From stabilization to stagnation? Peru's economy toward the mid-21st century

Silvio Rendon

Chapter 26 in The Elgar Companion to the Economies of Latin America and the Caribbean, 2025, pp 521-546 from Edward Elgar Publishing

Abstract: Peru, historically dependent on primary exports, experienced sustained growth until the late 1960s, when a military regime introduced reforms such as nationalizations, land reform, and state-led industrialization. However, by the late 1980s, imprudent fiscal and monetary policies led to recession and hyperinflation. The 1990s brought a semblance of stability with fiscal balance, tighter monetary policy, and pro-business reforms like privatization, enhanced property rights, and reduced labor protections. Despite restoring macroeconomic stability, these changes resulted in modest GDP growth and limited poverty reduction. The mid-2000s saw growth surge, driven by a commodity boom, which reduced poverty but left real wages and productivity stagnant. The end of this boom in the 2010s ushered in slower growth, stalled poverty reduction, and a severe political crisis, exposing entrenched distributive conflicts and casting shadows over the sustainability of Peru's progress. Looking ahead, Peru stands at a crossroads: persist with its traditionally touted export-led strategy, which might only deepen political instability, or embrace reform through a social pact that fosters new engines of growth, invests in human capital, particularly in health and education, and aims for a more equitable distribution of growth benefits.

Keywords: Emerging economies; Economic Development; Political instability; Neoliberalism; Economic Reforms; Redistribution (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035317196
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