of a fairer distribution of the

economic pie or, as seen previously, of better quality of jobs for workers. The poor did not getpoorer but they had to accept precarious and frequently harsh work conditions at a time when the

incomes and lifestyles of the well-to-do improved significantly.

In Peru, the overall situation has been one of relative stagnation. A growing informalsector has maintained roughly its wage share during the last two decades, while the numerically

declining formal sector has moved upwards in terms of its appropriation of incomes. The trend

is best discerned in metropolitan Lima where over half (59%) of the EAP in the bottom incomedecile in 2000 was composed of the informal self-employed while only 7% of formal workers

were in that situation. At the other extreme, 70 percent of those in the top income quintile wereemployees and workers on the formal sector; participation of informal sector workers in that top

category declined by 10 percent between 1986 and 2000. As a result, Table 3 shows that arapidly growing informal proletariat managed to keep its total share of the wage mass (with

declining individual wages) while the dominant cases grouped in the privileged decile

increased their participation by a remarkable 10 percent.In the two largest countries, Brazil and Mexico, the evidence also points to a

consolidation of the position of the dominant classes; a decline in the average incomes of

informal workers, and, as a consequence, a stagnation or rise in the indices of economicinequality. In Brazil, easily the most unequal country in the region, the national Gini index

inched upwards during the last decade, while in metropolitan Rio it rose from .59 to .62 while, inSao Paulo, it increased by 5 points to .61. The informal proletariat in both cities maintained its

absolute wage share, but this was due to the rising number of people employed in these

conditions, as seen previously. While average wages of informal workers thus declined, thenumerically stable dominant classes increased their income shares significantly, especially in Sao

Paulo. The situation in Mexico parallels, in all essentials, that found in Brazil.

In conclusion, the figures do not indicate that the decade of more consistent application

of neoliberal policies led to uniform increases in poverty. The opposite was the case, at least insome countries. What increased uniformly was inequality. Whether the economic tide lifted all

boats, as in Chile, or sank them as in the River Platte, the groups at the top of the class structure

managed to hold on or increase their positions of privilege, while those at the bottom saw theirrelative share remain stagnant or decline. National indicators of inequality remained stagnant or

moved upwards everywhere, a condition aggravated in the major cities. Corresponding to

Polanyis prediction, free markets did create wealth in some countries, but they did so veryunevenly while in others, exemplified by Argentina, they did not even accomplish their growth

task, leading to both rising inequality and widespread poverty.

Crime and Victimization


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13

Since their classic formulation by Robert Merton (1968), sociological theories of

deviance have identified the existence of a significant gap between culturally desirable goals andinstitutionalized (legal) means to attain them as a prime determinant of crime. When substantial

sectors of the population are deprived of such means, the stage is set for the emergence of

unorthodox ways to achieve desirable goals. Rapid increases in delinquency emerge as a result.

Social psychological theories of relative deprivation make a similar point emphasizing that it isnot absolute poverty, but the existence of significant inequality leading to the lack by many of

the goods and privileges enjoyed by the few that create the conditions for a series of

reivindicational practices from political mobilizations and riots to organized crime (Kornhauser1960; Toch 1965; Davies 1971). Criminologists generally agree that inequality is a major

structural determinant of delinquency, especially of practices such as theft and robbery aimed

at the acquisition of property (Londoo 1996; Bourguignon 1999; Arriagada and Godoy 2000).In Latin America during the last decade, high levels of unemployment and

underemployment have coincided with a new wave of modern mass consumption items

promoted by multinational industrial and commercial corporations. Never before as in the yearsof the neoliberal experiment have these societies been so exposed to First World standards of

living and consumer values. Naturally, it is in the cities where this penetration is more evidentsince it is in them where commercial marketing efforts concentrate and where the presence of

wealth and modern consumption styles in the midst of scarcity is most visible. Property crimecan rise in these contexts as a kind of enforced entrepreneurialism by at least some of the

lower classes who take matters in their own hands in order to redress absolute and relative

deprivation (Ayres 1988; Arriagada and Godoy 2000).The evidence from the six countries in our study point consistently toward significant

rises in crime, victimization, and citizen insecurity during the last decade. Reported crimes is a

feeble indicator of any trend because of the reluctance of the citizenry in many countries tocontact the police. The latter is perceived as corrupt and inefficient and often more of a threat

