PORTES, Alejandro e ROBERTS, Bryan - The Free Market City Latin America Urbanization

The Free-Market City: Latin
American Urbanization in the Years

of the Neoliberal Experiment*
Alejandro Portes and Bryan R. Roberts
We examine the evolution of Latin American cities in the last two decades of the
twentieth century and in the first years of the twenty-first on the basis of comparable
data from six countries comprising over 80 percent of the region's population. These
years correspond to the shift in hegemonic models of development in the region,
from import-substitution industrialization to neoliberal "open markets" adjustment.
We examine how the application of the new policies correlates with change patterns
in four areas: urban systems and urban primacy; urban unemployment and informal
employment; poverty and inequality; and crime, victimization, and urban insecurity.
We present detailed analyses of each of these topics based on the latest available
data for the six countries. We conclude that significant changes in patterns of urban-
ization have taken place in the region, reflecting, in part, the expected and unex-
pected consequences of the application of the new model of development.
Implications of our findings for each of the four areas examined and for the future
of the region are discussed.
his paper presents results o f a comparative study o f the character and evolution
T o f Latin American cities during the last decades o f the twentieth century. The
central hypothesis that guided the study is that significant changes have taken place
in the urban system and in the character o f urban life during this period, and that
these changes have been associated, at least partially, with the transformation in the
dominant model o f economic development in the region. These transformations
reflect the ways in which economic globalization has affected the region, especially
after the Mexican oil crisis o f 1982 (Portes, 1997; Walton, 1998). As is well known,
Alejandro Portes is department chair and Howard Harrison and Gabrielle Snyder Beck Professor of
sociology, and director of the Center t\~r Migration and Development at Princeton University. His
current research focuses on the adaptation process of second-generation immigrants and the rise of
transnational immigrant communities in the United States.
Bryan R. Roberts is professor of sociology and C.B. Smith Chair in US-Mexico Relations at the
University of Texas, Austin. His most recent work explores issues of development, globalization,
immigration, and social policy in Latin America.
Studies in Comparative International Development, Spring 2005, Vol. 40, No. 1, pp. 43-82.
44 Studies in Comparative International Development / Spring 2005
the development policies adopted by all or most Latin American governments in

the post-World War II period aimed at autonomous industrialization behind tariff
barriers in order to promote sustained economic growth and modern employment
creation. That policy registered notable economic successes during its early years
but was gradually compromised by a series of factors. Crucial among them was the
role of multinational corporations (MNCs) which jumped tariff barriers to exercise
hegemony within domestic markets, and a capital-intensive pattern of industrial-
ization, guided by the strategies of the MNCs, that retarded employment creation
and put increasing pressure on the balance of payments (Filgueira, 1996; Quijano,
1998).
During the last two decades of the twentieth century, in country after country,
this model gave way, to a varying extent, to one based on open markets, the
privatization of state enterprises, and the reduction of the state's directive role in the
economy. Implemented under the influence and with the strong guidance of global
institutions, such as the World Bank and the International Monetary Fund, the new
model has had momentous effects on the societies, political systems, and class struc-
tures of the region (Robinson, 1996; Sunkel, 2004; Portes and Hoffman, 2003). A
burgeoning literature documents the consequences, positive and negative, of the
implementation of these new open-market policies. Our purpose in this paper is to
complement that literature by examining the transformations in urban systems and
urban life that have taken place during this period and the extent to which they
reflect the changed social and economic environment created by the new model. To
this effect, it is important to review first how Latin American cities developed and
how they "looked" during the previous import-substitution era.
ISI and the Cities
During the mid-twentieth century, roughly from the 1930s to the end of the 1970s,
the application of import substitution industrialization (ISI) policies in most of Latin
America had a direct bearing on the character of cities in the region. These relation-
ships are documented by an extensive literature, in both English and Spanish, which
describes in detail the evolution of urban systems and the trends that, at the time,
appeared inexorable. These features included:
9 A rapid process of urbanization, concentrated in one or two cities per country, where
import-substitution industries clustered. Massive internal migration toward these cities
led to their extraordinary growth and to the exacerbation of a condition of"primacy"
where the population of these cities exceeded, by several multiples, that of the next-
largest urban areas.
9 Within major cities, labor demand by ISI industries led to the emergence of a mod-
ern, legally protected industrial working class along with a middle class employed in
government service and private industries.
9 The imbalance between labor demand created by capital-intensive ISl industries and
the supply generated by massive internal migration in search of such jobs gave rise to
an unprotected "informal" working class employed in multiple self-invented indus-
trial and service activities outside the modern sector.
9 Within large cities, a growing population put upward pressure on land and housing
markets, leading to prices that bore no relation to wages in either formal industry or
Portes and Roberts 45
informal services. The working classes were thus compelled to create their own housing
solutions in vast and rapidly growing squatter and other unregulated settlements on
the periphery of these cities.
9 Along with the creation of working-class settlements in the urban periphery, elites
and middle classes also abandoned the city center, relocating to increasingly remote
suburban areas, away from those occupied by the poor. Despite increasing spatial
polarization, elite and particularly middle-class areas retained a high degree of social
heterogeneity due to the proximity of low-income settlements and imperfect land
markets that created diverse land uses in residential areas.
9 Despite limited employment creation and growing spatial polarization, sustained
economic growth during the ISI period led to multiple articulations between the for-
mal and informal sectors of the urban economy and to a slow but sustained upward
mobility by the migrant poor. This pattern was evident in their gradual access to
formal industrial employment and in their eventual acquisition of legal titles to land
and dwellings in regularized, formerly precarious settlemenls.
9 Popular social movements during this period aimed at accelerating this process of
upward mobility through better employment conditions in industry and more gov-
ernment-provided services for peripheral working-class residential areas. Such move-
ments were articulated by the unions of ISI industrial workers and by organized land
invaders and settlers in the urban periphery. Despite their usually radical rhetoric,
their aims focused on the gradual improvement of work and living conditions for the
urban poor within the existing capitalist system.
9 Despite multiple tensions and frequent protests, urban society during the 1SI period
was fundamentally "orderly," with different social classes occupying known and ac-
cepted places in the urban hierarchy and with credible expectations of gradual up-
ward mobility by formal and informal workers alike. Organized protests by trade
unions and left-wing parties were common, but social disorganization in the form of
widespread crime and anomic violence was rare and, when it existed, was commonly
confined to certain well-known lumpen areas.
This panorama of Latin American urbanization in the mid-twentieth century was

extensively described by the specialized literature of the time and was buttressed by
numerous empirical studies.t The convergent and cumulative findings from the
period made these features of Latin American urban society appear immune to ex-
ternal pressures and capable of lasting indefinitely. That panorama was to change
dramatically, however, in the wake of deep economic crises followed by an altered
insertion of the region in the global economy during the last decades of the twenti-
eth century. We review next the principal IEatures of the new model of development
and its likely effects on urban systems and urban life.
The End of |SI and the Arrival of the Markets
The abrupt end of the autonomous industrialization project promoted by ISI in the
early 1980s is a familiar tale that need not be repeated here. Extensive discussions
of the origins of this shift in the Mexican default of 1982 and, more generally, in a
vigorous process of capitalist globalization already exist (Robinson, 1996; Galbraith,
2000; Sunkel, 2004). Just to lay the groundwork, the principal features of the new
free-market model that replaced ISI may be summarized in seven key program-
matic thrusts:
9 Unilateral opening to foreign trade.

9 Extensive privatization of state enterprises.
9 Deregulation of goods, services, and labor markets.
9 Liberalization of the capital markets, with privatization of pension funds.
9 Fiscal adjustment based on drastic reduction of public expenditure.
9 Restructuring of state-supported social programs, focusing on compensatory schemes
for the neediest groups.
9 The end of"industrial policy" and any other form of state-sponsored enterprise and
concentration on macro-economic management (Diaz, 1996; Portes, 1997: 238).
Such momentous policy shifts could be expected to have major consequences

for society in general and for urban society in particular. As a prelude to the presen-
tation of our empirical findings, it is worth considering the possible affinities or
discrepancies between the process of urbanization, as described previously, and the
implications of the new model of development. Here, a distinction must be made
between explicit predictions derived from the orthodox economic theory that in-
spired this model and alternative ones derived from a sociological perspective
grounded in recent empirical evidence. By and large, neoliberal expectations con-
cerning the effects of free markets on society are based on the emergence of a
trickle-down effect of sustained growth leading to better employment, higher in-
comes, and a stronger basis for social peace and order after an initial period of
adjustment (Williamson, 1994; Balassa et al., 1986). In agreement with the neoliberal
metaphor of a "tide that lifts all boats," we extend predictions from the theory to the
four areas to be examined empirically in this article:
9 Urban systems andprimacy

9 Urban unemployment and informal employment
9 Urban inequality andpoverty
9 Urban crime and victimization
These predictions are summarized in Figure 1. For comparison, we also summa-

rize conditions during the ISI period and alternative expectations concerning the
effects of neoliberal policies based on an empirically grounded sociological per-
spective.
To begin with, the rapid removal of trade barriers under the new model must
have had a direct impact on formerly protected industries, threatening their exist-
ence and promoting a process of initial de-industrialization (Williamson, 1994; Klein
and Yokman, 2000). From a neoliberal standpoint, this process represents the elimi-
nation of the old "rental havens" promoted by trade restrictions. Simultaneously,
the process impinges on the "pull" exercised over internal migrants by primate
cities where these industries were concentrated in the previous period. The export-
oriented activities promoted by the new model need not concentrate in these cities
because their markets are located abroad and because costs are reduced and profits
increased by locating near these markets. 2 The diminished attraction of primate
cities as sources of employment and the emergence of new growth poles associated
with export-oriented industries and tourism can be expected to have a direct bear-
ing on internal migration flows and on the character of urban systems. Less pri-
macy and rapid growth of secondary cities where new investments are sited can be
Figure 1
Actual and Expected Effects of the Application of Different Models
of Development to Urban Patterns
lraport-Suhstitution Export
Industrialization Oriented Development
Area (Actual Effects) (Expected Effects)
Orthodo.r (neoliberal) Alternative (sociological)

pe r,wective perwective
Unbalanced urban Reduction of primacy: Reduction of primacy

systems. Continuous, rapid growth of new contingent on siting of new
Urban Systems,
seemingly inexorable development poles; productive and tourist
and Primacy
increases in urban more balanced urban investments away from
primacy. systems. major cities,
Low levels of open Declining Increasing unemployment

unemployment. Large unemployment and and decline of the formal
Unemployment proportion of the labor informal employment working class. Blurring of
and Informal force employed as labor markets the formal-informal divide
Employment informally. Slow but "tighten" under rising as labor protections
steady rise of the demand. Increasing disappear.
fiwmal working class. labor productivity.
High levels of poverty Reduced poverty and No decline in poverty and

and inequality declined inequality rises in inequality as
declining gradually under dynamic labor economic benefits accrue to
over lime with relative markets. a minority of the population,
Poverty and
increase of the tkn-mal
Inequality
proletariat and
consolidation of
working-class
organizations.
(?rime mostly c o n fi ned hwreasing public order In,:teases in inequality and

