Informality and Unreality

Informal markets permeate economies worldwide. Informality coexists with formal market structures in developing and developed countries alike, making assets illiquid and locking up potential profits. What does informality look like? It has a very human face. Picture Latin America, where farmers sell produce on a side street without a license. Picture Europe where new, often undocumented immigrants hawk items at outdoor bazaars or at street intersections in large cities whenever traffic is stopped. Picture New York City, where drivers without a hackney license use their own cars as taxis after finishing their “regular” job. Picture “transaction middle men,” ubiquitous in Latin America, where they usually are referred to by the elegant Spanish name of tramitadores, who are hired by wealthier citizens for help with seemingly simple tasks such as renewing a passport or obtaining a government license. Picture New Orleans, where some residents reportedly refused to leave their homes after hurricane Katrina hit in the fall of 2005 because they did not have official documentation proving their ownership. Many transactions to transfer, buy or sell properties in the city were not registered but kept in personal notarized contracts, which were in danger of being lost in the floodwaters.