Market, Capital and Inequality: Lessons from the Peruvian Experience as an Emerging Economy 2000-2011

  • Abstract:
    Peru has showed impressive indicators during 2000-2010 which has made it to be considered as an emerging economy in Latin America. The GDP in 2000 year was US$ 53,336 mm while in the 2010 increased up to US176,604 mm. The stock of foreign direct investment started at US$ 13,019 mm in 2001 and by 2010 the FDI was about US$ 22,020 mm. The Gini Index has changed from 0.485 in 2000 to 0.452 in 2010. However, this paper argues that the level of social unrest measured by the Ombudsman Office (47 conflicts in 2004 vs 223 conflicts in 2010) shows that unbreakable modus operandi in the public and private sector in Peru impede a fine tuning between the economic and social dynamics in Peru. During the period 2000-2011, the net profit margin of the financial sector has grown up from 3.24% to 23.85 %, however the real urban salaries index has decreased from 108.30 to 107.6 in the same period. Furthermore, multidimensional poverty headcount ratio has changed from 55.47% in 2007 to 39.85% in 2011. Because of this, this paper shows how the lack of long term vision from both business and white-collar public sector, in order to increase the productivity of factors and promote redistribution of the income, is making impossible to build up structural changes for a more egalitarian society. The gap between the richest and the poorest in Peru after a decade of positive macroeconomics indicators should be explained focusing on the pattern of wealth distribution.