than the thieves themselves (Lomnitz 2003). As seen in Table 4, only 32 percent of robberyvictims reported their crime to police in Brazil in 1998; the same figure for Rio de Janeiro was

just 20 percent. The table also shows that over 90 percent of crime victims in Lima did not

contact the police during the same year._____________________________

Table 4 about here

_____________________________

In countries where the quality of the public force is sufficiently high to take official crimestatistics seriously, the evidence points to a significant rise in national or urban delinquency, in

particular property crime. This is the case of Chile, where the militarized police the

carabineros is a generally trusted institution. Property crimes per 100,000 in that countrydoubled between 1977 and 2000 and robberies (thefts with personal violence) more than tripled

during the late nineties. As shown in Table 4, the situation in metropolitan Santiago was even

worse, with the property crime rate skyrocketing from 600 per 100,000 in 1977 to 1,650 in 2000.In just three years (1998-2001), the rate of serious crime (robberies, thefts, homicides) reported

to the police went from 1,540 to 2,118. The long-term evolution of property crimes in Chile and

its capital city is graphically portrayed in Figure 8.

_____________________________


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Figure 8 about here

_____________________________

These results are not compatible with the image of economic growth, declining poverty,

and increasing well-being that have made Chile a showcase of neoliberalism. As seen previously

and as shown again in Table 4, poverty did decline markedly in the 1990s but inequalityremained unchanged. Persistently high economic inequality in a context of increasing wealth

and modern consumption enjoyment by the upper and middle-classes may well represent the key

structural factor behind the serious crime wave of the late 1990s. As Wormald, Sabattini, andtheir collaborators note:

It is worth observing that the increasing isolation of the

poor and the segmentation of social opportunities reinforce, amongthe marginalized population, such problems as family violence,

school abandonment, vagrancy, and drug addiction that precipitate,

especially among the young, the adoption of delinquent patterns.This explains the increases in crime indicators in the metropolitan

regions (Wormald et. al. 2003: 62).These conclusions are reinforced by the rapid growth of property crimes with violence

during the last half of the 1990s. This trend is portrayed in Figure 9._____________________________

Figure 9 about here

_____________________________The situation is similar or worse in neighboring countries. In Argentina, previously

regarded as a relatively tranquil, country, the property crime rate per 100,000 inhabitants rose

113 percent in the 1990s. In metropolitan Buenos Aires, the same rate more than tripled (seeTable 4). The evolution of the total crime rate, presented in Figure 10, makes clear two

important points: First, delinquency rose everywhere, but where the situation reached truly crisisproportions was in the capital city; second, the rates actually declined during the early 1990s and

it was during the second half of the decade when these activities virtually exploded. In

neighboring Uruguay, the number ofrapias (theft with violence) rose almost fourfold from anannual average of 27,000 in 1980-84 to 86,000 in 2000-01. Since the population of Uruguay

increased only marginally during this period, the crime rate per 100,000 rose significantly

(Kaztman et. al. 2003; Veiga and Rivoit 2001).

The evolution of serious crimes in metropolitan Lima is presented in Figure 9. Thesenumbers are estimates because of the low number of crimes actually reported to police.

According to these estimates, the absolute number of crimes in the city almost tripled from

85,000 to 213,000 in the short span of five years in the mid-1990s. As shown in Table 4,crimes against persons stabilized and even declined afterwards, while property crimes, after

experiencing a short decline, rebounded in the 2000s. The result has been a sharp increase in the

sense of urban insecurity and in the defensive strategies adopted by the dominant classes. As astudent of crime patterns in Lima concludes:

The rise in criminality generates defensive strategies such

as greater spatial segregation by the upper- and middle-classes thatisolate themselves and fortify their residential zones through

various mechanisms like gates, bars, guard dogs, and the like. The


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15

number of private security services has grown apace (Pereyra

2003: 7)._____________________________

Figure 11 about here

_____________________________

In Brazil, where police statistics on thefts and robberies are notoriously unreliable,

analysts have focused on homicide rates. In metropolitan Rio, the homicide rate increased 223

percent between 1985 and 1995, far ahead than the national growth rate of 88 percent. As inLima, the sense of urban insecurity led to the exponential growth of private security services and

personnel. In Rio, security personnel more than doubled between 1985 and 1995. In Sao Paulo,

there are at present as many as three private security guards for every policeman (Arriagada andGodoy 2000: 179).

