Inclusive informal-to-informal trade: the poverty alleviation potential of street vendors’ trade networks in Santiago de Chile

Abstract

The economic inclusion benefits of trade integration between formal and informal markets constitute an increasingly important debate in development studies, especially regarding poverty reduction. Recent international development efforts focus on strengthening informal-to-formal (I2F) links as a win-win developmental strategy to eradicate poverty, while building upon informal-to-informal (I2I) trade relations are seen to preserve poverty. Nevertheless, research comparing these approaches is scarce. This article compares street market vendors’ integration into I2F and I2I trading links, assessing their associated economic benefits and market power dynamics. Using mixed methods, we empirically test theoretical hypotheses on a representative sample of Santiago de Chile’s street market vendors and follow the trade networks of branded and unbranded street market products through 50 in-depth interviews. The results suggest that street vendors’ I2I trade can constitute a highly ­specialised, structured and nationwide trade network that can rival the poverty alleviation potential of I2F trade networks. Compared with I2F trade links, I2I networks reduce opportunities for exploitation and allow street vendors to obtain higher income. Consequently, building a more robust articulation of street vendors and informal firms into trade ­networks merits more attention in development studies as a potential alternative to I2F strategies when fostering street vendors’ economic inclusion.