Peru Systematic Country Diagnostic
Peru has been one of the most prominent performers in Latin America in the last 25 years. Peru is characterized by a complex and diverse geography that holds wealth in natural resources and several spatial development challenges.Peru has a remarkab...
| Main Author: | |
|---|---|
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/919181490109288624/Peru-Systematic-Country-Diagnostic http://hdl.handle.net/10986/26376 |
| Summary: | Peru has been one of the most prominent
performers in Latin America in the last 25 years. Peru is
characterized by a complex and diverse geography that holds
wealth in natural resources and several spatial development
challenges.Peru has a remarkable cultural heritage and rich
ethnic diversity. Peru’s geography, natural endowments, and
diverse population have shaped its unbalanced economic
development.Geography and resource abundance have thus led
to a spatial concentration of economic activities and
opportunities, creating large disparities in development
across the country’s territory and its population groups.The
virtuous cycle of growth and shared prosperity can be
explained in large part by a combination of two main forces:
favorable exogenous conditions and successful macro
structural reforms.The new headwinds indicate that the past
virtuous cycle of growth and shared prosperity may have
reached its limit.These new headwinds highlight two
structural challenges that have emerged from Peru’s specific
endowments, and that constrain the opportunities for income
growth of the bottom 40 percent. First, the persistence of
large spatial disparities in development consistently
undermine the ability of certain population groups,
particularly indigenous and Afro Peruvians, from overcoming
poverty. Moreover, the capital-centric development model
contributes to imbalances within the urban sector.Peru’s
second structural challenge relates to the large
productivity gap of its private sector relative to its
peers, which is constraining the demand for better-paying
jobs and income opportunities. Peru’s low aggregate
productivity stems in part from substantial misallocation of
capital and labor as its more productive firms do not
necessarily hire more workers or invest more.The Systemic
Country Diagnostic (SCD) prioritizes policy constraints that
have the greatest impact on Peru’s structural challenges of
reducing the large spatial disparities and boosting private
sector productivity. The SCD uses the following selection
criteria to identify the constraints with the largest impact
on achieving shared prosperity going forward. First, it
identifies constraints that significantly affect one or both
of the two main structural challenges. Second, it identifies
policy constraints that present synergies to overcome these
structural challenges. Third, it identifies constraints that
support the sustainability of addressing Peru’s structural
challenges. Applying the three criteria described above, the
SCD identifies a set of constraints that are pivotal to
address Peru’s two main structural challenges and should
thus be the focus of policies in coming years. |
|---|