Why Ciudad del Este?

I've been told in both Peru and Paraguay, "Wherever there is money you can find Chinese people." That seems to be a pretty big generalization, but it might be worth trying to explain why Chinese people have flocked to the City of the East, which in fact feels like the wild, wild West. Ciudad del Este is a border town, along the tri-border area of Argentina and Brazil.
Paraguay, as a land-locked country, has heavily depended on Argentina and Brazil for international trade. Without any port cities, Paraguay was basically forced to set up frontier trading towns along the border with Argentina and Brazil.

With such a dependence on foreign trade, it's no surprise that Paraguay should have relatively open international economy. Paraguay industries are hardly export-ready, and Paraguay must thus depend on the international market for its wealth.

Thanks to the historically trade-phobic economic policies of Brazil and Argentina, however, Paraguay capitalized on the high tariffs rates of Brazil and Argentina and began importing stuff from Asia and exporting it to its neighbors.

That's where Ciudad del Este comes in. Ciudad del Este is basically one giant duty-free shop, where Brazilian and Argentine traders come and buy up all kinds of stuff tax-free. Stuff gets exported, too, although somewhat under the table (or under the border). Although Argentine and Brazilian governments are well aware of the many illicit activities that have been undertaken in Ciudad del Este, it is nearly impossible to clamp down the border (think about how hard it has been to seal our border with Mexico).

"Ten years ago Ciudad del Este was a gold mine."

Ten years ago -- everyone seems in agreement -- was the golden age. Brazil still had many tariff peaks (i.e., high taxes on specific or groups of items), and basically anybody could come to Ciudad del Este, begin importing anything and everything from Asia, and make a handsome profit. The riches of Ciudad del Este reportedly even attracted the Chinese mafia, who got snuggly with sleeper cells of Hezbollah here (a side note: there's a substantial Lebanese population here, who people seem to have strong prejudices against).

After all, the Chinese people here are all merchants. They're here to make money. All of them own some sort of store or work in one, selling everything from clothes, food products, to electronics.

Now, however, everyone seems to agree that business is down. The mooncake seller told me that the mafia has since left and gone elsewhere -- Argentina and Brazil. I don't know the history of Brazilian economic policies, but it seems as if Brazil's recently liberalized economy has hurt business in Paraguay. Electronics are still a good business, but you can no longer simply buy from Asia and sell to Brazil. Now, Sao Paulo residents can buy most things in Sao Paulo for not much more or the same price as in Ciudad del Este. I suspect the same goes for Argentina, although trade with Brazil has been far stronger. All that seperates Brazil and Paraguay is a footbridge that can be crossed in about ten minutes by foot. This is an incredibly porous border, and I had to chase down customs on both sides in order to get my passport stamped.

Despite the famous corruption and illicit activities of Ciudad del Este, Paraguay's government simply can't afford to clamp down on the city. It relies on the chaos, on the crazy commercial center that is open from 4 am to 3 pm (Paraguay lags an hour behind Brazil and Argentina, and many people who work here in fact live in Brazil), on the laissez faire nature of this wild town.