Development challenges in Peru: addressing capitalism from economy, culture and environment
July 31 , 2018
Informality, corruption, the evolution of entrepreneurship and the sustainable management of natural resources were the main topics to be discussed at the "Approaches to Peruvian Capitalism" panel, the second panel of the "Development Challenges in Peru" organized by Universidad del Pacífico Research Center.
The seminar "Development Challenges in Peru", organized by Universidad del Pacífico Research Center (CIUP as in the Spanish acronym), continued raising the analysis and reflection on capitalism from different perspectives in its second panel, "Approaches to Peruvian Capitalism", which included the participation of Danilo Martucelli, professor at the Paris Descartes University, Cecilia Blondet, researcher at the Institute of Peruvian Studies, Martín Monsalve and Rosario Gómez, professors and researchers from Universidad del Pacífico, and featured comments by Roxana Barrantes, lead researcher at the Institute of Peruvian Studies, and Gustavo Yamada, Director of CIUP.

The discussion opened with the presentation by Danilo Martucelli, who reflected on informality in Peru as a continuous process that links the legal with the illegal and the informal. "In the perception of many local actors, informality is not only something that opposes the law, but that has a high degree of legitimacy," he said. He added that informal actions represent an escape valve that allows the functioning of the State. He also pointed out that economic formality in the Peruvian case faces "hexolegalidad", that is to say that for many social actors informal practices are not illegal or could be legal if they were taxed, and "hipoproteccionismo" phenomena through the construction of new labor statutes that grant fewer rights allowing the formalization of the Peruvian labor market. 

For Martucelli, economic informality, social overflow and cultural tolerance are three different phenomena, but take part in the creation of a feeling of oppression in Peruvian society. In his opinion, the key to the exit of deformalization of society can take place more through a social and cultural path rather than an economic one, which would allow understanding the reasons for deformalization of society. In this sense, he considered making a social pact where the expansion of the tax base has to go hand in hand with the transformation of real, tangible and rapidly visible social rights, which imply greater social and distributive justice in taxes, as a way to change. "The national social pact requires sacrifices for certain groups and the ability to make the public sector quick and much more efficient," he concluded. 

Danilo Martucelli, professor at the Paris Descartes University. 

For her part, Cecilia Blondet addressed corruption in Peru, analyzing the relationship between the public and private sphere, which due to the porous and undefined boundaries between the two, turns out to be very close. In this context, she referred to the corruption mechanisms implemented in the Peruvian public system, the composition of their networks and their various levels and machinery, ranging from local to national scope. "Both in the political negotiation at a high level to avoid the vacancy of the President of the Republic, and in the demand for bribes to carry out a minor project, the background is a bureaucratic, cumbersome and uncertain system that creates opportunities for corrupt agents to take advantage at different levels", the researcher explained. 

On the other hand, she drew attention to the naturalization of corruption, which many times is not seen as such but as a way to unlock the law. She also explained that there is a "capture" scheme of public institutions at different levels by actors with some greater or lesser power, who appoint an official in a certain position that can then act according to and/or in favor of their interest. "In Peru, corruption is a characteristic of the relationship between the public and the private, which flourishes in that gray area of undefined borders fueled by a certain social acceptance of citizens", she concluded. 

Cecilia Blondet, researcher at the Institute of Peruvian Studies.

Continuing with the discussion on Peruvian capitalism, Martín Monsalve analyzed the evolution of the great business sector in Peru from the perspective of the political impact of economic groups on the political and financial systems. Like Professor Bruno Seminario, Monsalve referred to the fall of the Gross Domestic Product (GDP) in southern Peru as one of the fundamental points in the history of entrepreneurship, since from the beginning of the nineteenth century a series of companies were created in this zone and went through an early industrialization process that little by little disappeared. "There are structural conditions that impede the development of business in the south. They have to do with infrastructure, the type of labor and financial capital", he said. 

He also highlighted the evolution of the creation of corporate network hubs since 1944, where the main feature was that the business groups shared members in their directors, which became the main information transmission channel. In this line, he said that since 1979 the network started to open, showing the beginning of the complexity of the business system and the functioning of the financial system, as well as a consequence of the actions of the military government. Finally, he pointed out that currently the economic groups are separate, except for the Romero, Benavides, and Hochschild that remain together at the core of the network. He also explained that the success of these groups currently lies in the consolidation of the financial system. 

Martín Monsalve, professor in the Department of Humanities at Universidad del Pacífico. 

Closing the discussion, Rosario Gómez, specialist in economics of natural resources and the environment, said that Peru is in a "green growth", sustainable development process, which is evidenced in the integration of the environmental component in public policies. "I think we are on this path (sustainable development), but a highly vulnerable, fragile path that faces various challenges, various factors, positive and adverse, which can get us off that path", she said. On the other hand, he summarized the instruments that regulate and articulate environmental development in the country; however, she regretted that these were not known by the authorities of different levels and tiers. 

According to Gomez, the environment has to be seen from the impacts it generates, mainly from the reduction of fiscal vulnerability; however, she recognized that the implementation of these policies is still very weak. Nevertheless, she acknowledged that there are internal and external factors, such as global trends, that favor the path to green growth. On the other hand, among the factors that do not favor or hinder sustainable development, she considered land use and urban sprawl, unsustainable production and consumption patterns, institutional fragility, corruption and the absence of a simple accountability system and limited transparency. In this regard, she recommended designing and implementing a system for monitoring and evaluating the progress of the goals set in the environmental component, funding conditional on targets generated by the environmental impact on the population and the country's competitiveness, and continuing the effort to create synergies between national, regional and local policies. 

Rosario Gomez, professor and researcher at Universidad del Pacífico. 

As recalled, the seminar "Development Challenges in Peru" was attended by academics and experts from both universities and by guests to reflect upon the main challenges that the development of Peru faces. It was held in partnership with the University of Oxford.



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