All studies about urban property crimes coincide in noting that the perpetrators are

mostly young males, either unemployed or informally employed. While there may be some biasin these figures due to the greater vulnerability of the poor to be arrested and incarcerated, the

figures are so overwhelming as to denote a clear fact. In Chile in 1996, 94 percent of thoseidentified as responsible for armed robbery were young men, 60 percent were between 15 and 24

years of age, and 75 percent were either jobless or manual informal workers (Fundacin PazCiudadana 1998). A study of determinants of crime in Montevideo found a correlation of .60

between the proportion of young males who did not work or study in a neighborhood and the rate

of incarceration for a crime. The same study reported a correlation of -.71 between level ofeducation of a neighborhood and the number of delinquents residing in it. The authors conclude:

Everything seems to indicate that in these poor

neighborhoods, both families and the local community have lostthe power to control their youths. In fact, adults seem to abandon

public spaces in these areas which are then occupied bydisaffiliated young people who are promptly socialized into

deviant lifestyles (Kaztman et. al. 2003: 55).

While the spatial origins of delinquents can be traced to the relatively more deprivedurban neighborhoods, the location of the actual crime is not necessarily confined to these areas.

Here it is necessary to make a distinction between homicides and property crimes, with or

without violence. Homicides are due to a number of causes, including family disputes, personal

vendettas, etc. On the other hand, property crimes are those most directly relevant to thehypothesis of enforced entrepreneurialism. All available evidence shows that the location of

thefts and armed robberies are not confined to poor neighborhoods but extend and are often most

common in: a) central city areas; and b) middle and upper-middle class neighborhoods.As Figure 12 shows, property crime in metropolitan Santiago has become most frequent

in the middle- and upper-middle class comunas of Providencia, La Reina, Vitacura, and Las

Condes. While working-class municipalities, such as San Miguel also report high rates ofproperty crime, what is notable about this map is that most low-income areas in the eastern,

southern, and northern periphery of the city are relatively tranquil while the delinquent activity

obviously concentrates in the high-income neighborhoods. The same is the case in BuenosAires. While, as seen previously, property crime for the capital city increased 340 percent in the

1990s, the crime wave was particularly heavy in wealthy areas such as San Isidro and Vicente


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16

Lopez. The reported victimization rate for the capital city hovered around 40 percent, but it

varied significantly by social class:Regarding the socio-economic level of the victims, those

with higher economic status were significantly more likely to have

been victims of a crime both in the capital city and the

metropolitan areathe vast majority of these were property crimes(Cerrutti 2003: 46).

In Mexico City, the most dangerous neighborhoods are in the city center the

delegaciones of Cuauthemoc and Benito Juarez. The rate of armed robbery per 100,000 in bothareas exceeded 2000 when the overall urban average was just 866. By 1997, the overall Mexico

City robbery rate surpassed 1,800 per 100,000 but in Cuauthemoc and Benito Juarez, it surpassed

4,000 (Ariza 2003: Table 3.3).Similarly, property crime in Montevideo is most common in the urban center and in

middle-class neighborhoods than in those inhabited by the very poor or the very rich (Kaztman

et. al. 2003). In all cities, the higher incidence of armed robberies in the urban center isattributable to the greater density of foot traffic and the greater mix of people from different

classes, which makes armed delinquents less conspicuous. The higher proportion of propertycrimes in middle class areas, other than those inhabited by the very wealthy in some cities can be

directly attributed to the greater ability of the well-to-do to barricade themselves in gatedcommunities and restricted commercial areas and hire private security. Middle-class households

generally lack the financial wherewithal to protect themselves so effectively (Sabattini 2000;

Kaztman et. al. 2003). Nevertheless, as the cases of Santiago and Buenos Aires attest, crime andvictimization do reach the wealthy areas as well which, despite all security measures, can also be

engulfed in the wave of urban insecurity.

From a theoretical standpoint, the key finding is that the significant rise in crime affectingmajor Latin American cities during the last decade or so is not random or anomic but

evidences a clear entrepreneurial rationality. In other words, it is not a case of the poor justpraying on the poor, but of marginalized young men going to the areas where the wealth is and

where some of it can be appropriated without unduly high risk of arrest and incarceration. Both

the urban origins of delinquents and the place of commission of crimes fit well the Mertonianhypothesis of enforced entrepreneurialism in a context of widespread relative when not absolute

deprivation.

