Peru

THE REPUBLIC OF PERU is a country in South America, located to the west of Brazil and Colombia and bordered also by Chile, Bolivia, and Ecuador, with a long coastline along the Pacific Ocean. It has a population of approximately 28 million and an average annual per capita income exceeding $2,300. Although a large store of natural resources and agricultural land offers promise for a successful national economy, the legacy of colonization, armed conflict, and corruption has contributed to a situation in which millions are still mired in poverty.

The history of Peru is dominated first by the indigenous empires of the Incas and others, which were conquered by the Spanish conquistadors in the 16th century. This resulted in 300 years of colonization in which control over profitable economic activities was taken into Spanish hands, while the indigenous population was denied access to economic or social opportunities. Independence was not achieved until 1824, when Peru was the last remaining colony in Latin America. Nearly 100,000 Chinese workers were imported to undertake some of the dirty, dangerous, and diligent jobs in the economy.

Wars with Chile and Ecuador also led to various realignments of political borders and hindered economic growth. Throughout the 20th century, military autocracy rotated with democratic or semidemocratic governments as popular support for reform was repressed by the political and economic elite. Absolute ownership of the means of production by the elite led to a system of endemic corruption in which interlocking interests reinforced each other across the whole range of economic activities.

When periods of democracy did lead to laws from which the poor could benefit, the elite class instituted extralegal means to prevent change by suborning the legal system to provide them with precedents that outweighed the common law—known as títulos supletorios. Military forces were available to carry out “disappearances” of those who might offer political dissidence, [Page 824]and the system of repression could be justified by the activities of the Maoist resistance group the Shining Path.

Shining Path was a communist guerrilla organization that focused on empowering the native people and undertaking armed conflict against the economic interests held in Spanish hands. Tens of thousands of people died during the period of activity of Shining Path, which declined as a result of the capture of its charismatic leader, Abimael Guzmán Reynoso, in 1992.

A considerable improvement in economic conditions and equality has taken place, first under the administration of Alberto Fujimori, now living in exile in Japan, and subsequently Alejandro Toledo, who assumed power in 2001 and is a native who arose from obscurity and poverty to govern his country. As an economist and a former advisor to the World Bank, he has been unable to deliver the increase in social spending and welfare required. One significant and persistent economic problem has been inflation, which reached 45 percent in 1991 and remained significant subsequently. This has further contributed to the general unwillingness of external investors to locate inward investment in Peru.

In 1997 it was estimated that 37 percent of the population lived in poverty and 16 percent lived in extreme or primary poverty. As might be expected, the situation in rural areas was significantly worse than for the urban population, although inequalities are higher within cities. People living in different parts of the diverse geography of the country are often excluded from the economic system entirely.

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