It) low-i~come and and citizen security as relative deprivation lead to
Illm[Yell ureas. unemployment and "'Ibrced entrepreneurialism,"
Urban Crime and
Relatively safe urban poverty decline. especially among the young.
Public Insecurity
centers, despite high Rising urban crime,
rnix of social classes in violence, and public
public places. insecurity.
expected. These demographic implications of the new model are not contested and,
as seen in Figure 1, are shared by both theoretical positions.
Urban labor markets could also be expected to be transformed under the new
model, for several reasons. Market-friendly policies privileged deregulation and
the shrinking of the state, with a consequent stagnation or decline of the public
sector, which had previously been a key source of middle-class employment. Si-
multaneously, as formerly protected ISI industries closed their doors because of
their inability to compete with cheap imports, the formal working class employed
by them could also be expected to decline. The neoliberal model predicts that, after
a period of adjustment, the slack in labor demand would be taken up by competitive
export-oriented industries and by associated service industries.
In theory, a market-friendly environment with less taxation and regulation would

stimulate capital investments, producing, in turn, a surge in labor demand. As labor
markets tighten under this pressure, wages and work conditions would improve
naturally without the need for state intervention (Williamson, 1994; Balassa et al.,
1986). To promote this result, governments were enjoined to adopt "labor
flexibilization" policies that reduce the security and benefits enjoyed by the for-
merly protected working class. The result would be less unemployment and a more
dynamic and productive labor force.
On the other hand, if the expected wave of private investments does not material-
ize, the contraction of the public sector and reduction in formerly protected indus-
trial employment can lead, alternatively, to an increase in open unemployment or a
significant rise in the informal sector. Even if labor demand materializes under
conditions of widespread deregulation, the new jobs can be of poorer quality than
those lost since they may lack a number of benefits, including a measure of protec-
tion against arbitrary dismissal (Diaz, 1996; Salinas and Wormald, 2003). Although
legal, these "flexible" jobs would come to resemble those formerly labeled "infor-
mal." The end result of the new model may thus be exactly the opposite of that
predicted: a decline of the formal working class along with a rise in open unem-
ployment, informal self-employment, and unprotected work (Klein and Tokman,
2000).
Along the same lines, the straightforward neoliberal expectation is that, after a
short period of adjustment, poverty would be significantly reduced through a dy-
namic process of job creation fueled by new capitalist investments. As Balassa and
his collaborators put it in 1986:
We propose three strategic changes for Latin America--outward orientation, induce-

ments for increased savings and more efficient investment, and a reordering in the role
of the state . . . . This shift, supported by appropriate tax policies, would usually encom-
pass a move from more capital-intensive to more labor-intensive industries . . . . This
process would boost employment and wages. (Balassa et al., 1986: 32-33)
On the other hand, if such a wave of new investments does not materialize or if it
does not produce the expected rise in labor demand, the combined effects of public
employment reduction, the decline in the old formal working class, and the end of
government subsidies for popular consumption can lead to the opposite consequence:
a significant rise in poverty and, along with it, an increase in already high levels of
inequality. By the end of the 1990s, a number of analysts concluded that this was
indeed what was happening in Latin America. According to Klein and Tokman:
Most of the positive impacts (of the open markets policies) benefited those sectors al-
ready in the upper echelons of the income distribution. They favored the rich. Negative
effects have taken place in labor markets as a result of the application of these policies--
precarization of work, informalization, and unemployment. These effects have affected
primarily those sectors that were already poor. In this manner, inequality has risen. (Klein
and Tokman, 2000: 28)
Galbraith has made the same point even more poignantly:
[I]t is not increasing trade a s s u c h that we should fear. . . . [T]o focus on "globalization"
as such misstates the issue. The problem is a process of integration carried out since at
least 1980 under circumstances of unsustainable finance, in which wealth flowed up-
ward, from the poor countries to the rich . . . . In the course of these events, progress toward
tolerable levels of inequality and sustainable development virtually stopped. Neocolonial
patterns of center-periphery dependence were re-established. (Galbraith, 2000: 25)
Finally, the consequences for social order and stability of the implementation of
the free-market model are a direct reflection of its success in reducing unemploy-
ment, poverty, and especially inequality. If this is the case, beneficial consequences
for peace, security, and public order can be expected to follow, and indeed this was
one of the predictions made by architects of the "Washington Consensus" and their
followers (Williamson, 1994).
A very different set of predictions emerges if the neoliberal model is viewed as
an instrument for the perpetuation or increase of inequality. In this case, the end of
subsidies for popular consumption and the disappearance of social-protection pro-
grams at a time when large numbers of formerly protected workers and new en-
trants into the labor force are forced to "sink or swim" in deregulated markets could
promote new forms of social instability. When jobs are not available, or are of such
poor quality as to keep those holding them in permanent poverty, former workers
and new entrants into the labor force may resort to alternatives to destitution, in a
pattern that can be labeled "forced entrepreneurialism." Informal economic activi-
ties can be expected to rise but other, less conventional modes of coping with the
absence of employment opportunities may also emerge. Various criminal activi-
ties including drug selling, robberies, and kidnappings for ransom--can be inter-
preted, from this perspective, as one such mode in which the perpetrators seek to
avail themselves of the material resources denied to them through legal channels.
The Study
To examine the extent to which these alternative perspectives on contemporary

Latin American urbanization hold in reality, we conducted a comparative study of
six Latin American nations that jointly comprise over 80 percent of the region's
population. The study was based on collaborative agreements with research teams
in these countries that carried out detailed inquiries into each substantive topic based
on a common methodological framework. This framework included analysis of cen-
sus data and existing surveys, along with fieldwork in selected urban settlements
deemed as emblematic of patterns of popular mobilization and demand making.
Progress seminars conducted during the course of the project brought together
the six national teams with the principal investigators to sharpen the focus of the
study and increase comparability among country reports. The substantive areas
analyzed in this paper correspond to those listed in Figure 1. Other topics consid-
ered in the course of the study, such as urban social movements and patterns of
spatial segregation of social classes, are the subject of a separate synthetic paper.
Table 1
The Evolution of Urbanization in Selected Latin A m e r i c a n Countries
Country Census Years

Argentina: 1970 1980 1991 2001
Total Population (000s) 23,385 27,947 32,616 36,220
Urban Population, % 78.9 82.9 87.0 89.5
Urban Growth Rate, % 2.1 1.9 1.6
Buenos Aires (Metro):

Percent of Urban Population 45.5 42.9 39.7 37.2
Urban Primacy ~ 4.0 3.9 3.6 3.6
Growth Rate, % 1.7 1.2 0.6
Brazil: 1970 1980 1991 2001

Total Population (000s) 93,204 1 2 1 , 1 5 1 1 4 6 , 9 1 7 169,590
Urban Growth Rate, %2 4.3 3.2 2.2
Sao Paulo/Rio de Janeiro (Metro):

Urban Primacy3 1.9 1.8 1.6 1.4
Growth Rate, % 3.3 1.4 1.4
Chile: 1970 1982 1992 2002

Urban Growth Rate, % 2.3 1.8 1.3
Santiago (Metro):
Urban Primacy I 4.1 3.3 3.0 3.1
Growth Rate, % 2.8 2.2 1.4
Mexico: 1970 1980 1990 2000

Mexico City (Metro):

Urban Primacy ~ 2.6 2.6 2.1 2.0
Growth Rate, % 3.9 1.6 1.7
Peru:
(continued)
Table 1 (continued)
Country Census Years
Lima (Metro): 1970 1980 1990 2000
Urban Primacy ~ 4.6 4.2 3.9 4.1
Growth Rate, % 3.5 2.8 2.2
Uruguay: 1963 1975 1985 1996

Urban Growth Rate, % 1.0 1.1 I. 1
Montevideo (Metro):
Urban Primacy ~ 8.4 7.4 7.1 6.6
Growth Rate, % 0.2 0.3 0.2
Notes: ~Ratioof the population in the largest metropolitan area to the sum of the next three. 2Cities
of 500,000 to 1 million. ~Ratio of the population in the two largest metropolitan areas to the sum of
the next six. 4 Cities of 250,000+. Source: Country reports to the Princeton-Texas Latin American
Urbanization Project in the Late Twentieth Century, based on national censuses or United Nations
estimates when census not available. Urban population estimates from World Urbanization Pros-
pects. 2003 Revision. New York: United Nations.
Overall, reports produced for each country contain the most up-to-date informa-
tion on contemporary patterns of urbanization and their relationship to recent eco-
nomic policies. This article presents the first synthesis o f findings from this study,
relating them to the alternative predictions, discussed previously.
Urban Systems and Urban Primacy
Table 1 presents the integrated set o f results for the six countries which show two
manifest tendencies: First, the continuing growth o f the urban population that now
comprises, in some countries, 90 percent of the total; second, within this urban
context, the gradual decline in the relative size of the primate city or, in the case of
Brazil, cities (Rio de Janeiro and Silo Paulo). The trend is apparent in various indi-
cators, including percent of the urban population concentrated in primate cities, the
index of urban primacy (the ratio of the size of the main metropolitan area to the
sum of the next three), and the evolution of urban and metropolitan growth rates?
Everywhere the growth of primate cities slows, and their relative dominance over
the national urban system, although still overwhelming, tends to decline.
In Argentina, for example, metropolitan Buenos Aires concentrated close to half
of the urban population in 1970, a proportion that declined to 37 percent in 2002.
Its growth rate declined continuously, dropping to less than 1 percent in the last
intercensal period. In Mexico, the metropolitan area of Mexico C i t y - - t h e third-
largest city in the world (United Nations, 2002: Table 7)--reduced its participation
in the urban total from 30 percent to approximately 25 percent in the same period,
Figure 2
Chile: R a n k Size Distribution of the Urban S y s t e m , 1970 and 2002
10,000,000
1,000,000
0 "~G ran Valparaiso