It is worth remarking, however, that despite skyrocketing rates of delinquency and

insecurity, the actual number of the poor involved in the commission of crimes is still minuterelative to the size of the urban informal proletariat. The vast majority of the lower-classes

continue to toil at minimally paid waged or self-invented jobs at the bottom of the labor market.

By the same token, there is some evidence that high levels of unemployment andunderemployment and the resultant hopelessness among the poor are taking its toll, propelling a

growing number of adult men to engage in criminal enterprise. In Montevideo, for example, the

proportion of young males (18-25) in the population incarcerated for serous crimes dropped from53 percent in the mid-nineties to 44 percent in 2001; while the proportion of adult men (36-50) in

this population rose from 16 to 21.4 percent (Table 4).

Be it as it may, all experts coincide that the serious deterioration of labor marketconditions in most countries and persisting or rising economic inequality in all is the root cause

of the degradation of urban society and the lower quality of life produced by widespread

insecurity. As Cerrutti (2003: 46) puts it for the case of Buenos Aires: The association


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between deterioration of labor market conditions, in particular the significant increase in open

unemployment and crime rates is uncontestable.It is not possible to prove that neoliberal policies are responsible for this situation.

Other hypotheses may include the expansion of the drug trade worldwide or cultural changes

affecting the global system. If causality cannot be fully demonstrated, there is still an eminently

plausible connection between the character of the policies implemented under the neoliberalmodel, their effects on the labor market and the distribution of income, and the reaction of some

members of the lower-classes to their situation. Neoliberalism preached self-reliance to all,

while leaving the most vulnerable sectors of the population to their own devices. From asociological standpoint, their reaction in the form of unorthodox means to escape absolute and

relative deprivation is predictable and understandable. Once criminal enterprise becomes

habitual, a process of cumulative causation sets in where the young are socialized intoalternative, deviant lifestyles and where their ties to the world of regular wage work become

increasingly fragile (Sullivan 1989; Wilson 1987).

Summary and Conclusion

In this article, we have assembled evidence on how different aspects of urban life in LatinAmerica evolved during the last decades. The period coincides with the dramatic shift from the

import substitution industrialization model of development to the new free market modelinspired by orthodox economics. Our initial hypothesis was that such momentous political and

economic change could not but have significant effects on civil society in general and urban

society in particular. More concretely, we advanced a series of tentative predictions on thelinkages between the new policies and the evolution of city systems, the character of the urban

labor markets, trends in poverty and inequality, and urban crime and victimization.

While the evidence for the six countries included in our comparative study is uneven, itincludes the latest results available and it points solidly to several general trends. Something

significant has indeed changed in Latin American cities and in the character of urban life. Urbanprimacy has declined almost everywhere, giving rise to the rapid growth of secondary centers

and somewhat more balanced urban systems. While primate cities remain dominant, their

relative decline is due to their rapid loss of attraction as a magnet for internal or internationalmigrants, their lower levels of fertility, and the economic attraction of new growth poles created

by local or regional export booms promoted by the new model. Internal migration flows have

responded rapidly to new employment opportunities in these areas creating boom towns

which, like the border cities of Mexico, have far exceeded the growth of the capital city in thelast decades.

Urban labor markets have also been heavily affected by the decline in formal industrial

employment provoked by the demise of old ISI industries and the contraction of publicemployment. These losses were, in most cases, not compensated by the expected trickling down

of capital investments in privatized and new export industries. The result was a significant rise

in open unemployment in some countries; a stagnation or rise in informal employment in others;and both trends simultaneously in those worst affected by the crisis. In Chile, unemployment

declined significantly, only to rebound back in recent years. Informal employment also declined

according to traditional ILO measures. However, when a more modern indicator based onabsence of social security protection is applied, the trend reverses itself. This is due to the rise in

precarious employment in mid-size and large firms pointing to the poor quality of industrial and


