Growth, poverty and inequality in Peru; by Pablo Lavado

Growth, poverty and inequality in Peru; by Pablo Lavado

Peru has experienced a significant reduction in poverty and inequality in the last thirty years. In fact, using comparable figures, at the beginning of the 2000s poverty was close to 60%, while by 2019 it fell to 20%, to rise as a result of the pandemic to 26% in 2021. Even with the effect of the pandemic, poverty fell by more than half. Meanwhile, according to the World Bank, inequality, measured as the Gini coefficient, was from 0.57 at the beginning of the nineties to reach 0.41 in 2019 (a significant improvement in income distribution).

Read the complete article here: Crecimiento, pobreza y desigualdad en el Perú

Lavado, P. (2022, May 15). Crecimiento, pobreza y desigualdad en el Perú. [Growth, poverty and inequality in Peru]. El Comercio Perú. https://elcomercio.pe/economia/peru/crecimiento-pobreza-y-desigualdad-en-el-peru-por-pablo-lavado-opinion-noticia/#:~:text=El%20Per%C3%BA%20ha%20experimentado%20una,a%2026%25%20en%20el%202021.

INTRODUCTION TO THE BLOG

We know that centralization is a problem for our country and it's difficult to fix it if something was not done in the past there are many reasons such as the geography of the country, economy, and politics. It must be taken into account that Peru is a unitary and decentralized state, the state seeks a way to satisfy the needs and guarantee the rights in conditions of equality and respect for the plurality of the population through a democratic process that seeks integrity, Until 2019, poverty had decreased significantly, but the numbers started rising once again a year later due to the pandemic and the pause of all economic activities; by 2021, poverty had reached 25%. Poverty is more prevalent in rural areas which means it has affected 45.7% of the population in rural areas and 26% in urban areas; increasing by 5% points and 11.4% points, respectively when comparing it with the year 2019. One of the fundamental reasons for the persistence of centralization is that Lima is a disproportionate economic center compared to the rest of the regional economies; at least 88.4% of public expenses belong to the central government and only 11.6% is from the rest of our country. Its influence over the rest of the country occurs on two levels: - First, the productive agglomeration of Lima inhibits the creation of companies in other regions that can compete with those in the capital. The economies of scale in Lima only make the companies more competitive with medium and large companies in the provinces, despite the distances and costs of transportation. - On the second level, the concentration of demand in Lima rather invites provincial businessmen to move to the capital. That is, on the one hand, we have inhibitory forces, and, on the other, centripetal forces that combined strengthen relatively more the center than the periphery. If the economic size is large, the tax base that supports the expenses of the government in the center is great. Consequently, the resources of the State to provide education, health, and infrastructure in Lima are higher, which causes underdevelopment in our provinces. The result is that Lima has also been centralizing the well-being social. For these reasons, the human development index in Lima and Callao is the highest among the rest of the country. What does the government need to do if we want a solution? - First, this obstacle can be solved with beneficial process management that facilitates communication and the coordinated execution of tasks. - Decentralized service companies that have a lot of human resources have a high chance of distortions and errors in their processes. - Strengthen our democracy: by broadening the base of decision-making in the country, that is by redistributing political power. We honestly believe that we can do as citizens to claim for a better and modern education, health, and infrastructure system. Although we aren't the ones in need, we need to raise our voices for them.