From the Inca empire to the viceroyalty and then to the Republic, Peru has enjoyed both international prominence and open opportunities for economic development. The “guano era” in the nineteenth century gave Peru considerable surpluses, as did mining, fishing, and petroleum in more recent times. Yet, despite its generous resource endowment, Peru has failed to find its way to a stable political, social, and economic environment in which to prompt balanced growth and equitable development
di Riccardo Lago
The economic decline has been particularly notorious over the last three decades, when Peru’s income per capita fell from the eighth highest in Latin America in the 1960s, to the fourteenth position in the late 1980s.’ At the turn of the decade, Peru’s economic retrogression can be gauged by an income per capita equal to that of 1960 and by a level of exports 40 percent lower than that of 1979. Peru’s frustrated economic and social expectations were eloquently described by its leading historian, Jorge Basadre, who defined Peru as a “beautiful promise yet to be fulfilled.” The object of this paper is to analyze the economic process undergone by Peru during the period 1985-90 during which the legendary APRA party (American Popular Revolutionary Alliance) assumed presidential office, for the first time, under President Alan Garcia. Following closely the methodology recently developed by Dornbusch and Edwards (1990), the paper is organized as follows. The next section provides a brief background on Peru’s economy and recent history. The third section analyzes the “heterodox” economic policies of the period 1985-90 an their results.
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