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service jobs created under the new model. Job growth with increasing precarization has been the

end result.The evolution of poverty and inequality followed a parallel trend. Poverty did not

increase everywhere. While in Argentina, it grew significantly; in neighboring Chile it declined

steadily during the 1990s. The common trend was the persistence and even rise of levels of

economic inequality prompted by the appropriation of larger wealth shares by the upper classesand the stagnation or at least lower growth in the slice of the economic pie going to the informal

proletariat. In most countries, this is the largest class of the population exceeding by several

multiples the combined size of the dominant classes. The informal proletariat bore the brunt ofthe economic adjustment both through its numerical growth, due to the contraction of the formal

sector, and the stagnation or decline in real average wages which, in most cases, failed to lift

working-class families out of poverty.The sustained rises in delinquency and, especially, robbery and theft, in all countries and

all major cities represent the counterpart to the deterioration of labor market opportunities and

sustained high levels of inequality. Taking place at the same time when the opening of marketsexposed the urban population to attractive lifestyles and consumption opportunities and when the

upper classes eagerly adopted them, the lack of employment opportunities for the lower-classesnecessarily triggered a search for alternative forms of income procurement. Invented self-

employment and informal enterprise was the path for many, but others adopted the direct route ofexpropriating wealth by stealth or force. There is evidence that the wave of crime engulfing

Latin American cities is not random or anomic, but reflects a clear entrepreneurial logic. By and

large, property crimes are the deed of marginalized young men going to the areas where thewealth is the city center and middle- and upper-class neighborhoods and seeking to appropriate

some with a modicum of risk.

With the start of a new century, a number of countries have started to pull back from neo-liberal orthodoxy, seeking a more humane and less socially destructive path to development.

Neoliberalism itself and associated terms like the Washington consensus have acquired anegative value connotation as symbols of inegalitarian and socially insensitive policies. The

governments of post-neoliberal Latin America have not abandoned the markets, but are

searching for ways of giving the state a more active role both in the promotion of viable nationalenterprises and the protection of the most vulnerable sectors of the population. Argentina under

Kirchner and Chile under Ricardo Lagos provide examples, as may well Brazil under Lula da

Silva, a president explicitly elected to stop the worst excesses of the markets.

Whether a new revised neo-Keynesian approach to economic policy is in the cards andwhether it can succeed against the still vigorous opposition of the U.S. government and the

International Monetary Fund is an open question. What seems clear is that the successes

obtained by the policies promoted by these powerful actors such as taming inflation, promotinginvestments, and creating new export industries have come at a serious social cost that

governments and societies alike appear unwilling to continue tolerating. Whatever new policies

and model evolve out of the present situation, they must, first and foremost, address theserealities. No police measures will succeed against the present crime wave and the deterioration

of the quality of urban life if the underlying structural causes are not confronted.


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Table 1

The Evolution of Urbanization in Selected Latin American Countries

Country Census Years

Argentina: 1970 1980 1991 2001Total Population (000s) 23,385 27,947 32,616 36,220

Urban Population, % 79.2 83.1 87.2 89.3

Urban Growth Rate, % 2.2 1.9 1.2

Buenos Aires (Metro):

Percent of Urban Population 45.5 42.9 39.7 37.2Urban Primacy

14.0 3.9 3.6 3.6

Growth Rate, % 1.7 1.2 0.6

Cities of 50,000+:

Percent of Urban Population 13.5 17.4 21.1 23.9Growth Rate, % 4.8 3.7 2.4

Brazil: 1970 1980 1991 2001

Total Population (000s) ? 111,622 136,338 154,128

Urban Population, % 58.0 69.0 76.0 81.0Urban Growth Rates, %:

Cities of 1.5 million 3.2 2.4

Cities of 500,000-1 million 4.1 3.1

Sao Paulo/Rio de Janeiro (Metro):Percent of Urban Populations ? 27.3 24.2 22.5

Urban Primacy2 ? 2.6 2.3 2.1

Growth Rate, % 1.5 1.3

Chile: 1970 1982 1992 2002

Total Population (000s) 8,885 11,330 13,348 15,116

Urban Population, % 75.1 82.2 83.5 86.5Growth Rate, % 2.3 1.8 1.3

Santiago(Metro):Percent of Urban Population 40.2 41.9 42.7 41.4

Urban Primacy3

4.1 3.3 3.0 3.1

Growth Rate, % 3.8 2.2 1.4

1 Ratio of the population in the largest metropolitan area to the sum of the next three.2 Ratio of the population in the two largest metropolitan areas to the sum of the next six.3 Ratio of Mexico D.F. metro to second largest metropolitan area.


