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Peru GROWTH AND STRUCTURAL CHANGE
Unavailable
Figure 8 Gross Domestic Product (GDP) by Sector, 1990
Source: Based on data from Banco Central de Reserva del Perú,
Memoria 1990, Lima, 1991.
Historical Background
Through the nineteenth century and into the
mid-twentieth
century, the great majority of the Peruvian population
depended
on agriculture and lived in the countryside. By 1876 Lima
was the
only Peruvian city with over 100,000 people--only 4
percent of
the population (see
table 3, Appendix). Much of the impetus for
economic growth came from
primary exports (see Glossary).
In common with the rest of Latin America up to the 1930s, Peru
maintained an open economic system with little government
intervention and few restrictions on either imports or
foreign investment. Such investment became highly important in the
twentieth century, especially in the extraction of raw
materials for export.
For many Latin American countries, the impact of
falling
export prices and curtailed external credit in the Great
Depression of the 1930s led to fundamental changes in
economic
policies. Many governments began to raise protection
against
imports in order to stimulate domestic industry and to
take more
active roles in shaping economic change. But Peru held
back from
this common move and kept on with a relatively open
economy. That
put it behind many other countries in post-World War II
industrialization and led to increasing pressures for
change.
Significant protection started in the 1960s, accompanied
by both
new restrictions on foreign investment and a more active
role of
government in the economy.
One of the country's basic problems has been that the
growth
of population in the twentieth century outran the
capability to
use labor productively. The ratio of arable land to
population--
much lower than the average for Latin America--continued
decreasing through the 1970s. Employment in the modern
manufacturing sector did not grow fast enough to keep up
with the
growth of the labor force, let alone provide enough
opportunities
for people moving out of rural poverty to seek urban
employment.
The manufacturing sector's employment as a share of the
labor
force fell from 13 percent in 1950 to 10 percent in 1990.
Data as of September 1992
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