- ~ r a n Concepcion
0
100,000
~Antofagasta
??o0u,m0o
10,000
1 10 100
Number of Cities by Rank Size, 1970
10,000.000~
1.000.000i ~,~an~]para~so
~ ' ~ r a n Concepci6n
O \ Serena-Coquimbo
.~Q ~ g a s t a
o
100,000. . . . . . . . . . . . . . . . . . . . . . . . . .
10.000
10 100
Number of Cities by Rank Size, 2002
1Logarithmic scale.
Figure 3
Brazil: Rank-size Distribution of the Urban System
11!!!1!
I /~ ?'?1 2
Source: Valladares and Preteceille (2003), based on census data.
and its growth rate declined markedly to become much lower than that of interme-
diate cities.
As a result of these trends, the sharp drop from the primate city to the rest of the
urban system, illustrated when these systems are plotted along a logarithmic scale,
began to give way to a pattern resembling the straight downward line common in
the developed world (Berry, 1973; Berry and Kasarda, 1977; Portes and Johns,
1989). Figure 2 depicts this change for Chile, comparing the rank-size of its cities
in 1970 and in 2002. Figure 3 shows the same pattern for Brazil between 1980 and
2000. In both countries, the distance between the primate city (or cities, in the case
of Brazil) and the next-largest city has been reduced, beginning to approximate the
straight rank-size rule of more mature urban systems.
Reasons for this change have become increasingly clear. Primate cities have lost
much of their allure as an economic magnet for internal migrants and, in the case of
Buenos Aires, for international migrants as well. Since fertility rates in metropoli-
tan areas are generally lower than in smaller cities, the shift in relative growth rates
in favor of the latter becomes an arithmetic certainty without compensating migra-
tion. That loss of attraction of major cities, in country after country, is due to a
complex set of factors, but is undoubtedly related to the end of the ISI era. During
the latter, the growth of the formal protected proletariat and the urban middle class
was accompanied by their overwhelming concentration in the major cities. Conse-
quences of the decline in public employment and in protected ISI industries appear
to have been transmitted rather quickly to migratory networks that put an end to
their previous overwhelming concentration in these areas.
54 Studies in Comparative International Development/ Spring 2005
Figure 4
Argentina, 1991: Total Fertility Rate by Localities
7
100
Ji
90 I
80 !
70
60 Jf ..... =!
50
40
i
30
20
10 i
v
0
Buenos Greater Mar del Greater La Greater Greater Greater Greater Cities o f
Aires, City Buenos Plata Plata Rosario Cordoba Mendoza Tucuman 50,000 or
Aires more
Y-axis: The ratio of live births to total number of women of reproductive age, multiplied by 1,000.
X-axis: Cities have been ordered according to their approximate GNP/capita (from higher to lower),
with the exception of the metropolitan area surrounding the capital city. Source: Cerrutti (2003).
Evidence of this interpretation comes from data on fertility and migration rates
for Argentina and Chile. As seen in Figure 4, fertility rates in Argentina drop
significantly from cities of 50,000 inhabitants and those in the more underdevel-
oped regions in the interior of the country to the federal capital, a pattern that would
necessarily lead to a slower growth rate in the latter in the absence of migration.
Results from Chile show clearly the drop in migration to the primate city, which
went from absorbing 41.2 percent of all internal migrants between 1977 and 1982
to just 28.3 percent in 1997-2002 (Wormald et al., 2003). Indeed, there were more
departures than arrivals to metropolitan Santiago in the last intercensal period ( 1997-
2002), leading to a negative migration balance of about 15,000.
There is additional evidence that not only have migration flows toward primate
cities become feebler, but that they have been frequently re-channeled toward smaller
cities, compounding the effects of differential fertility rates. In some cases, reasons
for these new flows are not clear and stand in need of additional investigation. The
relocation of industry and services to the periphery of the large metropolises is one
reason for these flows. This can result in a new pattern of economic and population
concentration, that of a regional constellation of cities (Lungo, 1997). In other in-
stances, however, there is an evident connection between the emergence of new
growth poles associated with export agriculture, export industries, or new tourist
ventures and secondary city growth. Whenever large export production zones (EPZs),
created under a favorable tax and labor regime, are sited away from the primate
cities, they inevitably trigger vigorous labor flows toward them (Gordon et al., 1997;
Portes et al., 1994; Lozano, 1997). The policies under which EPZs and other ex-
port-oriented growth poles have been created reflect, of course, the new model of
development, which can be credited, at least partially, with the re-orientation of
urban systems away from the inexorable primacy of the past.
The Mexican Border Industrialization Program, established in the 1960s and
expanded subsequently, stands as a textbook example of these trends. As is well
known, thousands of in-bond industries in the textile, garment, footwear, domestic
appliances, electronics, and other sectors emerged in Mexican border cities, em-
ploying cheap Mexican labor to produce commodities for the U.S. market
(Fernandez-Kelly, 1983; Shaiken, 1990, 1994). An immediate consequence was the
re-channeling of domestic migrant flows and the rapid growth of these cities. As
Ariza (2003: 12) notes, Tijuana and Ciudad Juarez are essentially maquiladoracit-
ies, which have exhibited the best economic performance in Mexico during the last
decade; they have simultaneously experienced a population boom far exceeding the
growth rate of the federal district. Merida, at great distance from the capital city, has
also received a vigorous demographic impulse due to maquila employment, while
Veracruz, a port city, has experienced rapid growth due to exports and tourism.
Mexico, however, is not the only example of this trend. In Chile, as we have seen,
migration flows have been re-channeled away from the largest city toward second-
ary ones, leading to a slight decline in primacy, most marked in terms of the three-
city index from 1970 to 1980. Growth of secondary Chilean cities has been directly
linked to the creation and fortunes of new export industries:
Notable cases have been the strong growth of lquique, Copiap6, and La Serena-Coquimbo
in the intercensal periods 1970-1982 and 1992 2002; of Rancagua between 1970 and
1982; Curic6 between 1982 and 1992; and Temuco, Arica, Punta Arenas and Calama
between 1970 and 1982. These periods of growth are explained by economic upsurges
linked with local export booms. (Wormald et al., 2003: 20)
Lastly, in Brazil, the same dynamics are apparent in the relative decline of the
axis Rio-Silo Paulo and the rapid growth of a number of cities between a half-
million and five million inhabitants. In every instance, such growth is attributable
to the re-channeling of migration flows in response to new industrial and export-
linked investments in cities scattered throughout the national territory:
In the South and Southwest, Belo Horizonte (metallurgy, transport equipment, and the
Fiat industrial pole); Campinas, Santos, Curitiba, and Porto Alegre (diversified indus-
tries) benefited from industrial de-concentration and the new pattern of investments. In
the Northeast, Salvador also gained from the development of the petrochemical and au-
tomobile complex of Ford. Manaus received a great growth impulse from the installation
of assembly industries for export. . . . This group of cities, which had the largest growth
rates during the last two decades, forms part of what may be labeled "second rank"
metropolization consolidating a more balanced urban system. (Valladares and Preteceille,
2003: 9)
The major exception among the countries studied is Peru, where indicators of
urban primacy barely changed during the last two decades. 4 The dominance of
Lima over the national system declined during the 1980s, only to reassert itself in
Figure 5
Open Unemployment Rates in Metropolitan Buenos Aires, 1980-2001
20
18 ,; ',, j
16
14
12
/
10 ,/
/
8 ./" \ /
6
/
4 /
/~
/"
2
0 I I I I I I I I I I I I I I
CO CO GO CO CO O~ ~'~ 0"~ 0"~ O~ 0"} Ob 0"> O~ Ob 0 CD

T-- ~ ~ T-- T'- T-- %-- T'- ~-- T'- T-- ~-- T-- ~ T'- ~
Year
Source: Cerrutt (2003), based on annual householdsurveys
the following decade. The civil war suffered by Peru during this time is a key factor
accounting for this exceptional pattern. The conflict reached its peak during the
early 1990s, leading to mass internal displacements toward Lima and, simultaneously,
to strong disincentives for new entrepreneurial investments (Mendez et al., 2003).
No new growth pole emerged in Peru to reorient internal migration flows. The geo-
graphic location of the country plus widespread violence disqualified Peru as a
suitable export platform for labor-intensive industries. Thus, the same factors that
led to industrial decentralization and a decline in primacy elsewhere played in re-
verse to consolidate urban primacy in Peru?
It is not possible to demonstrate a perfect one-to-one relationship between the
advent of the new open-markets model of development and the transformation of
urban systems throughout the region. Indeed, primacy had begun to decline in some
countries prior to the full application of the new policies. However, the conclusion
that the end of ISI and advent of export-oriented development had a significant
effect in the acceleration and, in other cases, initiation of this trend appears incon-
trovertible. This conclusion is buttressed by three facts:
9 The close temporal association between the onset of the new macro-economic model
and the transformation of urban systems, in most cases.
9 In countries where the new model was not applied or feebly applied, primacy levels
remained unaltered.
9 In countries where the model led to new investments concentrated in or near the
major cities, primacy levels rose and new "mega-cities" started to emerge?
These three facts are not based exclusively on findings from the present study,
but draw on prior studies that report precisely the same trends. Thus, a previous
study of urbanization in the Caribbean Basin found that changes in urban systems
corresponded to sociological expectations on the application of the new model (see
Figure 1). They accounted for significant declines in urban primacy in the Domini-
can Republic and Jamaica, little change in Guatemala, and the rise of a new mega-
city in the central valley of Costa Rica as new export investments concentrated in
the proximity of the capital city (Portes, Dore-Cabral, and Landolt, 1997).
The Evolution of Labor Markets
As noted previously and as summarized in Figure 1, expectations stemming from

