Sunday, February 18, 2007


Economics of Peru: Needs More Color

This inflatable Spiderman turned up at a recent festival. As you can see in this photo his chest was tatooed with the message, ¨needs more color,¨which I thought was a nice symbol of economic reality down here in Latin America. I am guessing somebody got a window office for finding a market for these ill-fated super heroes from the island of reject toys.

So Peru imports Spiderman imposters and exports its rock minerals, natural gas, and bountiful agriculture. Sounds like a fair exchange.

I am far from a bandwagon rider of Bolivia and Venezuela, but I can begin to see how their leaders win support when they spin rhetoric regarding resources. Evo Morales likes to say Bolivians first. It is perhaps a failed economic strategy, but it sounds a little more inclusive.

A recent trip to the North of Perú revealed an amazing desert climate with a real water shortage issue in some areas. Last week in the Northern town of Piura temperatures were in the 90s and the local water grid failed. Not pretty. Yet a short drive away up towards the Ecuador border brought a fascinating backdrop of miles and miles of flooded rice fields. So apparently somebody has some water.

I can´t quite get a beat on whether or not there is much of a market for Peruvian rice, nor whether or not anybody is making much money on it, but everybody is doing it.

And the latest crop...What´s that? Somebody says organic bananas are in? We should all grow organic bananas? OK...lets do it.



I found this gem of an economic analysis of Peru on line. It is from 1996...

Peru's bustling economy, engendered by tough-minded market reforms, is good news for U.S. exporters wanting to expand their markets in South America. Of the $2 billion in goods and services that the United States exported to Peru in 1996, agricultural, fish and forestry products made up over $300 million.

Since the election of Peru's President Fujimori in 1990, the country's economy has spiraled upwards. Once in office, the Fujimori administration began massive reforms, eliminating nearly all controls on trade, investment and foreign exchange.

We know now that Fujimori was more than a little corrupt and hogging the cookie jar. This spiraling up economically was not being redistributed, not that it ever is.

This type of analysis also tends to leave out that more than half of all Peruvians live under the poverty level. More than 90 percent of public school students cannot read or do math at grade level. And that a small small sector of the population is formally employed, which explains why many make around 2 bucks a day. This seems to both support a rosey economic outlook in terms of low worker wages and also explain why the country is a pitfall in that the labor force is not educated.

But don´t worry, President Alan Garcia has a new failsafe plan. He relaunched a campaign recently to both spur economic growth and better health in Peru by getting Peruvians to eat more Anchovies.

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