Abusada, IPE and the woes of the business sector

29 July 2019

Roberto Abusada, president of the Instituto Peruano de Economía (IPE), has long been an influential advocate of neoliberalism in Peru, bringing together the interests of the business community with those who operate the decision-making processes in government, chiefly in the Ministry of Economy and Finance (MEF). His strong imprint goes back to the early 1980s when he was vice-minister of economy in the Belaunde administration and the brains behind the attempt to reverse the statist policies of the preceding military government.
 
IPE has been one of the main think tanks that has supported liberalising policies over the last 30 years, but today it seems that its message is failing to be taken quite so blithely by those in charge of the Vizcarra government’s economic policies.
 
His weekly column in El Comercio is a useful reference point when it comes to understanding where business interests want to push public policy. In last week’s column, he seeks to identify the reasons why the Peruvian economy has slowed in recent times. Each reason calls out for correctives which mesh well with what the business community and its lobby organisations are pressing for.
 
With no mention of external influences such as the slow-down in China and the fall in mineral prices, he points to four causes of this deterioration:
 
    • The difficulty of shifting resources from low-productivity to higher-productivity areas. He mentions, for example the obstacles of transferring low-productivity (peasant) agriculture to higher yielding cash-crop agriculture.
    • What he called the ‘maraña regulatoria’ (regulatory tangle) of the bureaucratic state at its three levels (central, regional and local).
    • Failure to push ahead with large-scale mining and hydrocarbons projects
    • What he sees as a ‘failed’ process of decentralisation that has undermined ‘the unitary quality of the nation’. This, he says, has rendered the country ‘ungovernable’, the incapacity of the central government to govern.
      He concludes by pointing to what he calls “aberrant” political factors and poor public policy that has damaged the confidence of business and consumers alike, made worse by the lack of “managerial capacity” surrounding the current prime minister, Salvador del Solar.

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