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Evolution of Peru’s Economy

1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 2092 2094 2096 2098 2000 2002 2004

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

to a unilateral reduction of the industrial protection that had been built over the course of three decades (the 1960s, 1970s, and 1980s). The measures outlined above were all part of the first-generation structural reforms, which economic agents and most of the population accepted as the only way out of the economic catastrophe to which Peru’s situation had escalated. The search for competitiveness as the only alternative to survive and succeed in economic activities started to grow on Peruvians. Also, the population realized that it had access to a set of imported products—of higher quality and at lower prices—that had been off their reach for many years. Naturally, there was also opposition to these economic measures, particularly on the part of the sectors that had enjoyed the greatest protection. Their argument was that the opening had been too dramatic and that a progressive approach should have been implemented instead. They predicted that the manufacturing and agricultural/livestock sectors would suffer the most and were doomed to disappear. CHART Nº 3. Evolution of Manufacturing Production Index (Year 1994 = 100) Even though, at first, the opening process worsened the economic crisis inherited from 200 180 the import substitution model, production 160 activities underwent a productive reconversion 140 120 process in an attempt to increase productivity 100 and competitiveness, particularly the produc80 60 tive level of labor, which had remained in 40 stagnation for many years. 20 0 The manufacturing sector went through a successful industrial reconversion process Non-primary sub-sector after the opening implemented over the early Source : Ministry of Production 1990s. Strongly protected sectors that were Prepared by the authors only competitive at such protection levels quickly disappeared (mainly vehicle assembly, domestic appliances and machinery activities), CHART Nº 4. Agricultural/Livestock Production other sectors increased their productivity and (in million 1994 Soles) engaged in a modernization process that, in 14,000 some cases, allowed them to enter international 12,000 markets, as was the case with the textile and 10,000 clothing sector and other activities such as the 8,000 production of chemicals, the agro-industry, and 6,000 fish processing for direct human consumption, 4,000 among others. 2,000 The agricultural/farming sector has also 0 enjoyed positive results after the economic Year opening, with a sustained increase in the production of the main agricultural crops such Source: Ministry of Agriculture (MINAG) Prepared by the authors as rice, potato, and hard yellow corn, and the

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