1. The Peruvian Economy in the 21st century
Another Export Boom, More Dependent Development?

2. Introduction
Prolonged economic growth has allowed a narrative to develop about Peru both nationally and internationally:
One of Latin America’s strongest success stories (Economist, 2013).
Foundations laid for sustained economic development and the consolidation of democratic government (Ganoza and Stiglitz 2015; Ghezzi and Gallardo 2013; Taylor 2007).
This paper makes the simple proposition that such claims provide an unrealistic portrayal of Peruvian economic growth.
Instead, Peru has progressed since 2000 through another period of dependent development.
Limitations
This is a work of international political economy, rather than business history. But…..
This is the first step on a long-term research project that wishes to contribute to the varieties of capitalism debate as applied to Latin America.
In particular, we consider there a case for a ‘dependencia’ model of capitalism within the region.

3. Peru and dependency theory
Peru not a central focus of dependency theorists: neither a large diverse economy such as Brazil or Mexico, nor a small economy focused on agriculture such as Guatemala or El Salvador.
Thorp and Bertram (1977) notes the economic dependence of Peru as an exporter of primary products:
Enclave economy supported by a transnational political coalition of indigenous and foreign capitalists.
Dependent on export booms in international trade for economic growth
This drew economic resources into primary production, which discouraged the economic diversification of Peru into the production of manufactured goods.

4. Dependent Development
Latin America Structuralism – Underdevelopment consequence of structure of global economy (international trade, power relations), which caused unequal distribution of economic surpluses from periphery to core countries. Solution was global economic reform and domestic industrialisation.
Marxist Dependency Theory – Penetration of capital from colonial times left a distorted national economic structure in periphery countries, which led to expropriation of economic surpluses from periphery to core countries. Solution was worldwide socialist revolution.
Thorp and Bertram argued that economic growth delivered by export booms in 20th century led to ‘new dependence’.
Without explicitly stating so, what it seemed Thorp and Bertram had in mind was the dependent development model introduced by Cardoso (1973)
Dependent Development – Dependence and development not mutually incompatible, but created new forms of dependency on foreign capital (MNCs). Economic growth not an autonomous process of capital and technological accumulation towards industrialization.

5. Peru: recent economic performance
Peruvian economic growth averaged 5.1% GDP between , reaching the heights of 8.5% GDP in 2007, 9.1% in 2008 and 8.5% in (Banco Central de Reserva del Perú, 2018).
BUT growth is faltering: 2.4% in 2014, 3.3% in 2015, 4.0% in 2016 and 2.5% in 2017.

6. Peru as enclave economy
Economic growth in the twenty-first century has failed to promote economic diversification:
Primary products still accounted for 70.6% of Peruvian exports in 2016.
The contribution of mining contribution has remained strong despite declining prices for primary goods in international trade.
Imbalance in trade creates vulnerability to the Singer-Prebisch thesis. Trade in goods has fallen into deficit of US$1.5 billion in 2014 (1.64% of GDP) and US$3.1 billion in 2015 (2.41% of GDP) (Banco Central de Reserva del Perú 2018).
Economic growth has masked the declining performance of Peru in world trade before the end of the commodity boom:
Imports have expanded at an annual rate of 8% since 2000, well above the 5.5% annual expansion in exports of goods and services (Banco Central de Reserva del Perú 2018).
General deterioration of terms of trade is highlighted by the current account balance, which has been consistently in deficit since 2008 (Banco Central de Reserva del Perú 2018).

7. Development of new industrial sectors?
Development of new industrial sectors, particularly services and construction, has been dependent upon revenue from the mining industry (Emery 2017).
Growth of the service sector has been stimulated by fiscal and monetary policy, which has led to higher consumer spending and a construction and property boom in major cities (Foster 2014).
This has exposed the country to new sources of macroeconomic risk, which threatens fiscal stability.

8. New political alliances
This phase of Peruvian dependent-development has been supported by the vested interest of key social groups, which have their origin in the adoption by Peru of the neoliberal developmental strategy:
Successive governments have sought to liberalize and privatize the Peruvian economy. Extractive industries, which have been granted a permissive regulatory approach to its activity.
The implementation of a neoliberal development strategy saw existing sources of Peruvian economic power, such as the political elite, business elite and organized crime enter political alliance with foreign capital and the emerging middle class.
Corruption has become endemic in the political elite making a mockery of claims of political stability.

9. Fracturing political alliances
Signs that the political alliances that underpinned this phase of Peruvian dependent-development are beginning to fracture:
Increase in widespread protests in recent years directed towards the political elite.
Dissatisfaction within the middle class, a significant beneficiary of dependent- development in the twenty-first century.
Political demonstrations have also been directed towards the operations of mining companies with concern directed towards the social and environmental impact of the extractive industries.

10. New coalition of interests?
Possibility of the demise of the political alliance formed between the Peruvian political elite and foreign capital, organized crime and large family-owned businesses
Could lead to the formation of new coalitions of interest in Peruvian politics that implement an appropriate industrial strategy to escape Peru’s status as an enclave economy in international trade.
Unlikely this can be achieved unless the capital accumulated from the extractive industries is not directed towards industrialization of the Peruvian economy.

11. Conclusion
This paper has sought to temper some of the claims made about Peru in the 21st century.
Examination of its development since 2000 shows another case of dependent development of the type first described by Thorp and Bertram (1977).
This is not to decry poverty reduction in Peru, or any other achievement of the last two decades, but does provide a more realistic and historically rooted portrayal of recent economic growth.
Hope this provides a foundation for future research agenda into varieties of Latin American capitalism.

12. Reference List