The coronavirus has plunged the world into a crisis like no other (BBC news)
During the past few months, the economy, in general, has taken a big hit. This has affected and changed the lives of communities, jobs have been lost in a massive way and many formal, informal, big and small businesses have closed. 74% of Peruvians are employed informally or have individual informal businesses (they don’t pay taxes) (Peru Reports). With this said, people are struggling to maintain their life, by creating new means of income that satisfy the local demand. There are two types of local economies, income-generating and income retaining. Income-generating economies are where the products and services are produced by locals and are sold outside the local community, this one generates profits. Income retaining economies are the ones that make money circulating between the local residents, this doesn’t make any profits. However, this helps to maintain a healthy economic base.
To help the local economy grow there has to be a balance between the income-generating and the income retaining economy. To generate income we can help by promoting the local products to be sold outside the local community to make local small businesses grow, maintain firm and most importantly profitable, bringing money from other places to the locality.
Also, promoting the local purchase inside the local community helps to maintain the money circulating inside the locality. The local government should be able to promote the local businesses by giving a special tax law, so they can be competitive with the informal competition. It is important to say that the informal businesses help circulate and maintain the monies inside the local community but, do not promote growth.
As a community we should help the small local businesses, especially now during this economic crisis. Now more than ever we need to help our local businesses and the local economy. It is also important for the locality to succeed to become a formal economy which will help the community to grow healthy and strong. Finally, it is also an opportunity to formally grow and fight against informality.
Article Sources:
Post, Colin, et al. “Peru's Informal Economy to Persist for Decades: Report.” Perú Reports, 25 Aug. 2016, perureports.com/perus-informal-economy-persist-decades-report/3901/
Jones, Lora, and Daniele Palumbo & David Brown. “Coronavirus: A Visual Guide to the Economic Impact.” BBC News, BBC, 30 June 2020, www.bbc.com/news/business-51706225#:~:text=Although%20it%20said%20that%20the,such%20as%20India%20and%20China