Impact of Economic Informality on Financial Growth in Arequipa: A Comparative Analysis with Tacna and Arica (Chile)

Abstract

T
his article examines the impact of economic informality on financial growth
in Arequipa, Tacna, and Arica, highlighting significant differences among these
cities. The findings reveal that high levels of informality in Arequipa (65 %) and
Tacna (70 %) hinder sustainable financial growth by reducing tax revenue, limiting
access to credit, and perpetuating precarious economic practices. In contrast, Arica
exhibits lower informality (25 %) and better financial indicators, such as a higher
per capita GDP, due to effective public policies promoting formalization. These
disparities underscore the importance of addressing informality through business and
labor formalization programs, tax incentives for small enterprises, and institutional
strengthening. The study highlights how cultural, regulatory, and institutional factors
explain regional discrepancies and provides recommendations for fostering more
resilient economies. Finally, future research lines are proposed, including longitudinal
studies on formalization policies and analyses of other factors, such as innovation and
digitalization, that could influence regional financial development.