Interpreting Fraser Institute's report on Peru's attractiveness to investors

02 March 2018

Peru has improved its attractiveness to investment in mining, according to company perceptions. This information is contained in a new report by the Fraser Institute, a Canadian think-tank based in Vancouver. Not surprisingly, the findings have been given prominence by Peru’s Ministry of Energy and Mines.

According to the Fraser Institute, Peru has moved up from 28th place in 2016 to 19th in 2018, bettered only by Chile in Latin America. Number one in the league table is Finland. 

The Institute conducts an annual survey of approximately 2,700 international mining executives; this time it received replies from 360. The survey covers 91 'jurisdictions', meaning usually countries or sometimes states within federated countries. It asks of the executives questions related to their perceptions of mining potential in geological terms and the appropriateness of public policy.

Executives are asked to weigh the influence of the two sets of factors in their investment decisions. They come out with a rather solid view that the weight given to policy is 40% as opposed to 60% for geological factors. Given how fundamental the geology and the resulting market prospects are to any such decision, this finding is itself of some importance and demonstrates the considerable significance of policy in their calculations.

The 40/60 ratio is then used to construct the overall ranking, combining the geological attractiveness index with the rather interesting measure of 'perception of policy'. The latter is a composite index that "captures the opinions of managers and executives on the effects of policies in jurisdictions with which they are familiar".

The questions here cover "uncertainty concerning the administration, interpretation, and enforcement of existing regulations; environmental regulations; regulatory duplication and inconsistencies; taxation; uncertainty concerning disputed land claims and protected areas; infrastructure; socioeconomic agreements; political stability; labour issues; geological database; and security". It is interesting to note that on the ranking given by policy perceptions, Peru moved up from only 54th place in 2016 to 43th place in 2017, still a poor showing compared with 14th place in geological potential.

PSG reports on policy have repeatedly raised issues around both the weakening of controls and their effectiveness, in particular the whole area of the environmental impact of mining. This dimension is in no way captured in the survey. Nor are other issues that affect human rights, such as the use of police and the behaviour of security forces.

The Fraser Institute's full report is careful to point out the limitations of a survey which represents company perceptions, not outcomes. The press reports are less qualified in their assessment of Peru’s standing.

All news

  • PSG Aims

    The Peru Support Group exists to promote social inclusion, sustainable development and the observance of human rights in Peru. To that end the PSG highlights shortcomings in observance of established norms, whether international or local in nature, in its research, advocacy and publications. In so doing, it underscores the relationships that exist within the political system, how institutions work, and the effectiveness of policies that aim to reduce poverty and inequality within the context of sustainable development.

  • Historical Overview

    Over the past century Peru has suffered a series of autocratic governments and a civil war in which nearly 70,000 people died. Many of the country's ongoing political and social problems are a legacy of its somewhat turbulent past. 

  • Human Rights

    Human rights violations were widespread during the twenty years after the initiation of armed conflict in 1980. Efforts to convict perpetrators since the war's end have made only limited progress. Today, concerns remain over the treatment of those engaged in social protest, particularly against strategically important investment projects.

  • Why join the PSG?

    • Keep up to date with latest news and developments in Peru
    • Learn about key issues of poverty, development and human rights in Peru
    • Support the work of the Peru Support Group

    Become a member