Peru’s economic policies, a matter of the income and wealth gap
According to the analysis made by the World Bank, in 1990 the Peruvian GDP was 26, 41 billion dollars and by 1995 the GDP had grown to 53, 313 billion dollars, which would represent an almost increase toDouble of the GDP demonstrating an important improvement in the country’s productive activities and a greater market value by the population. In turn, this economic growth was also involved in the daily life of people since having increased wealth in the country, expressed in GDP, the wages of most workers increased as a result of the convenient state of theEconomy resulting in that between 1992 and 1995, “the formals saw their income increased by 7.8% – Annual average, (growth led by the increase in income of independent professionals and technicians in large companies) ”(Saavedra, 1998). In addition, independent workers between 1991 and 1994 would see their increased income by 10.2%, although with a slight decrease of -1% around 1995.
It can be affirmed through these exposed data, that economic growth and investments addressed to Peru by private capitals positively impacted the income received by the population because production and wealth increased resulting in increasing salaries,which allowed them to improve their socioeconomic status and access services that could not be allowed before, consequences that would later be represented in the decrease in poverty nationwide.
Poverty reduction and improvement of the quality of life
The increase in GDP was linked to the increase in the quality of life and decrease in poverty, in the face of “the poverty rate almost doubled between 1985 and 1991, a period in which the GDP per capita fell by 20%” (ABUSADA & CUSATO, 2007). As 1991 when economic reforms were just beginning to impact society poverty was in 55.1% of the national population and by 1994 it had decreased to 53.4%, although it was not too much improved since only 2 percentage points decreased, marked a continuity for the reduction of poverty that would remain in subsequent years implying significant social advance and constant improvement of the quality of life in PeruIn addition, the most important advances were given in the Rural Sierra where the poverty of 72.6% in 1991 fell to 64.7% in 1994. This improvement in the quality of life is represented in an obvious advance of the human development index;According to the report “Socioeconomic Evolution of Peru 1990 – 2010” prepared by the Peruvian Government. As 1990 the HDI in Peru was 0.708. And it would come down even more to 0.642 to 1992, being Peru in the 95th place worldwide by human development index in that specific year. These aggravated social conditions were inherent to the short -term consequences of Alberto Fujimori’s economic policies for fiscal adjustments and economic cuts to social services that the State assured the population. However, these policies were designed to cause positive impacts in the long term since in 1995 the HDI had increased to 0.735, promoting Peru to the 85th position worldwide. Demonstrating the success of the impact of the economic policies of the Fujimori government on Peruvian society;This HDB increase implied that, in addition, it is related to other indicators such as the increase in life expectancy at birth, from 63.0 in 1990 to 67.7 in 1995;evidencing an improvement in health systems and medical care. On the other hand, the adult literacy rate would increase from 85.5 In 1990 to 89.0 in 1995;Accompanied by an obvious improvement in initial, primary and secondary schooling as it would go from 74 to 79, referring to the gross school enrollments rate. Although there were challenges referring to ensuring the quality of education, it is quite clear the improvement in educational systems and in the increase in the purchasing power of many families that were now able to provide education to their children, consequences of liberalizing the education sector andthat encouraged the creation of new schools and the economic policies of Fujimori that achieved greater purchasing power for the population allowing more Peruvians to access education, being an important advance and beneficial social impact.
Consequences and negative impact
While the positive impact that Alberto Fujimori’s economic policies had “these results were already achieved, however, they were achieved causing a series of distortions in the economy, through clearly unsustainable macroeconomic policies.”(Marco Terrones, 1993). Perspectives argue. These perspectives contrast with the good results that were argued in the previous section, so the main negative consequences of Fujimori’s economic policy for Peruvian society will be examined and analyzed.
Social inequality
The applied economic policies contributed to the increase in social inequality according to the amount of economic income, especially that increase was a consequence of the policies of privatization and liberalization of the market, which allowed entrepreneurs with large capitals to acquire different public companies that the State used to be used forGrant services, and now entrepreneurs could profit from it, causing wealth to concentrate on a few business groups, in contrast to the majority of the population. It is evidenced by increasing the Gini coefficient of “0.641 points to 1990 to 0.653 in 1995” (Mendoza, Leyva, & Flor, 2011). Although it is not an exponential increase, it implies a clearly negative social impact as a consequence of economic policies because the wealth generated began to concentrate on less economic actors, therefore, many more people did not perceive economic growth in their environment and neither thegenerated wealth did not obey the set of needs of society, but was available to a small group of entrepreneurs.
