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OECD Territorial Reviews: Peru 2016

image of OECD Territorial Reviews: Peru 2016

The economic performance of Peru in recent times has been impressive. There is now a transition underway as commodity prices fall, and the key challenge for Peru is how to improve productivity and maintain this growth trajectory. Peru is a territorially diverse country and addressing these challenges will require policies that are designed for the specific needs of different cities and regions. The importance of regional policies is particularly important for the case of Peru. Within the OECD only four countries have a larger land mass. The physical geography of the country is shaped by a thin coastal region, the Andes and the Amazon forest in the interior. These different areas are not well connected and have vastly different levels of service provision and infrastructure. The report sets out how regional policies can be improved to address these challenges. This includes ensuring the preconditions (such as revenues, capabilities and coordinating mechanisms) are in place for decentralisation to work. Lifting national productivity will largely depend on well-functioning cities. The report also includes recommendations for how Peru can develop a comprehensive approach to urban policy, including enhancing linkages with rural areas.

 

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Executive summary

The economic performance of Peru in recent times has been impressive. Since 2000, gross domestic product (GDP) growth has averaged 5% per annum compared to the Latin American average of 3.2% per annum and the OECD average of 2% per annum. A commitment to fiscal discipline and open markets has enabled the country to take advantage of favourable external conditions. Growth has been supported by increased exports of agricultural and mining products, and foreign investment has flowed into the country. The people of Peru have benefited from this growth. Household incomes have risen and poverty rates have declined significantly. However, GDP per capita is USD 11 438, which is about 30% below Mexico, close to 40% below Turkey and significantly below the OECD average of USD 37 270.

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