Analysis of the growth of informal businesses in Nicaragua

Abstract

Informal commerce is defined as a progressive activity established in different parts of society, without having a specific establishment to carry out its sales, being located in strategic places in the cities. According to an analysis of the determinants of labor informality in Latin America, it is established that 47% of employment is informal. This panorama allows us to analyze the relationship between the factors that motivate informality in business and the social coexistence that is generated in the municipalities of Estelí, Chinandega, Ciudad Sandino and Tipitapa as references for this analysis. These municipalities have commerce as one of their main activities in common; they are also municipalities with high population density, especially in urban areas, a favorable condition for the establishment of businesses since there is a greater demand. The Government of Nicaragua has implemented a series of programs and actions whose strategic logic is to facilitate the generation of new enterprises, improve the quality of existing ones, and facilitate the registration of businesses in order to reduce the informality gap. In Nicaragua there is a problem of informality in trade that has been a consequence of all historical stages. The main factors that determine the informality of businesses is the unequal economic growth that generates the need in a large sector of the population for self-employment, high unemployment rates, bureaucratic red tape, lack of rules and regulations or slight enforcement.