Informality and work precariousness
The management of Fujimori achieved that "between 1992 and 1995, the peak year in terms of employment, employment grew in total 23.1%" (Saavedra, 1998). However, measures were also approved that allowed greater labor flexibility allowing worse working conditions together with greater job precariousness that would impact private sector workers, through Law 25327, which had allowed privatizations, now it would approve “the figureof arbitrary dismissal that allowed employers to fire workers without major explanation.”(Loayza, 2011). These policies were applied waiting for more labor to attract more investments and companies to the country that would generate employment and wealth, however, the results did not cover all the expectations that the government had raised since despite the peak of employment that ishad achieved, there were still many unemployed. According to the report “Socioeconomic evolution of Peru 1990 – 2010”, in 1991 unemployment was in 5.8%, showing an important decrease from 8.5% in which it was in 1990 but since 1992 unemployment beganTo climb up to 9.4% reaching 9.9% in 1993 and from that figure decreased to 7.1%, however, never decreased again from that figure or even close to 5.8% in 1991 before the labor reforms applied by the government. This is why work precariousness above is considered as a consequence of labor flexibility policies, making it possible for companies to carry out large training cuts with the aim of reducing salaries and related to human resources since Peru stillHe had not fully recovered from the economic crisis and companies sought to be more solvent to maintain their income, in addition to being prepared at a possible relapse. These changes in labor policy carried out by the Government impacted harmfully on society because there was no legislation that really protected the worker from arbitrary dismissals and labor precariousness, rather favored them, and in turn towards possible a worsening of the worsening of theworking conditions resulting in an increase in labor informality, which was also caused by the increase in unemployment because it led the population to look for other alternatives to generate income, even in informality and no matter how precarious these options were. Labor informality increased “since the participation of the informal sector would have grown from 48.1% in 1990 to 51.9% in 1995 ”(Saavedra, 1998), which was a negative consequence for the population because when they are in informality, these workers could not access health benefits, compensation or pensions that it gives to the State for all workers andthat are not registered as such by the fact of working informally. Situation that mostly affected the most socially vulnerable populations, especially those of lower income and less job qualification that were the most difficulties to insert themselves in the formal labor market due to their poverty situation that did not allow them to access good training,further increasing inequality for economic income among the population.
conclusion
In conclusion, it can be affirmed that, due to the applied economic policies, Alberto Fujimori’s first government “privileged the market as an institution for the allocation of resources, significantly reducing the participation of the State in the economy” (INEI, 2016). These reforms holistically impacted in Peruvian society, generating deep changes both favorable and unfavorable for the population since, as exposed and evaluated, it is found that inflation managed to reduce accompanied by exuberant economic progress, causing the purchasing power ofThe population increases and again can cover their basic needs, causing a decrease in poverty nationwide, especially in the areas of the Rural Sierra. However, for another perspective, with the liberalization of the economy and the policies involved to achieve that objective, such as privatizations, wealth accumulated in few business groups benefited by the acquisition of state once companies, which caused an increase in theIncome by income in society as expressed with the Gini coefficient, in addition to bringing social problems such as precarious employment and informality that, although thanks to foreign investments, more job positions were created, most new workers no longer enjoyedof their labor rights that ceased to be protected by the government causing greater precariousness.
Despite being radical changes, Alberto Fujimori’s economic policies were the necessary to rescue Peru from the financial and social debacle ensuring the development that Peru has achieved, which would progressively increase improving the quality of life of all Peruvians, since it was evidenced that the applied economic policies were designed to generate a long -term positive social impact that was also sustainable because although it is observed that during the first years there were adverse consequences, later with economic recovery and the market to be liberalized; Better wages would be offered, poverty and inequality would be reduced would not necessarily represent a negative consequence for society because wealth can accumulate in few economic actors but this is not a static good but the wealth progressively increases which creates greater capital for Generate ventures and new jobs that would give work to Peruvians getting them to have an economic livelihood, thus causing a conformity between the social classes of Peru at the time allowing that while the richest were even richer, the poor would also be richer Thanks to Alberto Fujimori’s economic policies.
Leave feedback