Peru's economic model and poverty reduction: Is it working?
The relationship between Bolivia and Peru has deteriorated rapidly over the past year, partly because of disagreements on foreign trade issuess. Recently, the Peruvian President Alan Garcia and his Bolivian counterpart, Evo Morales, engaged in personal attacks that have served to increase tensions between the two Andean nations. On July 2nd, Garcia Morales attacked by saying that it was jealous of economic growth in Peru. Maybe Garcia has a point in noting that Peru of economic growth is stronger than Bolivia, but economic growth is not necessarily the ultimate goal for a country; largest May be to the satisfaction of its citizens, Peru, which is trending down because of rising inequality. In its fight against chronic poverty, Latin America has experienced several economic models. These have included the neo-liberal policies of the years 1980 and 1990, which led to increased inequality. Some see neoliberal failures as head of the leftist wave that has spread throughout the region. Peru, however, is one of two Latin American countries that have not been tempted by recently calling for solutions to relinquish the neoliberal model of development. The Peruvian model has produced an exceptional economic growth over the past five years. In 2007, Peru's GDP growth rate of over eight per cent. The following year, USA ratings agency Fitch gave Peru an investment grade rating, which means that after thorough analysis of recent economic trends, the agency now considers Peru a safe and hospitable business Investment. Cost-effective policies but especially for the elite Unfortunately, as the country's economy has increased, along with its inequalities. This trend is particularly evident in contrasting Peru's coastal region with the Andes, with most of the increase in personal income was concentrated in Lima and other coastal urban areas. This can easily be seen in the exclusive beach clubs south of Lima, who often embody the fabulous wealth of the Peruvian elite. However, Peru's National Statistics and Information Institute (INEI) recently reported that the upland rural areas are less successful in reducing poverty in 2007. Many communities here still practice subsistence agriculture and suffer from extreme poverty, even if the region is rich in mineral resources - Peru's main export product. During the M. Alejandro Toledo presidency (2000-2005), Peru's Gini coefficient rose from 49.8 in 2000 to 52 in 2003, showing a considerable increase in inequality. The importance of this injustice is not only ideological or statistical, because economic inequality increasingly inevitably led to the dissatisfaction of the public, which in turn contributes to instability in the country. The public dissatisfaction with the uneven growth was manifested in Toledo document, which are the lowest in South America in 2004. This has apparently been recognized by the new president, Alan Garcia, who announced in May a budget increase of S. / 203 million (approximately $ 70 million) for social programs "Juntos", which was originally initiated by Toledo in 2005. The "Juntos program engineering wasted? "Juntos" program provides grants to poor families provided they regularly send their children to schools and health centres. "Juntos" is an attempt to recreate programmes Mexican and Brazilian models, which were designed to increase literacy rates and reduce economic inequality. Unfortunately, objective conditions in Peru make this programme unlikely to succeed, because the nation, primary education and health systems are among the most inadequate in the world. In addition, the program has targeted urban and neglected rural areas, which are most in need of government assistance. It is not surprising that "Juntos" does not meet its goal because Lima has proved extremely innefficient to implement social programs in the past. The "Vaso de Leche effort in the 1990 has not reached its goal of reducing malnutrition in five years, children, even if it was the most widespread program of its kind in the country. These examples reaffirm the challenge that would be involved in the successful expansion "Juntos." Ultimately, "Juntos" expansion can contribute to sustainable development if the country education and health-care settings are not first reformed. Yet, some statistics suggest that "Juntos" May help reduce poverty in general. The INEI has recently announced a significant reduction of 5.2 in poverty in 2007. However, many have questioned the validity of these figures, including Farid Matuk, a former president of INEI, who guesses that these figures could be false. They suggest a reduction of poverty rate of 0.6 percent for each point of GDP growth, which is three times higher than the average of previous years. At this rate, Peru would completely eliminate poverty in nearly 10 years, which strains credulity. Despite the surprising results, several institutions, including the World Bank and two Peruvian universities, oversaw the study methods and test the validity of statistics. If they are valid, then "Juntos" May even be the reason why poverty reduction, arguing that it was implemented when the alleged decline began to accelerate. The development must be sustainable All efforts must be taken to promote poverty reduction. In the past, repeatedly social programs have failed to create sustainable development in the neo-liberal Peru. The economic expansion experienced by Peru between 1991 and 1997 in factreduced poverty by several points. However, the 1998 to 2001 recession was a huge step backwards, suggesting that social programs in the 1990 failed to create sustainable development at the time. The new expansion be different, or a future recession negate all the progress made? Peru's Economy Minister Luis Carranza, predicted optimistically that Peru experience 10 to 15 years of economic growth from 2008. This would represent the longest expansion cycle in the history of Peru and lead to a significant reduction of poverty. "Juntos" could potentially play a role in Peru's economic success, but for Carranza's dream become a reality, the government must first take aggressive steps towards sustainable development and adequately address the problems of inequality, health and education. Without such reforms in these areas, programs like "Juntos" can not create enough opportunities for the poor, no matter how they are carefully managed. |
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