ECONOMY OF PERU

Peru attempted to industrialize in the years 1950-60 and again in the 1970s. The economic policy was import substitution based, but efforts were frustrated by the overwhelming Latin American economic crisis in the 1980s. The majority of Peruvians make a living in the service industry, the exploitation of natural resources, agriculture, mining and fishing. However, the past few years have seen a diversification in services and light industry (clothing, household items, etc.)

During the government of Alberto Fujimori in 1990, a policy of economic liberalization was pursued to combat the very serious economic crisis that had undermined industry and to stop the acute hyperinflation. After 15 years of applying these policies, the first positive results were seen. For example, in the year 2006, the GDP growth was 8.03% (official figures), exports grew more than 35%, public and private investment was 21%, State income from collection of taxes increased 33%, the debt as a percentage of GDP was reduced to 34% and the national budget has increased 50% in the past five years.

At the end of 2006, the government released a package of economic measures to strengthen the economy and increase production and exports. However, the economic outlook caused it to be suppressed; the economic crisis and the drastic neoliberal measures led to a strong decapitalization of the national economy. This left an absence of national companies, while at the same time favored foreign capital which enjoyed tax exemptions and successful reinvestment in the country´s profits.

In December 2006, the government approved a series of tax and economic measures to drive and strengthen economic growth in all areas, especially in those thought to augment added value products and create jobs.

During the 2005 APEC (Asian-Pacific Economic Cooperation) summit, Peru initiated talks for a FTA (Free Trade Agreement) with South Korea, China, Japan, Singapore and other countries. The European Union is also seeking a FTA with Peru and has entered negotiations. If the agreements are ratified, Peru will be the second South American country to enter this international market.


NATURAL RESOURCES IN PERU BY CATEGORY

HYDRO-BIOLOGICAL RESOURCES
Thanks to the vast coastline that Peru possesses, it is one of the richest in resources in the Pacific Basin and the world. The low temperatures of the waters, the tropical location and areas of shallow water give Peru very special characteristics which cause a extraordinary variety of species, especially mammals, birds, fish, invertebrates, and seaweed.

The hydro-biological resources of the sea include anchovies, tuna, silver sides, rays, octopus, squid, etc. In the coastal rivers shrimp, freshwater silver sides, and others can be found. In the rivers, lakes and lagoons of the sierra the suche and trout are abundant. In the rivers of the jungle paiche, bagre, boquichicho, piranhas, and others can be found.

LIVESTOCK RESOURCES
Livestock in Peru has been evolving for over 100 years, contributed to by various representative species such as cattle, goats, sheep, horse, camelids and pigs. Approximately 80% of the national livestock is located in the sierra; the remaining 20% is distributed between the coast and the jungle.

On the coast milk and beef cattle, pigs, goats and sheep are prevalent. In the Andes, the existence of natural pastures and climatic conditions favor the breeding of livestock such as sheep for wool, camelids, dual purpose cattle for milk, and in less quantity goats. In the jungle, livestock is limited to certain species such as the cebu (a cross of a Brazilian buffalo and a Peruvian cow) due to high temperatures, excessive rains and the shortage of natural pastures. The production of milk and beef and recently sheep wool is also prevalent.

AGRICULTURAL RESOURCES:
On the Coast: Agriculture has developed in the valleys, as the majority of the coast is a dessert. The majority of agro-industrial complexes are focused on: sugar cane and cotton in the north; and asparagus, tomatoes and grapes in the south. A great variety of fruits and vegetables are also grown: mangoes, limes, strawberries, avocados, olives, oranges, potatoes, beans, etc.

In the Sierra: The Andes provide diverse ecosystems with a variety of climates and temperatures in between range valleys, low and high. There are zones with lows of 20C, 12C, 6C, and 0C. Species that can grow in these conditions include: barley, potatoes, corn, wheat, beans, oca, kiwicha, quinua, nisperos, peaches, passion fruit, ground cherries, tara, cactus fruit, and more.

In the Jungle: The jungle constitutes 59% of Peru, 76 million hectares, the majority of which is covered in tropical rain forest with an average temperature of 25C and heights between 100m and 500m. The products of this region include: coffee, cacao, rice, corn, yucca, palms, tea, barbasco; fruits such as bananas, mandarin oranges, tangerines, avocado, camu camu, Moriche Palm fruit, and pineapples; and woods such as cedar, mahogany, walnut, tornillo, bolaina, cumala, ishpingo, capirona, congona, and more.


MINING IN PERU
One of the most important sectors of the Peruvian economy is mining. It normally represents more than 50% of the exports of the country, bringing in about four billion US dollars per year. Mining has become very important to the economy. Since 1993, Peru has doubled their production of minerals. The principal minerals exported are: copper, gold, iron, silver, zinc and lead, all of which demand a high level of technology to process.

Peru is a country with a mining tradition that dates back to the Colonial Era. The Spanish worked mines of gold and mercury; many sources agree that the minerals coming from these mines permitted the survival and development of Europe.

The privatization of the state owned mining industry, which was started by the Peruvian government in 1991, attracted more than one hundred foreign companies. 40% of these investments came from Canada, the rest from Australia, the United States, Mexico, South Africa, China, Switzerland, the United Kingdom, Luxembourg and Italy. The state owned companies such as Centromin and Minero Peru were practically shut down and their assets were liquidated.

During the period from 1992 to 2007 it was planned to invest US$9,811 million in the sector. The most ambitious project was that of the Canadian company Noranda, Rio Algom and Teck, and the Japanese Mitsubishi in the poli-metallic deposit of Antamina which produces copper, lead, silver and zinc. It is located in Ancash and is considered one of the best deposits in the world.


TOURISM IN PERU
In general, one can state that the tourism sector has potential for sustainable growth in the existing environment. Peru has principal tourist attractions that can be organized into three groups. The first is the wealth of thousand year old archaeological, historical and cultural patrimonies, such as well conserved vestiges of the prehispanic culture in their constructions, ceramics, metal works, mummies, textiles, etc.

The second group is the attractions of nature and biodiversity, as well as the practice of adventure sports it promotes such as surfing, rafting, trekking, hiking, mountaineering, and mountain biking.

The third group is formed of the current cultures. There exist no less than 44 ethnic groups in 14 linguistic families in the Amazon region such as Jíbaro, Cahuapano, Witoto, Arawak, Y Pano, Tocano, Tucano, Tupí, Zaparo, Peba-Yagua, Quechua, Uranina, Harakbert and Ticuna.

In the sierra there are areas of interest such as Puno where the Uros community lives on floating islands on the banks of Lake Titicaca.

Development of tourism was interrupted by the political violence of the 1980s which was based in the sierra and jungle of Peru. During the 1990s, while the country was peaceful, the National Commission for the Promotion of Peru (Promperu) was created whose mission was to improve Peru´s image in the international community.

When done well, tourism as an economic activity is a source of foreign income and intensifies the need for labor, creating employment. It has a indirect impact in the conservation of the environment and the local communities.