Peru's Path to Recovery: A Plan for Economic Stabilization and Growth

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Carlos E. Paredes, Jeffrey D. Sachs
Brookings Institution Press, Dec 1, 2010 - Political Science - 336 pages

For the past fifteen years Peru has suffered a profound and lasting economic crisis that threatens the stability of the country's fragile democratic system. Economic mismanagement has led to plummeting per capita income, accelerating inflation—an annualized rate of nearly 3,000 percent by 1989—and widespread social upheaval. This study by experts in the United States and Latin America offers a coherent proposal for economic stabilization and structural adjustment to restore economic growth—but growth with equity—to this distressed country.

The contributors provide background analysis and thorough diagnosis of Peru's economic problems. They explain how inconsistent populist policies and the ensuing economic crisis have caused the standard of living to deteriorate dramatically, paving the way for significant expansion of social violence, political instability, and isolation from the international financial community.

Peru's Path to Recovery offers an adjustment program that is sound but also is complemented by a social support program to assist the poor - those who have suffered the most from previous disadjustment. This combination makes the program both equitable and politically sustainable. With the inauguration of Alberto Fujimori, Peru has the opportunity to embrace a new economic strategy to stabilize the economy, curtail the extreme poverty, and reduce the massive unemployment and underemployment. Such a course will not be easy: patterns of government, business, and social behavior will have to change. But through such changes Peru can hope to become a stable, thriving country once more.


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Page viii - ... or the trustees, officers, or other staff members of the Brookings Institution and GRADE.
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Page 1 - ... bureaucrats, and the broad preferences of the Peruvian polity as a result of what could be called environmental change. The tax base, the public sector's access to credit, and the polity are changing faster than the state itself. The government's food supply is running out, and more and more it is being outmaneuvered and even outmuscled by privatize citizens.
Page 1 - The most striking result of Peru's fifteen-year economic crisis has been de facto privatization. The public sector has undergone massive compression. The state is withering away, and surprisingly the process has been independent of any political program The shrinking preceded conservatism... The state is shrinking despite the politicians, the bureaucrats, and the broad preferences of the Peruvian polity.
Page viii - Economics at Harvard University and Research Associate at the National Bureau of Economic Research.

About the author (2010)

Carlos E. Paredes is a research associate in the Brookings Economic Studies program and a former executive director of GRADE, an economic research center based in Lima, Peru. Jeffrey D. Sachs of Harvard University has helped design different stabilization programs around the world and is currently an economic adviser to several Latin American and East European governments.

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