the Washington Consensus were that labor markets would respond quickly to the
stimulus provided by new capital investments, leading to sustained declines in un-
employment and underemployment. The reality during the last decades bears little
relationship to these expectations. In country after country, rates of open unem-
ployment and informal employment either remained stagnant or increased signifi-
cantly. These national trends were quite apparent in the major cities where large
proportions of the respective populations continued to live.
Table 2 presents the relevant information for the six countries included in our
comparative study. There are significant variations among them, although in no
country (with the partial exception of Chile, to be discussed below) are there visible
signs of labor-market improvement. The countries of the River Platte have been the
most visibly affected by declines in formal protected employment. In Argentina,
the open unemployment rate doubled during the 1990s and in Buenos Aires, it went
from just three percent in 1980 to over twenty percent in 2001. This dramatic dete-
rioration of labor-market conditions is portrayed in Figure 5. Its evolution in time
coincided perfectly with the period of strict application ofneoliberal policies to the
Argentine economy. As noted by various observers, no other Latin American coun-
try witnessed a more fervent implementation of the open-markets model than Ar-
gentina during the years of the Menem presidency (Sunkel, 2004; Altimir and
Beccaria, 2001; Grimson, 2003).
During the same period, employed workers also suffered a significant deteriora-
tion in their work conditions. The formal working class employed by large firms in
the Buenos Aires metropolitan area declined from close to half of the economically
active population (EAP) in 1980 to less than one-third in 2001. Conversely, the
informal proletariat rose from thirteen percent to thirty-four percent of the EAP
during the same period, when the traditional ILO measurement of informality is
applied, and to forty-four percent when a more modern measure based on lack of
social security protection is used. v As a result, the index of labor vulnerability rose
from one-third to one-half of the metropolitan labor force during these two de-
cades. Nationwide, the informal proletariat reached forty-four percent of the total
Argentine labor force in 2001. 8
58 Studies in ComparativeInternational Development/ Spring 2005
Table 2
The Evolution of Labor Markets in Six Latin American Countries
Country Year I
1980 1990 1995. 2000 2002/3
Argentina (Urban)
Unemployment, % 2.6 7.4 11.5 15.1 15.1
Informal workers 2, % 23.0 -- -- 45.0 41.8
Buenos Aires (Metro)

Unemployment, % 2.6 12.1 15.4 20.1 16.0
Informal workers (traditional) 2, % 12.9 27.6 36.1 33.8 44.0
Informal workers (modern) 3, % -- 41.5 39.7 43.6 47.5
Brazil (Urban)
Unemployment % 6.3 4.5 5.4 7.1 10.7
Informal workers 2, % 27.2 37.3 42.6 41.8 --
Rio de Janeiro (Metro)

Unemployment, % -- 3.5 4.0 4.6 9.24
Informal workers (trad.) 2, % -- 31.7 36.4 39.3 --
Sao Paulo (Metro)

Unemployment, % -- 5.5 5.2 7.5 14.14
Informal workers (trad.) 2, % -- 27.7 33.4 32.0 --
Chile (Urban)
Unemployment, % 10.4 8.7 6.0 l 0.1 l 0.6
Informal workers 2, % 27.1 39.2 38.8 37.2 35.6
Santiago
Unemployment, % -- 7.3 5.4 9.2 9.8
Informal workers (trad.) 2, % -- 36.3 37.0 35.3 34.0
Mexico (Urban)
Unemployment, % 4.5 2.7 5.5 2.2 3.3
Informal workers 2,, % 35.8 35.1 38.2 35.4 44.15
Mexico City
Unemployment, % -- 5.3 9.6 3.5 3.7
Informal workers (trad.) 2, % --- 34.4 36.9 37.1 45.7 s
Informal workers (modern) 3, % --- 44.7 57.4 50.6 50.0
Peru (Urban)
Unemployment, % 10.9 -- 7.0 7.4 7.9 ~'
Informal workers 2, % 40.5 -- 59.7 60.3 61.56
(continued)
Table 2 (continued)
Country Year ~
1980 1990 1995 2000 2002/3

Lima (Metro)
Unemployment, % 7.1 5.9 7.0 7.8 10.3
Informal workers (trad.) 2, % 49.7 48.8 53.1 57.1 53.16
Informal workers (modern) 3, % 54.9 55.2 53.8 61.3 --
Uruguay (Urban)
Unemployment, % 7.4 8.5 10.3 13.6 17.0
Informal workers3, % 23.1 33.0 35.1 34.7
Montevideo (metro)
Unemployment, % 10.7 9.3 10.8 13.9 17.0
Informal workers (trad.) 2, % 23.1 30.3 30.5 30.7 --
Informal workers (modern)~, % -- 30.6 28.9 27.9 --
Notes: ~Exactyear may vary according to date of national census or household survey. 21LOtradi-
tional definitions based on the sum of the self-employed minus professionals and technicians, own-
ers and employees of firms with less than five workers, unremunerated family workers, and domestic
workers. 3Workers uncovered by social security and/or other legally mandated protections. 4New
series of unemployment estimates from 2001.5This is an overestimation that includes all workers
(employees, self-employed and unpaid) in enterprises of from 1 to 5 persons. "2001. Sources: For
national urban unemployment, Panorama Social de Amdrica Latina 2002 2003, Annex Table 13.
For 1980 estimates of urban unemployment, Social Panorama of Latin America 1994, Table 1. For
1980 estimates of urban informal employment, J. Wilkie and A. Perkal, Statistical Abstract of Latin
America, 23, Table 1309. All other calculations compiled by project staff at the University of Texas
at Austin or from country reports to the Princeton-Texas Latin American Urbanization Project, based
on national and urban household surveys and census figures.
Across the River Platte, labor-market conditions were not much better. Although
neoliberal policies were applied in Uruguay with somewhat less enthusiasm than in
its neighboring country, the results for labor market were essentially the same: as in
Argentina, there were large declines in the proportion o f workers employed in for-
mal industry and in the public sector and a concomitant rise in open unemploy-
ment. Figure 6 presents the evolution o f the unemployment rate in the Montevideo
metropolitan area. Simultaneously, the proportion o f the self-employed and pre-
cariously employed also increased, although not as rapidly as the unemployment
rate. As a consequence o f these trends, U r u g u a y - - f o r m e r l y the country enjoying
the highest levels o f labor protection and lowest unemployment in Latin A m e r i c a - -
exhibited an index o f labor vulnerability o f half o f its labor force in 2001, exactly
the same figures as its larger neighbor.
Chile is c o m m o n l y cited as the success story o f the neoliberal experiment and,
from a labor-market perspective, there is some evidence backing this assertion. As
shown in Table 2, open unemployment declined to just 5.4 percent o f the Santiago
metropolitan labor force in the mid-nineties and just six percent nationwide. How-
ever, the figure climbed right back to close to ten percent in 2001. The traditional
way o f measuring the informal s e c t o r - - a s the sum o f unpaid family workers, the
Figure 6
The Evolution of Unemployment Rates in Greater Montevideo according
to Levels of Education, ! 991-2001
'"'"41-" Low Educalion -- -- Medium Education ~ High Education I

200.
18.0.
jJ
16.0.
140.
12.0.
;/
100.
60.
6+1~.
4,0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Source: Kaztmanet al. (2003), based on annual householdsurveys. High education is 13 or more
years of education, mediumeducation is 9 to 12 years, and low educationis less than 9 years.
unskilled self-employed, domestic servants, and workers in very small enterprises--

evolved positively, showing small but sustained declines in Santiago and nation-
wide. However, if the more modern definition of the informal sector--as workers
unprotected by legal regulation and benefits--is applied, the opposite result ob-
tains.
As Table 2 indicates, there has been a sustained increase in the proportion of
unprotected workers, both in the capital city and in the country as a whole during
the 1990s. This rise is attributable to the rising number of workers in largefirms
without social-security protection. Thus, while the Chilean economy managed to
create sufficient j obs to avoid the record unemployment level of its neighbors, many
of these jobs were of poor quality--lacking social services or protection against
arbitrary firing (Wormald et al., 2003). This trend reflects the policy of "labor
flexibilization" introduced as part of the neoliberal model. As Chilean sociologist
Alvaro Diaz noted at the height of this period:
Chilean labor institutions do not protect the workers--especially women, the young, and
the aged--against recessions, rationalizations, and productive reorganizations. They do
Figure 7
Greater Lima: The Evolution of Informal Employment, 1986-2001
~ 5 ~~, " - ~
~- ,, i i i i i i i i r i i i J
?i i: ~i -
. . . . . . ,i I
Source: Saavedra and Nakasone (2003), based on annual household surveys
not guarantee labor rights against authoritarian practices, which are the norm in many
Chilean enterprises and which have resulted in a rise in the intensity of work as well as
the rate of work-related accidents. Only a minority of the labor force has gained access to
stable and well-remunerated jobs. (Diaz, 1996: 25)
In Peru, the free-market model was applied with vigor during the Fujimori years,
coming to resemble the Argentine embracement of the same policies (Mendez et
al., 2003; Saavedra and Nakasone, 2003). However, the results were not the same,
reflecting differences in national context and levels &development. Whereas in the
more developed River Platte nations, the application of the new model led to record
levels of unemployment, this was not the case in Peru, where the unemployment
rate, while increasing, did not exceed the levels of the 1980s. Instead, effects were
felt in the form of precarization of employment and a decline in the proportion of
formal workers to just one-third of the EAR In Metropolitan Lima, the informal
sector--which, by any standard, had already absorbed half of the labor force in
1986--swelled to approximately 60 percent by the end of the t990s; as elsewhere,
Peruvian workers did not see the presumed trickle-down benefits of the new model
materialize anywhere. The evolution of informal employment in the city is depicted
in Figure 7.
The remaining results in Table 2 correspond to the two largest regional econo-
mies. In Brazil, a more cautious and less orthodox application ofneoliberal policies
by the two Cardoso administrations was associated with a less drastic evolution of
the labor markets. Unemployment and informal employment rose nationwide, as
well as in the two largest metropolitan areas. However, the trend was neither as
consistent nor as drastic as in Argentina. From a labor-market perspective, the 1990s
were a stagnant decade with little economic progress and a slow deterioration of
employment conditions (Valladares and Preteceille, 2003).
In Mexico, the new export-oriented model took the form of the country's entry
into the North American Free Trade Agreement (NAFTA). The increasing use of
Mexico as an industrial export platform for the huge U.S. market resulted in sig-
nificant labor demand in the maquiladora sector in border cities, like Tijuana and
Juarez, and elsewhere (Ariza, 2003). This demand appeared to have partially neu-
tralized the loss of jobs in bankrupt ISI industries (Pozas, 2002). Although, like
elsewhere in the region, there was a sustained decline in industrial employment
following the application of market-opening policies, the trend was reversed in the
late 1990s, leading to a level of industrial employment similar to that experienced
two decades earlier.
Unemployment and informal employment followed an erratic pattern. In the case
of the latter, there is a notable gap between informal employment measured tradi-
tionally and modern measures that incorporate unprotected workers. In 2000, the
first indicator yielded an estimate of 37.1 percent of the national EAP employed
informally, while the second increased it to 50.6 percent (see Table 2). Hence, even
in Mexico, and despite the labor demand generated by export-platform industries,
the results of the new model of development were not impressive. Whatever eco-
nomic growth occurred, it did not translate into a rapid increase in formal employ-
ment. As elsewhere in the region, labor indicators either remained stagnant or
declined. By the end of the 1990s, up to half of Mexican workers continued to
survive in precarious forms of employment at the margins of the formal economy.
Poverty and Inequality
The deterioration of labor-market conditions has not affected the population of these
countries uniformly. Instead, rising unemployment and informalization has been
accompanied, in several countries, by steady or rising economic inequality where a
number of individuals and families have descended into poverty, while a minority
of the population has seen its fortunes rise as beneficiaries of the new model. As
Polanyi (1957; 1992) demonstrated long ago, free markets are inherently machines
for the creation and reproduction of inequality. The wealth that they create tends to
flow upward, exacerbating pre-existing class differences unless checked by deliber-
ate regulation.
A recent analysis of the evolution of Latin American class structures has shown
that the dominant classes--defined as large and mid-size employers, administra-
tors and executives of these firms, and elite professionals--compose approximately
one-tenth of the Latin American EAR and less than that in several countries (Portes
and Hoffman, 2003). This "privileged decile" received average incomes equivalent
to fourteen times the average LatinAmerican poverty-line income in the early 1990s;
by contrast, the informal proletariat, comprising approximately forty percent of the
regional EAP, had incomes of just twice the poverty line, or about half the amount
needed to lift them out of poverty (Economic Commission for Latin America and
the Caribbean, 2000). 9 These economic differences, which make Latin America as
a whole one of the most unequal regions in the world, tended to become exacerbated
Figure 8
Per-Capita Household Income Inequality in Metropolitan Buenos Aires
?;.z,?. o
~-~'~--- a
= /
/
O~ /
"5 7~,.42 /
.i ~4
I I I i I I
19L54 "; '-"