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Table 1 (continued)

Mexico: 1970 1980 1990 2000



Urban Growth Rates:Intermediate Cities (100,000 to 499,000) 4.1 3.6 3.0

Large Cities (500,000 to 499,000) 5.6 3.3 3.1

Metropolis (1 Million +) 5.2 2.8 2.1

Mexico City (Metro):


12.6 2.6 2.1 2.0

Mexico City/Guadalajara3

5.8 6.1 5.1 4.9

Peru:

Total Population (000s) ? ? ? ?Urban Population, % ? ? ? ?

Urban Growth Rates, %:Intermediate Cities (250,000+) ? 2.9 1.6

Small Cities (100,000+) ? 2.8 2.0

Lima (Metro):

Percent of Urban Population 58.7 57.9 58.8

Urban Primacy1

4.2 3.9 4.1Growth Rate, % ? 2.8 2.2

Uruguay: 1963 1975 1985 1996



Montevideo (City):

Percent of Urban Population 57.4 53.5 50.8 46.8

Urban Primacy1

7.7 6.3 6.1 5.5

Montevideo (Metro):


18.4 7.4 7.1 6.6

Source: Country reports to the Princeton-Texas Latin American Urbanization Project in the Late

Twentieth Century, based on national censuses.


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Table 2

The Evolution of Labor Markets in Six Latin American Countries

Country Year

Argentina 1980 1990 1994 2000Unemployment, % 2.6 7.4 11.5 15.1

Buenos Aires (metro):Informal workers, % 12.9 27.6 33.8

Formal workers in large firms1, % 47.6 35.2 31.4

Unemployment, % 2.8 6.1 20.1Index of Labor Vulnerability

230.0 40.0 50.0

Informal Proletariat3

41.5 43.6

Brazil 1980 1990 1994 2000

Unemployment, % 6.3 4.3 5.4 7.1Informal workers, % 43.9 46.4

Rio (metro):

Unemployment, % 3.5 5.6

Informal workers, % 37.9 43.6Informal proletariat

332.8 35.7

Sao Paulo (metro):


26.4 33.4

Chile 1990 1994 1998 2002Unemployed, %

Males 8.1 5.9 9.4 9.9

Females 9.7 8.4 11.2 11.7Informal workers, % (traditional)

439.2 38.8 37.2 35.6

Informal workers, % (modern)5

30.2 31.3 33.0 34.4

Santiago (metro)Unemployed, %

Males 7.3 5.4 9.2 9.8

Females 9.1 7.1 10.5 10.3Informal workers, % (traditional)

436.3 37.0 35.3 34.0

Informal workers, % (modern)5

30.8 31.3 32.3 33.9

1 Firms with more than 100 workers.2 Sum of unemployed workers, unskilled self-employed, and unprotected workers.3 Estimate based on salaried workers without legal protection or benefits.4 ILO definition. See text.5 Workers not contributing to the social security system and/or not protected by legal regulation.


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Table 2, continued

Country Year

Mexico 1980 1990 1993 1995 1998 2000

Unemployment, % 4.5 2.7 3.7 5.5 2.2Informal workers, %

(traditional)5,6

38.7 43.1 41.2 36.7

Informal workers, %(modern)

5,649.8

Employed in industry, % 21.2 17.0 16.0 19.3

Mexico D.F. (metro):


43.9 45.2

Peru 1980 1986 1989 1992 1995 1998 2001

Unemployed, % 7.7 8.3 8.8 7.0

Lima (metro):Informal workers, %

(traditional)4

49.7 48.8 55.2 55.4 52.8 58.2

Informal workers, %(modern)

5

54.9 52.7 59.3 55.5 57.3 61.1

Informal proletariat3

54.9 60.8

Uruguay 1970 1980 1986 1990 1995 1997 2000 2003

Unemployed, % 7.1 9.2 12.3 13.6 16.0

Montevideo (metro):

Self-employed, % 13.2 17.4 17.4 19.4Employed in industry, % 32.3 22.2 24.0 15.9

Employed in public sector,

%

27.7 23.8 19.6 15.6

Informal proletariat3, % 30.0 27.9

Unemployed, total % 8.9 10.8 11.6

Unemployed with less than

9 years of education, % 9.7 12.7 13.6

Source: Country reports to Princeton-Texas Latin American Urbanization Project, based on

national and urban household surveys.

