Saturday, April 19, 2008


A lot of people work for themselves in Latin America. The streets are full of vendors selling clothes, food and drink, pirated CDs and DVDs, and the like. Here in Nicaragua you see a lot of people selling nuts. Many taxis are unofficial with the drivers working for themselves. One gets accustomed to people entering the buses before they leave or during the trip in an attempt to sell candy or drinks or knickknacks. And the bus stations will be full of people selling different items.

It certainly isn´t very efficient to have 100 different people selling different random items in a bus station, rather than one large store with 3 employees. But then a larger store requires a certain amount of capital and investment. Studies have shown that small loans of money to small businesses in developing nations have boasted of impressive returns. In fact, this type of lending to small businesses in developing countries in a field in and of itself, microfinance.
I got to thinking about all of this after reading an article in an old The Economist magazine, er newspaper, that I picked up. The article was about the ´new´ middle class worldwide, whose development everyone thinks is important. The general view of the middle class worldwide is of a group of budding entrepreneurs, but in the opinion of the authors these people are not very entrepreneurial and would rather have a salary and work for someone else. Having your own little petty business seems to fit with the lifestyle down´s pretty laid back, you don´t really have to work very hard; just kind of sit around and talk with your friends in your little stall and hang out until a customer comes around. Many of these businesses aren´t very´ll be ignored when you walk in and have to call attention to yourself to get service. When you work for someone else you are usually going to have to work a little harder I would think.

I perceive Americans as they´d rather work hard for a set number of hours in a day and then enjoy their freetime, whereas down here work and play are more intertwined, and/or they don´t care as much about earning money. I don´t know though...with the advent of cell phones and Blackberrys, and people becoming more and more connected and accessible, perhaps our work and leisure hours are becoming just as mixed as the shop owner chatting with his friends at the sidewalk stall. But I´d say our work habits are probably more influenced by the fact that we´re a developed economy than some sort of cultural difference. Owning their own petty business is more of a situation they are forced into rather than what they really want...and for this reason they don´t often invest in the business to really grow it.

One of the more capital-intensive businesses that you see all over the place in Latin America is the pharmacy. They´re on nearly every corner it seems, which makes me want to draw a comparison between the people here and the Iraqis I worked with who thought pills were the answer to every problem... At any rate, a pharmacy kind of has to be located in a building to give it a bit of a sense of respectability...nobody wants to buy aspirin from a guy running a corner stall. And just as the locally-owned pharmacy has given way to the nationwide chains in the States, eventually these corner vendors will be replaced by larger enterprises. In Panama this seems to have happened...but not so much in the poorer countries like Nicaragua and Peru. Political and economic stability certainly provides a nice foundation for these types of investments.

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