Year
Sources: Cerrutti (2003), and Altimir and Beccaria (2001).
during the decade in which the neoliberal model was implemented. Table 3 presents
the relevant figures based on standard indicators of poverty and inequality plus the
definition of top and bottom social classes advanced by Portes and Hoffman (2003).
In Argentina, the income share of the top decile increased almost ten percent
between 1980 and 2000; the incomes of employers alone went from nineteen times
the national poverty line in 1980 to twenty-four times in 1997. The incomes of
informal workers declined substantially in the same period. During the 1990s, the
share of wages relative to employment of the "dominant" classes increased from a
ratio of 2.3 to 2.7, while that received by the informal proletariat remained stag-
nant. The percentage of individuals in poverty, which in 1980 was just five percent,
increased by 2002 to a remarkable thirty-eight percent of the metropolitan popula-
tion. As a result, Argentina went from being one of the most egalitarian countries in
the region to resembling their neighbors' traditional economic inequality. By 1996,
according to Altimir, the national Gini Index had surpassed the .50 threshold. Fig-
ure 8 portrays this evolution for the capital city and environs.
Neighboring Uruguay experienced a similar, although less drastic, evolution.
For the country as a whole, inequality increased, with the urban Gini Index reach-
ing .44 in 2000. In Montevideo, the dominant classes retained their disproportion-
ate share &wages throughout the 1990s despite their increasing numbers, while the
decline in the numbers of the informal proletariat brought them no relative wage
increase. Nationwide the picture was one of stagnation, with the incomes of the
bottom quintile and of informal workers barely budging during the decade. While
less dramatic than the situation across the River Platte, the traditionally
64 Studies in ComparativeInternational Development / Spring 2005
Table 3
The E v o l u t i o n of Poverty and Inequality Indicators in Six
Latin American Countries
Country Year ~
1980 1990 1995 2000 2002/2003
Argentina (Urban)
Gini Index 2 .403 .470 .505 .510 .52
Poor Population 2, % -- -- 35.9 54.7
Income Share of Top Decile 2, % 29.8 34.8 35.8 37.0 42.1
Buenos Aires (Metro)

Gini Index 2 .411 .437 .446 .500 .540
Poor Population 2, % 5.0 33.7 24.8 28.9 51.7
Wage Shares (Wage/Employment Ratios)3:
Dominant Classes 4 12.9 (2.3) 16.1 (2.7) 16.9 (2.7) 15.8(2.9)
Informal Proletariat s 30.3 (0.6) 25.6 (0.6) 25.8 (0.7) 27.7(0.6)
Brazil (Urban)
Gini Index 2 .590 .570 .530 .640 .640
Poor Population 2, % 39.0 48.0 35.8 37.5 --
Income Share of Top Decile 2, % 39.5 43.9 46.0 47.1 --
Rio de Janeiro (Metro)

Gini lndex 2 .570 .540 .600
Poor Population 2
Dominant Classes 4 19.2 (3.4) 20.2 (3.1) 21.8 (3.2)
Informal Proletariat 5 16.8 (0.5) 15.9(0.5) 20.3 (0.6)
Sao Paulo (Metro)

Gini Index 2 .510 .540 .550
Poor Population 2 37.1 56.6 55.8
Dominant Classes 4 20.9 (3.3) 20.7(2.8) 26.5 (3.3)
Informal Proletariat s 11.9 (0.4) 19.2(0.5) 17.5 (0.5)
Chile (Urban)
Gini Index 2 .560 .570 .570 .580 --
Poor Population z, % 45.1 38.6 27.5 20.6 --
Income Share of Top Decile 2, % 56.2 40.7 40.2 40.3
Santiago (Metro)
Gini Index 2 -- .560 .560 .580 --
Poor Population 2, % 33.8 28.5 17.8 12.7 --
Dominant Classes4: -- 31.8 (3.7) 31.3 (3.4) 32.9 (3.5) --
Informal ProletariatS: -- 17.0 (0.6) 14.5 (0.6) 12.9 (0.5)
(continued)
Table 3 (continued)
Country Year j
1980 1990 1995 2000 2002/2003
Mexico (Urban)
Gini Index 2 -- .470 .490 .470 --
Poor Population 2, % 28.0 47.7 52.9 41.1 39.4
Income Share o f Top Decile 2, % 25.8 36.6 35.6 36.4 33.2
Mexico City (Metro)

Gini Index 2 -- .480 ,500 .500 --
Poor Population 2, % -- -- --
Wage Shares (Wage/Employment Ratios)B:
Dominant Classes4: -- 19.6 (3.0) 22.3 (2.7) 21.5 (2.9)
Informal Proletariat 5 -- 29.6 (0.7) 32.0 (0.6) 28.1 (0.6) --
Peru (Urban)
Gini Index 2 -- .390 .332 .370 --
Poor Population 2, % 46.0 50.2 45.8 47.7 54.8
Income Share o f Top Decile 2, % -- -- 33.3 36.5 --
Lima (Metro)
Gini Index 2 .429 .414 .386 .403
Poor Population 2, % 47.8 35.5 45.2
Dominant Classes4: r
19.8 (2.9) 29.1 (4.0)

Informal ProletariatS: 31.8 (0.6) 33.9 (0.6)
Uruguay ( U r b a n )
Gini Index ,2 .379 .414 .425 .442 --
Poor Population 2, % -- 28.3 21.7 22.8 --
Income Share o f Top Decile 2, % -- 31.2 25.8 27.0 27.3
Montevideo (Metro)
Gini Index 2 -- .400 .400 .430 --
Poor Population 2, % -- 28.6 21.3 23.9 --
Dominant Classes 4 -- 21,7 (2.7) 24.3 (2.5) 27.3 (2,7)
Informal Proletariat 5 -- 20.4 (0.7) 16.9 (0.6) 16.7 (0,6) --
Notes: IExact year may vary according to dates of national census or household surveys. 1980 is the
first available year in the 1980s, 1995 is the available mid-year statistic, and 2003 is the latest year
available. ZHousehold per capita income. 3Wage employment ratios in parentheses. 4Sum of owners
and employers of firms employing more than five workers; administrators and executives of the
same firms; and salaried university professionals in these firms or in public services. 5Sum of own
account workers, minus professionals and technicians; unremunerated family workers; domestic
workers; and all other workers without contract and/or social security. Sources: For national-level
poverty and income concentration statistics, with the exception of Uruguay, Panorama Social de
Am6rica Latina 2002-2003, Tables 1.4, 1.6, 1.7. All other calculations compiled by project staffat
the University of Texas at Austin or from the country reports to the Princeton-Texas Latin American
Urbanization Project, based on national and urban household surveys and census figures.
egalitarian Uruguayan society did not make any progress in moving further in that
direction, experiencing instead a reversal toward greater inequality.
Chile is the country that registered the best results in terms of a sustained reduc-
tion of poverty during the last two decades. As shown in Table 3, the proportion of
persons in poverty declined by more than half between 1980 and 2000, from forty-
five to twenty-one percent. Similar declines were registered for both the poor and
indigent populations in the Santiago metropolitan area. Informal workers, espe-
cially the self-employed, saw their average incomes rise significantly, to a level
high enough to lift the average worker out of poverty. However, this occurred at a
time when the wage share of the dominant classes in the capital city remained dis-
proportionately high, keeping the Gini Index at close to .60--second only to Brazil
in the region. Clearly, the economic tide "lifted" some boats higher than others. We
conclude from these data that the Chilean population did enjoy the benefits of eco-
nomic growth in the form of higher incomes, but not in terms of a fairer distribution
of the economic pie or (as seen previously) of better quality of jobs for workers.
The poor did not get poorer, but they had to accept precarious and frequently harsh
work conditions at a time when the incomes and lifestyles of the well-to-do im-
proved significantly.
In Peru, the overall situation has been one of relative stagnation. The Gini coef-
ficient barely budged during the last decade, while poverty increased by a few per-
centage points between 1980 and 2001, when, by new measures, the poor became a
majority of the population. The trend is best seen in metropolitan Lima, where a
rapidly increasing informal proletariat barely increased its wage share, just manag-
ing to keep its employment/wage ratio unchanged. By contrast, the dominant classes,
grouped in the "privileged decile," increased their total wage share by a remarkable
ten percent and their employment/wage ratio to 4, the highest among our six
cities.
In the two largest countries, Brazil and Mexico, the evidence also points to a
consolidation of the economic position of the dominant classes, a stagnation in the
average incomes of informal workers, and, as a consequence, a rise in economic
inequality. In Brazil, easily the most unequal country in the region, the national
Gini index inched upward during the last decade, while in metropolitan Rio it rose
from .57 to .60 and in Sao Paulo, it increased by 4 points to .55. The informal
proletariat in both cities increased its absolute wage share, but this was due to the
rising number of people employed in precarious and unprotected jobs, as seen pre-
viously. Thus, the wage/employment ratio for this class remained stagnant. The
same was true for the dominant classes in both cities; nationwide, however, the top
decile increased its income share by almost 10 percent, reinforcing a pattern of
extreme inequality.
In Mexico City, the Gini also moved slightly upward in tandem with a rise in the
income share of the top decile, although there was also a decline in the urban popu-
lation classified as poor. As in the large Brazilian cities, the wage share of the
informal proletariat in Mexico City remained stagnant and its wage/employment
ratio a fraction of that accruing to the dominant classes. In both cases, wage appro-
priation by the latter was about thrice their numbers, while it was about half for
informal workers.
In conclusion, the data do not indicate that the decade of most-consistent appli-
cation of neoliberal policies led to uniform increases in poverty. The opposite was
the case, at least in some countries. What increased uniformly was inequality.
Whether the economic tide lifted all boats, as in Chile, or sank them all, as in the
River Platte, the elites managed to hold to or increase their positions of privilege,
while those at the bottom of the class structure saw their relative share remain stag-
nant or decline. National indicators of inequality moved upward everywhere, a con-
dition aggravated in the major cities. Corresponding to Polanyi's prediction, free
markets did create wealth in some countries, but it was appropriated very unevenly,
while in others, exemplified by Argentina and Uruguay, free markets did not even
produce growth, leading to both rising inequality and widespread poverty.
Crime and Victimization
As summarized in Figure 1, sociological theories of deviance have generally iden-