6 Cities of 100,000+


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Table 3

The Evolution of Poverty and Inequality Indicators in Six Latin American Countries

Country Years

Argentina: 1974 1980 1990 1996/97 2000 2002

Gini Index .403 .470 .505 .510

Income Share of Top Decile, % 29.8 34.8 35.8 37.0

Average Incomes1:

Employers 19.3 20.6 24.2

Professionals 15.6 9.4

Informal Workers:

Domestic Servants 3.1 3.5 2.6

Waged Workers 5.1 3.6

Buenos Aires (metro):

Gini Index .356 .411 .437 .446

Wage Shares:Dominant classes2 12.9 16.9

Informal proletariat3 30.3 25.8

Poor Population, % 5.0 25.3 20.1 20.8 37.7

Brazil 1980 1990 1996/97 2000

Gini Index .627 .638 .640

Income Share of Top Decile 39.1 41.8 44.3 47.9

Poor Population, % 39.0 41.4 28.6 30.0

Average Incomes1:

Employers 21.8 16.1 19.1

Professionals 9.4 8.2 10.7

Informal Workers:

Waged Workers 2.5 2.6 2.5

Own Account 5.2 3.4 3.7Rio de Janeiro (metro):

Gini Index .590 .618

Wage Shares:

Dominant classes2 19.2 21.8

Informal Proletariat3 16.8 20.3

Sao Paulo (metro):

Gini Index .550 .606

Wage Shares:

Dominant classes2 20.9 26.5


1 In multiples of the national poverty line for each country and each year.2 Sum of owners and employers of firms employing more than five workers; administrators and executives of the same firms; and

salaried university professionals in these firms or in public service.3 Sum of own account workers, minus professionals and technicians; unremunerated family workers; domestic servants; andwaged workers without contract and/or social security.


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Table 3 (continued)

Country Years

Chile 1980 1987 1990 1994 1998 2000Gini Index .56 .58 .57 .57 .58

Income Share of Top Decile, % 56.2 57.4 57.3 57.1 55.2Income Share of Bottom Quintile 4.4 4.3 4.1 4.2

Poor Population, % 45.1 38.6 27.5 21.7 20.6

Average Incomes1:Employers 24.8 33.7 33.8


Informal Workers:

Waged Workers 2.4 2.9 3.0

Own Account 5.0 6.3 8.6

Santiago (metro):

Gini Index .57 .56 .58 .58

Poor Population, % 33.8 28.5 17.8 12.4 12.7Wage Shares:

Dominant Classes2 31.8 32.9


Mexico 1980 1984 1990/92 1995 1998 2000

Gini Index .536 .542 .559

Income Share of Top Decile, % 25.8 36.6 35.6 36.4

Poor Population, % 28.0 39.0 35.8 43.4

Average Incomes1:

Employers 14.8 18.3 18.2

Professionals 8.8 9.5 6.9Informal Workers:

Domestic Servants 4.1 3.3 2.6


Workers Earning Less thane One Minimum

Salary:

Formal Sector 4.4 6.2 1.6 4.5

Informal Sector4 27.2 33.3 21.4 26.3

Mexico City (metro):

Wage Shares:

Dominant Classes2 19.6 21.5Informal Proletariat3 29.6 28.1

4 Traditional ILO definition: own account workers, less professionals and technicians; unremunerated family labor,

domestic servants, and workers in firms with less than five employees.


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Table 3 (continued)

Country Years

Peru 1980 1986 1990 1992 1995 1998 2001Gini Index .392 .386 .403

Income Share of Top Decile, % 54.3 47.8 51.8 48.2Poor Population, % 46.0 40.5 42.3

Wage Shares:Formal Workers 54.0 53.0 45.0 52.0 58.0 59.0

Informal Workers:

Waged 13.0 12.0 18.0 15.0 15.0 13.0

Own Account 24.0 26.0 30.0 21.0 21.0 21.0

Income Ratio:

Top two Quintiles/

Bottom Two Quintiles 7.9 8.5

Lima (metro):Participation in Bottom Income Quintile:

Formal Workers 18.0 10.0 7.0

Informal Workers 35.0 28.0 22.0

Own Account Workers 42.0 49.0 59.0

Wage Shares:

Dominant Classes2 19.8 29.1


Uruguay 1980 1990 1992 1997 2000

Gini Index .379 .414 .421 .425 .442

Income Share of Top Quintile, % 47.5 45.7 45.8 47.0Income Share of Bottom Quintile, % 5.8 6.1 5.8 5.4

Average Incomes1:

Employers 23.6 12.0 11.5


Informal Workers:

Waged 3.0 2.5 3.0


Montevideo (metro):

Wage Shares:

Dominant Classes2 21.7 27.3Informal Proletariat3 20.4 16.7

Sources: Argentina: Cerrutti (2003), ECLAC (2002: Table 22), Altimiret. al. (2001: Figure 1); Brazil: Valladares andPreteceille (2003), ECLAC (2002: Tables 22, 24); Chile: Wormald et. al. (2003), Raczynski ( ); Mexico: Ariza

(2003), ECLAC (2002: Tables 22, 24, Figures 1.2); Peru: Saavedra and Nakasone (2003), Equipo Ciudad (2003), Aramburu (); Uruguay: Kaztman et. al. (2003), ECLAC (2002: Tables 22, 24, Figure 1.2); For all countries: Class Wage Shares:

Aliaga, Flores, and Roberts (2003) based on national household surveys; Average Class Incomes: Portes and Hoffman (2003)

based on ECLAC annual reports.


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Table 4

Crime and Victimization Indicators in Six Latin American Countries

Country Year

Argentina 1991 1994 1998 2001

Serious crimes per 100,000 inhabitants 900 1050 1800 2002Property crimes per 100,000 inhabitants 1000 1100 1500 20

Growth rate, 1991-2000 (%) 113

Buenos Aires (metro):

Serious crimes per 100,000 1500 2100 4700 6600

Property crime rate per 100,000 1000 1500 3400 4800Growth rate, 1991-2000 (%) 340

Reported victimization rate

1

,% 39.8 39.6

Brazil 1980 1990 1996 2000

Robberies reported to police, % 32

Homicide growth rate, 1985-95 (%) 88

Rio de Janeiro (city):

Homicides per 100,000 38.8 67.3 59.8Growth rate in private security

personnel, 1985-95 112

Rio de Janeiro (metro):


Sao Paulo (metro):


1 Representative surveys of the metropolitan areas adult population.


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Table 4 (continued)

Country Year

Chile 1977 1980 1985 1990 1995 1998 2000 2001Property crimes per

100,000

700 700 1100 1100 1000 1400

Robberies per 100,0002 48 100 155

Crimes against persons

per 100,000 335 273 519Crimes against property

per 100,000 1085 1189 1429

Poor population3,% 38.6 23.2 20.6

Gini Index .554 .553 .559

Santiago (metro):

Property crimes per

100,000

600 700 1400 1450 1300 1650

Robberies per 100,000 100 200 310Serious crimes per

100,000

1540 1718 2118

Mexico 1981 1990 1994 1995 1997 2001

Crime victims, total

(%)4

14.0

Violent crime victims

(%)4

6.5

Robberies per 100,000 219.5

Kidnappings (#) 642

Mexico D.F. (metro)

Homicides per 100,000 10.2 19.5

Homicides per 100,000,

males 26.3 34.6

Crime growth rate:

1981-90 2.2

1991-97 35.4

Total crimes (#) 180,000 252,000

Robberies per 100,000 866 1017 1830 1831

Mexico D.F. (city)

Robberies per 100,000 2071 2755 4769 4793

2 Robberies are defined as theft with violence.3 Percent of the national population below the poverty line for each year.4 As reported by national surveys of the adult population.


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Table 4 (continued)

Country Year

Peru 1992 1994 1995 1996 1998 2001

Lima (metro):Crime victims, not reporting to police, %4 90.6

Victimization rate, % 32.4Crimes against persons (#) 76,760 64,429 75,412 51,649

Crimes against property (#) 89,924 72,888 76,971 91,296

Uruguay 1980-84 1985-89 1990-94 1995-99 2000-01

Robberies, annual average (#) 26,920 48,849 67,358 73,141 86,494

Homicides, annual average (#) 139 157 200 220 216

Judicial proceedings for robbery 7367 6712 8252

Age of convicted robbery felons:18-25, % 53.2 46.9 44.5

36-50, % 15.9 19.8 21.4

Sources: Country reports to the Princeton-Texas Latin American Urbanization Project, based on

official police statistics and victimization surveys of the national and urban populations.


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