IDEAS home Printed from
   My bibliography  Save this article

The Percistence of Poverty in Peru: Possible Answers, their Limits and their lmplications for Latin America


  • John Sheahan


In the 1990s, with economic liberalization at the beginning of the decade, and with the end of the extreme violence of Sendero Luminoso from 1992, the Peruvian economy went through a period of recovery and rapid growth up to 1997. In that period the incidence of poverty came down from 55 to 51 percent. But growth stopped again at that point, and did not show any signs of revival until 2002. The main frustration for Peruvians in the last decade has been the problem of finding employment that is sufficiently productive to enable them to get out of poverty. Even in the period of high growth from 1994 to 1997, employment conditions remained so weak that real wages of hourly paid production workers fell. One of the greatest disappointments of the 1990s was that economic liberalization, and better results with economic growth, did not do more to improve the balance between the overwhelming numbers of low-skill workers and the opportunities for productive employment. A major reason for this failure is that the structure of comparative advantage, led by the mining sector, holds down the power of growth to improve employment opportunities. That structural handicap could be lessened by using exchange rate management to raise incentives for exports and growth in manufacturing, non-traditional agriculture, and modern services. It was a costly mistake, from the viewpoint of efforts to reduce poverty, to allow an appreciation of the real exchange rate at the time of liberalization, and to maintain that unhelpful orientation until nearly the end of the decade. Many other factors have kept poverty at high levels. One of them is the low supply of arable land relative to the agricultural labor force. Another is the low quality of public education. A third is that the level of taxation is too low to provide sufficient financing for social investment.

Suggested Citation

  • John Sheahan, 2002. "The Percistence of Poverty in Peru: Possible Answers, their Limits and their lmplications for Latin America," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, issue 50, pages 9-64.
  • Handle: RePEc:pcp:pucrev:y:2002:i:50:p:9-64

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pcp:pucrev:y:2002:i:50:p:9-64. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (Rebekah McClure). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.