tified the existence of a rising gap between culturally desirable goals and institu-
tionalized (legal) means to attain them as a prime determinant of crime (Merton,
1968; Sullivan, 1989). Social psychological theories of relative deprivation make a
similar point, emphasizing that it is not absolute poverty but the existence of sig-
nificant inequality, leading to the lack by many of the goods and privileges enjoyed
by the few, that creates the conditions for a series ofvindicational practices--from
political mobilizations and riots to organized crime (Kornhauser, 1960; Toch, 1965;
Davies, 1971). Criminologists generally agree that inequality is a major "struc-
tural" determinant of delinquency, especially of practices such as theft and robbery
aimed at the illegal acquisition of property (Londofio, 1996; Bourguignon, 1999;
Arriagada and Godoy, 2000).
In Latin America, rising levels of economic inequality, just documented, coin-
cide with ready access by the privileged classes to the benefits of modern consump-
tion. While, as seen previously, the influence of imported consumer expectations
has never been absent from the region, the radical market opening has meant even
readier access to the goods and lifestyles imported from the developed world. As
several Latin American authors have indicated, Latin American societies have never
before been so exposed to First World standards of living and consumer values as in
the last decades (Sunkel, 2004; Diaz, 1996). Naturally, it is in the cities where this
influence is most evident, because that is where marketing efforts by multinational
corporations concentrate, and where the presence of wealth and modern consump-
tion styles in the midst of scarcity are most visible. Property crime may rise in these
contexts as some members of the subordinate classes take matters into their own
hands in order to redress both absolute and relative deprivation. This is the context
that has given rise to the notion of"forced entrepreneurship" in current theories of
crime (Ayres, 1998).
The evidence from the six countries under study points toward significant rises
in crime, victimization, and citizen insecurity during the last decade. Reported crimes
are feeble indicators of any trend because of the reluctance of the citizenry in many
countries to contact the police. The latter is perceived as corrupt and inefficient and
often "more of a threat than the thieves themselves" (Lomnitz, 2002). As seen in
Table 4
C r i m e and Victimization Indicators in Six Latin A m e r i c a n Countries
Country Year
Argentina 1991 1994 1998 2001
Felonies per 100,000 inhabitants 900 1050 1800 2002
Property crimes per 100,000 inhabitants 1000 1100 1500 2000
Growth rate, 1991-2000, % 113
Buenos Aires (Metro):

Felonies per 100,000 1500 2100 4700 6600
Property crimes per 100,000 1000 1500 3400 4800
Growth rate, 1991-2000, % 34O
Reported victimization ratel,% 39.8 39.6
Brazil 1980 1990 1996 2000

Robberies reported to police, %2 32
Homicide growth rate, 1985-96, % 88
Rio de Janeiro (City):

Homicides per 100,000 38.8 67.3 59.8
Growth rate in private security 112
personnel, 1985-95, %
Rio de Janeiro (Metro):

Sao Paulo (Metro):

Chile 1980 1985 1990 1995 1998 2000 2001

Property crimes per 100,000 700 1100 1100 1000 1400
Robberies per 100,0002 48 100 155
Crimes against persons 335 273 519
per 100,000
Santiago (Metro):
Property crimes per 100,000 700 1400 1450 1300 1650
Robberies per 100,0002 100 200 310
Felonies per 100,000 1540 1718 2118
(continued)
Table 4 (continued)
Country Year
Mexico 1990 1994 1995 1997 2001

Victimization rate, %3 14.0
Victimization rate
(violent crimes), %~ 6.5
Robberies per 100,0002 219.5
Mexico D.E (Metro) 1990 1994 1995 1997 2001

Homicides per 100,000 10.2 19.5
Homicides per 100,000, males 26.3 34.6
Robberies per 100,0002 866 1017 1830 183 l
Crime growth rate:
1981-90 2.2
1991-97 35.4
Mexico D.E (City)

Robberies per 100,0002 2071 2755 4769 4793
Peru 1995 1996 1998 2001

Lima (Metro):
Crime victims, not reporting to police, %1 90.6
Victimization rate, %t 32.4
Crimes against persons 76,760 64,429 75,412 51,649

Crimes against property 89,924 72,888 76,971 91,296
Uruguay 1980-84 1985-89 1990-94 1995-99 2000-01

Robberies, annual average 2 26,920 48,849 67,358 73,141 86,494
Homicides, annual average 139 157 200 220 216
Judicial proceedings for robbery 2 7367 6712 8252
Age of convicted robbery felons:

18-25, % 53.2 46.9 44.5
36-50, % 15.9 19.8 21.4
Notes: tRepresentative surveys of the metropolitan area's adult population. 2Robberies are defined
as theft with violence. 3As reported by national surveys of the adult population. Sources: Country
reports to the Princeton-Texas Latin American Urbanization Project, based on official police statis-
tics and victimization surveys of the national and metropolitan populations.
Figure 9
Property Crime in Chile, 1977-2000
lV0ff, cA,
1 InC
70C~
2CC
- - I - - National
--Jr- Santiago (Metro)
Source: Wormail el al. (2003), based on annual police reports
Table 4, only thirty-two percent of robbery victims reported the crime to police in
Brazil in 1998; the same figure for Rio de Janeiro was just twenty percent. The
table also shows that over ninety percent of crime victims in Lima did not contact
the police during the same year.
In countries where the quality of the police force is sufficiently high to take
crime statistics seriously, the evidence points to a significant rise in national and
urban delinquency, in particular property crime. This is the case of Chile, where the
militarized police--the carabineros--is a generally trusted institution (Wormald et
al., 2003). Property crimes per 100,000 inhabitants in that country doubled be-
tween 1977 and 2000 and robberies (thefts with personal violence) more than tripled
during the late 1990s. As shown in Table 4, the situation in metropolitan Santiago
was even worse, with the property crime rate skyrocketing from 600 per 100,000 in
1977 to 1,650 in 2000. In just three years (1998-2001), the rate of felonies (robber-
ies, thefts, and homicides) reported to the police rose from 1,540 to 2,118. The
long-term evolution of property crimes in Chile and its capital city is graphically
portrayed in Figure 9.
These results are not compatible with the image of economic growth, declining
poverty, and increasing well-being that have made Chile a showcase ofneoliberalism.
As seen previously, poverty did decline markedly in the 1990s, but inequality re-
mained unchanged. Persistently high economic inequality in a context of increas-
ing wealth and modern consumption by the upper and middle classes may represent
the key structural factor behind the serious crime wave of the late 1990s. As Wormald,
Sabatini, and their collaborators note:
It is worth observing that the increasing isolation of the poor and the segmentation of
social opportunities reinforce, among the marginalized population, such problems as
Figure 10
Chile: Theft with Violence, Denounced to the Police, 1995-2000
3Sg,
J
25C
20C,
15C _-I ..... m _--,--~--
lOC, j _ _ _ - - " ~ F
_ _ @ ....... ~--
.-5[,
i I I I
i -3:5 1 9 ~ ~-:' " ~,'37 "~,~ ~ 1 ~!-a~, 2ZC~3

--It--- Santiago (Metro)
National
Source: Wormald et al. (2003), based on annual police reports
family violence, school abandonment, vagrancy, and drug addiction that precipitate,
especially among the young, the adoption of delinquent patterns. This explains the in-
creases in crime indicators in the metropolitan regions. (Wormald et al., 2003: 62)
These conclusions are reinforced by the rapid growth of property crimes with vio-
lence during the last half of the 1990s. The trend is portrayed in Figure 10.
The situation is similar or worse in neighboring countries. In Argentina, previ-
ously regarded as a relatively tranquil country, the property crime rate per 100,000
inhabitants rose 113 percent in the 1990s. In metropolitan Buenos Aires, the same
rate more than tripled (see Table 4). The evolution of the total crime rate, presented
in Figure 11, makes clear two important trends: First, delinquency rose everywhere,
but where the situation reached truly crisis proportions was in the capital city; sec-
ond, the crime rates actually declined during the early 1990s, and it was only during
the second half of the decade, coinciding with the years when the neoliberal experi-
ment unraveled, that crime rates virtually exploded (Cerrutti, 2003; Grimson, 2003).
In neighboring Uruguay, the number of rapi~as (theft with violence) rose almost
f o u r f o l ~ f r o m an annual average of 27,000 in 1980-1984 to 86,000 in 2000-2001.
Since the population of Uruguay increased only marginally during this period, the
crime rate per 100,000 rose significantly (Kaztman et al., 2003; Veiga and Rivoit,
2001). Conditions in Uruguay, however, never reached the extremes of its River
Platte neighbor.
The evolution of serious crimes in metropolitan Lima is presented in Figure 12.
These numbers are estimates compiled by private research centers because of the
low number of crimes actually reported to the police. According to these estimates,
the absolute number of crimes in the city almost tripled--from 85,000 to 213,000--
in the short span of five years in the mid- 1990s. As shown in Table 4, crimes against
Figure 11
Total Crime Rates (Per 100,000 Inhabitants)
7CCC
llll- -m
iii
i~OCO
HI
50C0
!i 9
,11
4CCC U '
a,,' -41, t Country ~otal

