From the Streets to Markets: Formalization of Street Vendors in Metropolitan Lima

Reforms of the 1980s and 1990s altered the historical pattern of informal street vending in Lima, Peru, to create superior commercial opportunities for poor vendors. Hernando de Soto’s Institute for Liberty and Democracy (ILD) identified and promoted the crucial elements of growth that had eluded policymakers and businesspeople for decades: property rights, low barriers to market entry, cost-effective regulation, and a democratic policy process. The Center for International Private Enterprise (CIPE) helped ILD design its economic reform agenda and a highly effective advocacy campaign based on increased citizen participation in decision-making.

  • De Soto transformed the way the world viewed the informal sector.
  • More than 200 informal markets in Lima acquired legal status by 2008.
  • 382,100 Peruvian businesses belonging mainly to the poor were formalized from 1991 to 1994.
  • Newly formalized businesses saved $692.5 million in red tape and created more than 550,000 legal jobs.
  • Land values doubled in formalized markets.
  • Major urban districts were revitalized.
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