Paper short abstract:

We analyse from the human development perspective the informal economy of Peru, specifically the growing illegal mining. As a profitable alternative, it has attracted many people from the rural areas. But it has great impact in the insecurity and the pollution. The paper explains the consequences in the development of this informality, promoted by the State as a way to create social welfare.

Paper long abstract:

The aim of the present research is to analyze from the human development perspective the informal economy of Peru, specifically the growing illegal mining. As an economic and profitable alternative, it has attracted many people (specially from the rural area). Nevertheless, it has great impact in the insecurity and the pollution. The paper explains how the State has allowed this situation as a way to create “informal” welfare having such a limited capacity.

Professor Alisha Holland (2017) states that, in the recent decades, the Peruvian State has allowed the expansion of informal practices (specially in the urban economy) as a way to create “informal” welfare. This forbearance is used as a redistribution by the governments, that are unable to implement effective social policies. From the same perspective, we can identify that the governments have allowed informal business in the rural areas: informal and illegal mining, illegal tree felling, and their subsequent connection with drug trafficking; specially during and after the pandemic, where the lockdown and the curfews severely restricted the national economy.

The current research analysis the involvement of many people in the informal economy and how this stronger informal economy is fostering or weakening the capabilities and agency of the people from the development perspective. For this analysis, we use the concept of collective capabilities from Severine Deneulin’s view.

One of the perspectives of collective capabilities focuses on the environments in which social action and/or the agency of people takes place. These environments can be favorable or unfavorable for the development of people, both at the level of their freedom of well-being and their freedom of agency.

Irreducibly social goods are those elements spread throughout a society or culture (Taylor, 1995). These assets are not possible to divide among its members. As Gore indicates, there are aspects of development that, being constitutive of individual well-being, are not possible to study on a personal level. These irreducibly social goods are key when we evaluate the situation of a country or a group, analyzing how institutions (for example) promote or limit the well-being and agency of its citizens or a specific group. In the same way, there are cultural patterns that can limit the development of certain social groups.

Although several authors have investigated this concept, we take the conceptualization made by Severine Deneulin as a point of reference in this section, since it has provided a theoretical definition, using concepts from Paul Ricoeur and Charles Taylor, which have been replicated by others.

Severine Deneulin reviews Charles Gore's approach to highlight the importance of irreducibly social goods, and in this framework, proposes the concept of structures of living together, from Paul Ricoeur himself, as a concept "more appropriate” (2007: 110). These structures of living together “belong to a particular historical community, which provide the conditions for individual lives to flourish, and which are irreducible to interpersonal relations and yet bound up with these. [They] have an autonomous existence and cannot be reduced to the features of the individuals living in these structures” (Deneulin, 2007: 110-111).

As we mentioned, the aforementioned structures are the spaces where people develop, so they can limit or enhance the expansion of people's freedoms. The contexts “have an impact on life itself, allowing the affected person to obtain better results, but it also allows individual action to intervene in the improvement of social agreements. In this way, it could be said that there is a kind of virtuous circle between social agreements and the expansion of freedom and capabilities, mediated by interaction environments” (Pereira, 2006: 6).

In conclusion, the capabilities approach is the perspective that provides us with the tools to assess these economic structures (with a strong informal sector) in light of people's capabilities. In the research we analyze how the State forbearance for informal activities have created a new challenging situation, where the informal businesses provide an economic activity to many people, but they have promoted the use of violence and caused serious damages to the environment.

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