30C0
2000 -J- Capital {-;iW

all- - ~ - 4 ' . .& ....
1000 A BuenosAir.~,
Province
i i i i i i i i i
Year
Source: Cerrutti (2003), based on official crime statistics
persons stabilized and even declined afterwards, while property crimes, after expe-
riencing a short decline, rebounded in the 2000s. The result has been a sharp
increase in the level of felt insecurity of the urban population and in the defensive
strategies adopted by the dominant classes. As a Peruvian criminologist concludes:
The rise in criminality generates defensive strategies such as greater spatial segregation
by the upper and middle classes that isolate themselves and fortify their residential zones
through various mechanisms like gates, bars, guard dogs, and the like. The number of
private security services has grown apace. (Pereyra, 2003: 7)
In Brazil, where police statistics on thefts and robberies are notoriously unreli-
able, analysts have focused on homicide rates. In metropolitan Rio, the homicide
rate increased 223 percent between 1985 and 1995, far ahead of the national growth
rate of 88%. As in Lima, the sense of urban insecurity led to the exponential growth
of private security services and personnel. In Rio, security personnel more than
doubled between 1985 and 1995; in S~o Paulo, there are as many as three private
security guards for every policeman (Arriagada and Godoy, 2000:179).
All studies about urban property crimes coincide in noting that the perpetrators
are mostly young males, either unemployed or informally employed. While there
may be some bias in these figures due to the greater vulnerability of the poor to be
arrested and incarcerated, the figures are so overwhelming as to denote a clear
trend. In Chile in 1996, ninety-four percent of those identified as responsible for
Figure 12
Estimated Number of Serious Crimes in Metropolitan Lima, 1992-1996
250000
E 200000
0
,.,_ 150000
0
.~ 100000
E
z 50000
1992 1993 t994 1995 1996

Year
Source: Pereyra (2003), based on data from the Peruvian Crime Institute.
armed robbery were young men, sixty percent were between 15 and 24 years of age,
and seventy-five percent were either jobless or manual informal workers (Fundacidn
Paz Ciudadana, 1998). A study of the determinants of crime in Montevideo found a
correlation of.60 between the proportion of young, unemployed, non-student males
in a neighborhood and the local rate of incarceration for a crime. The same study
reported a correlation of-.71 between a neighborhood's average level of education
and the number of delinquents residing in it. The authors conclude:
Everything seems to indicate that in these poor neighborhoods, both families and the
local commtlnity have lost the power to control their youths. In fact, adults seem to
abandon public spaces in these areas which are then occupied by "disaffiliated" young
people who are promptly socialized into deviant lifestyles. (Kaztman et al., 2003: 55)
While the spatial origins of delinquents can be traced to the relatively more de-
prived urban neighborhoods, the location of the actual crime is not necessarily con-
fined to these areas. Here it is necessary to make a distinction between homicides
and property crimes, with or without violence. Homicides are due to a number of
causes, including family disputes, personal vendettas, and the like, On the other
hand, property crimes are those most directly relevant to the hypothesis of forced
entrepreneurialism. The available evidence shows that thefts and armed robberies
are not confined to exclusively poor neighborhoods but extend and are often com-
mon in (a) central city areas and (b) middle- and upper-middle-class neighbor-
hoods.
As Figure 13 shows, reported property crime in metropolitan Santiago has be-
come most frequent in the middle- and upper-middle class comunas o f Providencia,
La Reina, Vitacura, and Las Condes, While working class municipalities such as
San Miguel also report high rates of property crime, what is notable about this map
is that most low-income areas in the eastern, southern, and northern periphery of
74 Studies in Comparative International Development/ Spring 2005
Figure 13
Santiago Property Crime Rates, 2002
(per 100,000 inhabitants)
0 375 7.5 15 ~lomelers

~less than 500 ]
t i_ i i 4 I l __._L__
501 to 1000
1001 to 2000
2001 to 3000
3001 to 5000
~more than 5000
Source: Seguridad Ciudadana, Ministerio del Interior, Chile

the city appear relatively tranquil, while delinquent activity concentrates in the high-
income neighborhoods. It is likely that this trend is exaggerated by the greater pro-
pensity of middle- and upper-class families to report property crimes to the police
because of insurance requirements. Despite this source of bias, the data show that
the present crime wave in Santiago is not just a case of the poor preying on the poor,
but that it has also affected well-to-do individuals and neighborhoods (Arriagada
and Godoy, 2000).
The same trend is evident in Buenos Aires. As seen previously, property crime
for the capital city increased 340 percent in the 1990s. This crime wave was par-
ticularly heavy in relatively wealthy areas such as San Isidro and Vicente Lopez.
The reported victimization rate for the capital city hovered around 40 percent, but
varied significantly by social class:
Regarding the socio-economic level of the victims, those with higher economic status
were significantly more likely to have been victims of a crime both in the capital city and
the metropolitan area . . . . [T]he vast majority of these were property crimes (Cerrutti,
2003: 46).
In Mexico City, the most dangerous neighborhoods are in the city center--the
delegaciones of Cuauthemoc and Benito Juarez. The rate of armed robbery per
100,000 in both areas exceeded 2000, when the overall urban average was just 866.
By 1997, the overall robbery rate in Mexico City had surpassed 1,800 per 100,000
but reached 4,000 per 100,000 in Cuauthemoc and Benito Juarez (Ariza 2003: Table
3.3).
Similarly, property crime in Montevideo is most common in the urban center
and in middle-class neighborhoods than in those inhabited by the very poor or the
very rich (Kaztman et al., 2003). In all cities, the higher incidence of armed robber-
ies in the urban center is due to the greater density of toot traffic and the greater
"mix" of people from different classes, which makes armed delinquents less con-
spicuous. The higher proportion of property crimes in middle-class areas other than
those inhabited by the very wealthy can be attributed directly to the greater ability
of the well-to-do to barricade themselves in gated communities and hire private
security. Middle-class households generally lack the financial wherewithal to pro-
tect themselves so effectively (Sabatini, 2000; Kaztman et al., 2003). Nevertheless,
as the cases of Santiago and Buenos Aires attest, crime and victimization do reach
some wealthy areas which, despite all security measures, have also been engulfed
in the wave of urban insecurity.
From a theoretical standpoint, the key finding is that the significant rise in crime
affecting major Latin American cities during the last decades is not random or
"anomic," but evidences a pattern of entrepreneurial rationality. In other words, it is
not limited to poor areas, but frequently involves young men from these areas going
to where the wealth is, and where some of it can be appropriated without undue
risks of arrest and incarceration. Both the urban origins of delinquents and the place
where property crimes take place fit well the hypothesis of forced entrepreneurialism
in a context of widespread relative deprivation.
It is not possible to conclusively "prove" that neoliberal policies are responsible
for this situation. Other hypotheses may include the expansion of the drug trade
worldwide or cultural changes affecting the global system. If causality cannot be

