Easier Than Latin America's Summary

The contributor of “Africa's Informal Economy Is Receding Faster than Latin America's,” published by The Economist, discusses the current and rapidity changing economy of sub-Saharan countries and their respective traditional roles. The author directly cites Adam Smith and the invisible hand in correlation to human nature to “truck, barter, and exchange” (Africa’s). This is to illustrate how individuals will innately make economic decisions based on their personal needs and that these decisions will benefit society as a whole. However, the author continues to describe how individuals in “spaza shops” and “jua kali,” which are traditional market places where individuals work for themselves without the consent of the reigning government, neglect to report their economic behaviors to the respective government and pay taxes (Africa’s). This is because these “spaza shops” and “jua kali” operate under a traditional market structure meaning the market is much more simplistic and does not operate efficiently under a large central government because it intercepts with day-to-day economic decision making. Additionally, these shops do not pay taxes or do not register under the government because the marginal benefit is far outweighed by the marginal …show more content…
However, overall these shadow economies are a major contributor to the GDP of these countries and since they operate in a traditional market structure putting polices in place to regulate the shadow economies might have a profound negative result on GDP. Additionally, the shadow economies have the added benefit of creating increased competition resulting in a healthier economy able to produce at higher