As it is the case with many other contemporary cities around the world, Mexico City is a service-oriented metropolitan area in which the tertiary sector has become the driving force of the regional economy. Even though the region still represents the largest concentration of industrial activities in Mexico, the significance of this sector in the local economy has decreased significantly over the past few decades.

Since the decentralisation policies of the 1970s, many large- and medium-sized enterprises were relocated to other parts of the country. Following the overall crisis of the Mexican economy in the early 1980s and the restructuring and liberalisation that ensued, a large number of smaller establishments were forced to close down as they could not keep up with foreign competitors. In parallel to these processes of de-industrialisation, Mexico City has experienced uneven growth in services that has lead to an overall landscape of economic polarisation. Amidst stagnation and decline, high value-added services such as finance, insurance and real estate, and community, social and personal services have been the only sectors of the formal economy where the city has shown a significant dynamism. With other intermediate sectors contracting – even formal retail has shrunk in relative terms, the counterpart to this growth at the top has been the spread of micro businesses and the unprecedented expansion of the informal sector.

Some analyst argue that Mexico City is well on its way to becoming a global city based on this considerable expansion of the city’s command and control functions; its increasing integration into global flows of goods, capital, and information; and the surge in large-scale spaces oriented to up-market transnational consumption. Others point out that the city’s development in the globalised economy is considerably vulnerable due to its lack of resilience to macroeconomic shifts and its dependent position within the international urban hierarchy. They further emphasise that the sectors identified with global-city functions only employ a limited segment of the metropolitan workforce and that the globalised enclaves of Mexico City are functionally and territorially disconnected from the rest of the city, where the most alarming sign of urban change manifests itself, namely the enormous swelling of the informal economy.

Some estimates attribute up to half of Mexico City’s total employment to the informal sector. Insufficient employment creation in formal industries and the reduction of real wages appear as the main factors behind this proliferation of informal activities. The informal economy attracts those forced to search for work by any possible means – diverse segments of the population that include women, seniors, young people of school age and those with lower educational levels. Informality can therefore be characterised by its gender, age and educational biases. Black market retail is the most visible part of the informal economy and the one that arguably most impacts everyday life in the city. A particularly high concentration of informal vendors is noticed in the city’s historic centre and 60% of the revenues generated from informal exchanges are estimated to be located in this area of the city. The number of street vendors has more than doubled over the past five years defeating government’s attempts to curtail their proliferation. Schemes to relocate vendors and regulate their trade through the provision of new commercial plazas and open spaces have been met with either their refusal to change locations, even after an agreement has been reached, or the arrival of new stall holders, occupying the coveted spots left vacant.

This polarised and problematic transition of Mexico City into a service economy has produced an increasingly fragmented metropolis whose sprawling landscape shows evident signs of special unevenness and territorial disjointedness. What remains of its industrial past is located to the north of the city and tends to continually move further out into the metropolitan periphery, leaving behind deteriorating brownfield and unutilised industrial areas that are difficult to re-connect to the existing urban structure. Suburban service-oriented nodes are also characterised by their insularity, their car-orientation and their social and spatial disconnection from their surrounding urban environments. Meanwhile, back in the deteriorating urban core, public space is taken over by the informal sector. The overpowering presence of vendors and their stalls aggravates complex urban conditions – demand exceeds local infrastructure capacity, pedestrian flows are obstructed, the public realm is degraded to unhygienic and sometimes altogether dangerous levels.

Author: Iliana Ortega-Alcazar