fully demonstrated, there is still a plausible connection between the character of the
policies implemented under the open markets model, their effects on the labor mar-
ket and the distribution of income, and the reaction of some members of the
marginalized classes to their situation. Neoliberalism preached self-reliance to all,
while leaving most vulnerable sectors to their own devices. From a sociological
standpoint, the reaction of some of their members in the form of unorthodox means
to escape absolute and relative deprivation is predictable.
As Cerrutti (2003: 46) puts it for the case of Buenos Aires, "The association
between deterioration of labor-market conditions, in particular the significant in-
crease in open unemployment and crime rates, is uncontestable." Once criminal
enterprise becomes habitual, a process of cumulative causation sets in where the
young are socialized into alternative, deviant lifestyles and where their ties to the
world of regular work become increasingly fragile. This is what a large body of
research in U.S. cities shows, and what Latin American evidence uncovered in the
course of the present study also indicates (Sullivan, 1989; Wilson, 1987; Fernandez-
Kelly, 1995; Kaztman et al., 2003; Wormald et al., 2003).
Summary and Conclusion
In this article, we have assembled evidence on how different aspects of urban life in
Latin America have evolved during the last decades. The period coincides with the
dramatic shift from the import-substitution industrialization model of development
to the new free-market model, inspired by orthodox economics. Our initial assump-
tion was that such momentous political and economic change could not but have
significant effects on civil society in general and urban society in particular. More
concretely, we advanced a series of tentative predictions about linkages between the
new policies and the evolution of city systems, the character of the urban labor
markets, trends in poverty and inequality, and urban crime and victimization.
While the evidence for the six countries examined in our comparative study is
uneven, it includes the latest available data and it points solidly to several general
trends. Something significant has indeed changed in Latin American cities and in
the character of urban life. Traditional urban primacy has declined almost every-
where, giving rise to the rapid growth of secondary centers and to more complex
urban systems whose future evolution remains uncertain. The relative decline of
traditional primate cities has been due, among other factors, to their loss of attrac-
tion as a magnet for internal or international migrants, lower levels of fertility, and
the economic attraction of new growth poles created by local or regional export
booms promoted by the new model. Internal migration flows have responded rap-
idly to these developments, leading to the growth of secondary cities in Brazil,
Chile, and, in particular, along the Mexico-U.S. border. On the other hand, the loca-
tion of some of these emerging centers at close distance from the old primate cities
threatens to create new "mega-cities" engulfing entire regions.
Urban labor markets have also been heavily affected by the decline in formal
industrial employment provoked by the demise of old ISI industries and the con-
traction of public employment. These losses were, in most cases, not compensated
by the expected trickle down of capital investments in privatized and new export
industries. The result was a significant rise in open unemployment in some coun-
tries; a stagnation or rise in informal employment in others; and both trends simul-
taneously in those worst affected by the crisis. In Chile, unemployment declined
significantly, only to rebound in recent years. Intbrmal employment also declined
according to traditional measures; however, when a modern indicator based on ab-
sence of social security protection is applied, the trend reverses itself. This is due to
the rise of precarious employment in mid-size and large firms, pointing to the gen-
erally poor quality of industrial and service jobs created under the new model.
The evolution of poverty and inequality has followed a parallel trend. Poverty
did not increase everywhere. While in Argentina it grew significantly, in neighbor-
ing Chile it declined steadily during the 1990s. The trend common to all countries
was the persistence of or rise in levels of inequality prompted by the appropriation
of larger income shares by the dominant classes, and the stagnation or at least lower
growth in the slice of the economic pie going to the working classes. In most coun-
tries, the informal proletariat is the largest class of the population, exceeding by
several multiples the combined size of the dominant classes. The informal prole-
tariat bore the brunt of economic adjustment both through its numerical growth,
due to the contraction of the formal sector, and the stagnation or decline in real
average wages, which, in most cases, failed to lift working-class families out of
poverty.
The sustained rises in delinquency and, especially, robbery and theft in all coun-
tries and all major cities represent the counterpart to the deterioration of labor-
market opportunities and sustained high levels of inequality. Taking place at the
same time that the opening of markets increasingly exposed the urban population to
new, modern forms of consumption, the lack of employment opportunities for the
lower classes has triggered a search for alternative forms of income procurement.
Invented self-employment and informal micro-enterprises represented the most
common path, but others adopted the direct route of expropriating wealth by stealth
or force. Our evidence indicates that the wave of crime engulfing Latin American
cities is not random or anomic, but reflects a clear entrepreneurial logic. Accord-
ingly, not only poor areas but those inhabited by the well-to-do have been affected
by it. Among other consequences, this has given rise to the proliferation of gated
communities for the wealthy and a quantum increase in private security services.
Coinciding with the start of a new century, a number of countries have begun to
pull back from economic orthodoxy, seeking a more humane and less socially de-
structive path to national development. Neoliberalism itself and associated terms
like the "Washington consensus" have come to acquire an increasingly negative
connotation, as symbols of inegalitarian and socially insensitive policies. The gov-
ernments ofpost-neoliberal Latin America have not abandoned the markets, but are
searching for ways of giving the state a more active role in both the promotion of
viable national enterprises and the protection of the most vulnerable sectors of the
population. Although beyond the scope of this paper, it appears that Argentina un-
der Nestor Kirchner and Chile under Ricardo gagos are moving in this direction,.
Whether a new, revised neo-Keynesian approach to economic policy is in the
cards and whether such a change in macro-economic policy can succeed against the
still-vigorous opposition of the U.S. Treasury Department and the International
Monetary Fund is an open question. What seems clear is that the successes ob-
t a i n e d b y t h e p o l i c i e s p r o m o t e d b y t h e s e p o w e r f u l actors, such as t a m i n g i n f l a t i o n ,
p r o m o t i n g f o r e i g n i n v e s t m e n t , a n d c r e a t i n g n e w e x p o r t i n d u s t r i e s , have c o m e at
s u c h s o c i a l c o s t s that g o v e r n m e n t s a n d s o c i e t i e s a l i k e a p p e a r u n w i l l i n g to c o n t i n u e
t o l e r a t i n g t h e m . W h a t e v e r n e w p o l i c i e s a n d m o d e l s e v o l v e out o f the p r e s e n t situa-
tion, t h e y m u s t a d d r e s s , first a n d f o r e m o s t , t h e s e realities. N o p o l i c e m e a s u r e s w i l l
s u c c e e d a g a i n s t the o n g o i n g c r i m e w a v e a n d the d e g r a d e d q u a l i t y o f u r b a n life until
the u n d e r l y i n g s t r u c t u r a l c a u s e s a r e c o n f r o n t e d .
Notes
* Data on which this paper is based were collected by the Latin American Urbanization at the End
o f the Twentieth Century project, sponsored by the Andrew W. Mellon Foundation. We thank our
collaborators and directors of country teams, without whom this study would not have been
possible: Marcela Cerruti and Alejandro Grimson in Argentina; Licia Valladares, Bianca Freire-
Medeiros, and Filippina Chinelli in Brazil; Guillermo Wormald, Francisco Sabatini, Yasna
Contreras and their collaborators in Chile; Marina Ariza and Juan Manuel Ramirez in Mexico;
Jaime Joseph and the Centro Alternativa research team in Peru; and Ruben Kaztman, Fernando
Filgueira, Alejandro Retamoso and their collaborators in Uruguay. We would also like to thank
Carolina Flores and Lissette Aliaga for their assistance in assembling and analyzing survey data-
bases from the six countries. We also thank anonymous referees of this journal for their com-
ments. Responsibility for the contents is exclusively ours.
1. See, among others, Hardoy (1969), Unikel (1972), Roberts (1978), Leeds (1969), Goldrich (1970),
Cornelius (1975), Eckstein (1977), and Portes and Walton (1976).
2. Mexico is the archetypical example of this pattern, with new export-oriented maquiladora indus-
tries locating overwhelmingly in border cities and in other northern towns with good transport
connection to the U.S. market. By and large, export industries established under the new regime
have avoided the capital city. See Fernandez-Kelly (1983), Garza (2000), and Ariza (2003).
3. In the case of Brazil, the ratio of the population of metropolitan Rio de Janeiro and S~o Paulo to
the next six metropolitan areas.
4. These indicators should be treated with a measure of caution, since the Peruvian National Statis-
tical Institute indicates that there may be a high margin of error in current population estimates
because of lack of a census in 1993.
5. The case of Guatemala, analyzed during a previous study, is quite similar to that of Peru. A
smaller country also affected by a civil war and widespread violence during the 1980s and 1990s,
Guatemala was unable to implement any export-oriented industrialization program or create new
industrial or tourist growth poles during the period. As a result, its urban system remained stag-
nant, with a continuing high rate of primacy and little growth in cities other than the capital and
its environs. See Perez-Sainz (1997) and Portes et al. (1994).
6. The phenomenon of "mega-cities" around the old primate cities is a consequence of the
suburbanization of the urban population and the emergence of a cordon of satellite cities where
a variety of new investments and enterprises settle. In several of the countries analyzed as part of
our study, it is likely that the decline of old-style primacy may be followed by a process of
"megalopolization" as entire regions in the proximity of the major cities become effectively
integrated (See Garza, 2000; Pacheco, 1998; Roberts, 2004). This process has already taken
place elsewhere, as noted below.
7. Informal employment was traditionally measured by the International Labor Office's Program
for Latin America as the sum of unpaid family workers; owners and employees of firms of up to
five workers; domestic servants; and the self-employed minus professionals and technicians (Klein
and Tokman, 1988). The more modern measure, commonly used in the developed world, is based
on the number of workers hired casually and unprotected by social security, health, and other
mandated legal coverage (Portes and Hailer, 2004).
8. The index represents the sum of the open unemployed, unskilled own-account workers, and un-
protected wage workers (Cerrutti, 2003).
9. The poverty line is calculated on the basis of the cost of a basket of goods and services for the
average individual. As working-class households have more than four members on average in
Latin America, an income of less than 4 poverty-line units for the principal breadwinner is insuf-
ficient to take a family out of poverty (Klein and Tokman, 2000; Economic Commission for
Latin America and the Caribbean, 2000).
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PORTES, Alejandro e ROBERTS, Bryan - The Free Market City Latin America Urbanization

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The Free-Market City: Latin

American Urbanization in the Years

the development policies adopted by all or most Latin American governments in

ISI and the Cities

This panorama of Latin American urbanization in the mid-twentieth century was

The End of |SI and the Arrival of the Markets

9 Unilateral opening to foreign trade.

Such momentous policy shifts could be expected to have major consequences

9 Urban systems andprimacy

These predictions are summarized in Figure 1. For comparison, we also summa-

Orthodo.r (neoliberal) Alternative (sociological)

Unbalanced urban Reduction of primacy: Reduction of primacy

Low levels of open Declining Increasing unemployment

High levels of poverty Reduced poverty and No decline in poverty and

(?rime mostly c o n fi ned hwreasing public order In,:teases in inequality and

In theory, a market-friendly environment with less taxation and regulation would

We propose three strategic changes for Latin America--outward orientation, induce-

Galbraith has made the same point even more poignantly:

To examine the extent to which these alternative perspectives on contemporary

Country Census Years

Buenos Aires (Metro):

Brazil: 1970 1980 1991 2001

Sao Paulo/Rio de Janeiro (Metro):

Chile: 1970 1982 1992 2002

Mexico: 1970 1980 1990 2000

Mexico City (Metro):

Uruguay: 1963 1975 1985 1996

Urban Systems and Urban Primacy

0 "~G ran Valparaiso

Source: Valladares and Preteceille (2003), based on census data.

CO CO GO CO CO O~ ~'~ 0"~ 0"~ O~ 0"} Ob 0"> O~ Ob 0 CD

The Evolution of Labor Markets

As noted previously and as summarized in Figure 1, expectations stemming from

Buenos Aires (Metro)

Rio de Janeiro (Metro)

Sao Paulo (Metro)

1980 1990 1995 2000 2002/3

'"'"41-" Low Educalion -- -- Medium Education ~ High Education I

unskilled self-employed, domestic servants, and workers in very small enterprises--

Source: Saavedra and Nakasone (2003), based on annual household surveys

Poverty and Inequality

19L54 "; '-"

Sources: Cerrutti (2003), and Altimir and Beccaria (2001).

Buenos Aires (Metro)

Rio de Janeiro (Metro)

Sao Paulo (Metro)

Mexico City (Metro)

19.8 (2.9) 29.1 (4.0)

Crime and Victimization

As summarized in Figure 1, sociological theories of deviance have generally iden-

Buenos Aires (Metro):

Brazil 1980 1990 1996 2000

Rio de Janeiro (City):

Rio de Janeiro (Metro):

Sao Paulo (Metro):

Chile 1980 1985 1990 1995 1998 2000 2001

Mexico 1990 1994 1995 1997 2001

Mexico D.E (Metro) 1990 1994 1995 1997 2001

Mexico D.E (City)

Peru 1995 1996 1998 2001

Victimization rate, %t 32.4

Crimes against persons 76,760 64,429 75,412 51,649

Uruguay 1980-84 1985-89 1990-94 1995-99 2000-01

Judicial proceedings for robbery 2 7367 6712 8252