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2018 | OriginalPaper | Chapter

16. Development Models, Agricultural Policies and Agricultural Growth: Peru, 1950–2010

Authors : Jackeline Velazco, Vicente Pinilla

Published in: Agricultural Development in the World Periphery

Publisher: Springer International Publishing

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Abstract

Throughout its history, Peru, as a small open economy, has undergone cycles of crisis and recovery, usually linked to fluctuations in the international market. The Peruvian economy has always been an exporter of primary products and an importer of manufactured goods. Chapter 16 has a two-fold aim: to identify the salient characteristics of the development models and policies affecting Peruvian agriculture since the mid-twentieth century, and to identify what effect they have had on agricultural production and productivity based on an estimation of total-factor productivity (TFP) for the 1950–2010 period. Development strategy models have ranged from the diversification of primary exports to import-substitution industrialisation and to the promotion of non-traditional exports, which is the current model.These strategies have determined the outcome for agriculture.

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previous chapter From Backwardness to Global Agricultural Powerhouse: The Transition of Brazilian Agriculture

next chapter Land Frontier Expansion in Settler Economies, 1830–1950: Was It a Ricardian Process?

Concern over industrialisation is part of an old debate in the economic history of Peru. The subject arose in the political arena every time there was a crisis in the export sector. These periods can be identified in the 1880s, after the War of the Pacific; in the Great Depression; and in WWII.

For a detailed analysis of the stabilisation policy and macroeconomic performance of agriculture, see León (1994) and Dancourt and Mendoza (1994).

Dancourt and Mendoza (1994) discuss the implications and effectiveness of import tariffs on agricultural products.

Despite these trends, it should be borne in mind that the BAP’s coverage did not reach all farms, and this was most noticeable in small-scale agriculture. Data from the National Survey of Rural Households (Encuesta Nacional de Hogares Rurales; Portocarrero, 1987) show that in 1984, only 7.6 per cent of farms had access to loans from the BAP. This information is crucial when considering the importance of alternative, informal sources of agricultural credit and the impact on interest rates.

This expansion of the agricultural export sector can be related to the trends identified in Latin America, as well as the ways capitalism can expand into agriculture, as described by de Janvry (1981), when considering commercial and contract farming as the predominant modes in the region. This subject has yet to be researched in the context of Peruvian agriculture. Some initial thoughts and hypotheses on this process can be found in Eguren (2003) and Valcárcel (2002).

The agrarian reform was executed mainly on the coast and in the highlands, the two regions with greater rural populations and greater areas of agricultural use. Between June 1969 and June 1979, 15,826 properties and more than 9 million ha were expropriated. Most of this area was transferred to 370,000 beneficiaries (Eguren, 2006).

Mejía (1982) provides some examples of the problems faced by these companies. A study carried out in 1977 by a High-Level Commission of the Ministry of Agriculture clearly revealed this fact. Of 1,388 existing companies at that time, 955 (68%) had no manager and 659 (47%) lacked accounting. At the same time, the problems of lack of human resources were classified as serious in 1,088 cases (78%); lack of training in 941 cases (68%); and lack of business organisation in 633 cases (48%).

Regarding the terms of term (ratio of export prices to import prices), a correlation coefficient between the terms of trade and an openness trade ratio (agricultural exports to agricultural GDP) for the period 1950–2010 is 0.61, suggesting a significant and positive relationship.

Further information about the sources of data for estimating TFP is found in Velazco & Pinilla (2017).

The Brazilian weights were preferred due to the fact that we used the same five inputs in our empirical analysis.

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Title: Development Models, Agricultural Policies and Agricultural Growth: Peru, 1950–2010
Authors: Jackeline Velazco
Vicente Pinilla
Publisher: Springer International Publishing
Book: Agricultural Development in the World Periphery
Print ISBN: 978-3-319-66019-6

Electronic ISBN: 978-3-319-66020-2

Copyright Year: 2018
DOI: https://doi.org/10.1007/978-3-319-66020-2_16

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