Informal Trade as a Predominant Factor in the Local Economy of Ambato, Ecuador

Abstract

This study identifies the effect of informal or unregulated commerce on the local economy of the city of Ambato, Ecuador. Trade has social and economic repercussions; the population participating in trade is made up of people facing unemployment, economic crisis and lack of opportunities. Informal sellers seek to earn income for their families; in the process, they may work outside of regulations or ordinances that affect formal trade. The objective is to identify how the presence of informal merchants has affected the sales of formal traders in the city's markets, and whether the increase in the number of informal merchants has caused a reduction in formal sales. Both qualitative and quantitative research methods were to analyze economic data and socioeconomic factors. The sample is made up of 326 respondents to a questionnaire. The results show that the increase in informal commerce is due to the economic crisis, and that those who engage in this activity damage public spaces. The results determine that informal trade directly affects the local economy and suggests the creation of an advertising and promotion plan for formal trade will help mitigate the problem.