Economic history of Peru
Encyclopedia
The economic history of Peru
has its traditional roots in natural resources such as mining
, farming, fishing
, and agriculture
. In precolonial times, during the reign of the Inca empire
, the economy was mainly agricultural, though it reached some animal husbandry and mining development. The primary goal of the Incan economy was substinence, with a system based on reciprocity and exchange of products.
In recent years, there has been a noticeable increase in slight industries, services, and high technologies. In 2007, the Peruvian economy grew 9%, the largest growth rate in the world.
After the war of succession of 1700, Spain began to lose its monopoly over colonial trade. In the mid-18th century, liberal factions began to appear within the colonial elite; these questioned the legitimacy of the crown’s rule in the Americas. These “Creole patriots”, which had originally been marginalized to the periphery of the empire (Venezuela, Argentina, etc.), provided the necessary conditions for successful economic development during the late colonial period (Mahoney, 52, 80). The introduction of free trade led to explosive growth throughout the empire, with Spain receiving ten times more imports by the end of the 18th century. Despite this overall growth of the colonies, the trend observed in Peru over the course of the century and a half following the war of secession was one of stagnation. The regional socioeconomic hierarchy inverted itself, as core territories where liberals were absent experienced much lower levels of economic development. Their marginalization actually allowed them to benefit from expanded trade opportunities. According to Mahoney, “regional specialists have argued that underdevelopment throughout [areas such as Peru] can be traced to colonial patterns of economic dependence, Hispanic culture, and inefficient markets and economic arrangements".
Attempting to protect its colonial possessions and reverse its faltering role in colonial trade, the crown implemented liberalizing reforms, hastening the removal of trade restrictions and weakening colonial monopolies. This continued the decay of the core regions, leaving them more exposed to the uncertainties of the free market. By the mid-19th century, the reversal of the socioeconomic hierarchy was complete; Peru would not recover its Viceroyalty-era supremacy (Mahoney, 86).
In 1879, Peru entered the War of the Pacific which lasted until 1884. Bolivia invoked its alliance with Peru against Chile. The Peruvian Government tried to mediate the dispute by sending a diplomatic team to negotiate with the Chilean government, but the committee concluded that war was inevitable. Chile declared war on April 5, 1879. Almost five years of war ended with the loss of the department of Tarapacá and the provinces of Tacna and Arica, in the Atacama region.
Originally Chile committed to a referendum for the cities of Arica and Tacna to be held years later, in order to self determine their national affiliation. However, Chile refused to apply the Treaty, and both countries could not determine the statutory framework. In an arbitrage that both countries admitted, the USA decided that the plebiscite was impossible to take, therefore, direct negotiations between the parties led to a treaty (Treaty of Lima, 1929), in which Arica was ceded to Chile and Tacna remained in Peru. Tacna returned to Peru on August 29, 1929. The territorial loss and the extensive looting of Peruvian cities by Chilean troops left scars on the country's relations with Chile that have not yet fully healed.
After the War of the Pacific, an extraordinary effort of rebuilding began. The government started to initiate a number of social and economic reforms in order to recover from the damage of the war. Political stability was achieved only in the early 20th century.
led a successful military coup
and became the new President. Thanks to a thriving economy, Odría was able to implement expensive, populist social reconstruction, including housing projects, hospitals, and schools. His government was dictatorial, however, and civil rights were severely restricted, and corruption was rampant throughout his régime.
Military juntas continued to majoritarily rule Peru over the next three decades. The economic policies of the 50s, 60s, and 70s in particular, were based on the substitution of imports, and had little effect on the size of the economy. General Francisco Morales Bermúdez
replaced leftist General Juan Velasco Alvarado
in 1975, citing Velasco's economic mismanagement, among other factors. Morales Bermúdez brought about a more conservative period, beginning the task of restoring the country's economy.
In 1980, after 12 years of military rule, Fernando Belaúnde Terry
was elected President. After a promising beginning, his popularity eroded under the stress of inflation, economic hardship, and terrorism; his government's lukewarm liberalization attempt failed in the context of the Latin American debt crisis
, as per capita income declined, Peru's foreign debt burgeoned, and violence by leftist insurgents (notably Shining Path
) rose steadily during the internal conflict in Peru, which was launched the day before Belaúnde's election. He continued many of the projects that were planned during his 1963-1968 term, including the completion of the Carretera Marginal de la Selva, a roadway linking Chiclayo
on the Pacific coast with then-isolated northern regions Amazonas and San Martín.
During the next years, the economic problems left behind by the junta government persisted, worsened by an occurrence of the El Niño weather phenomenon in 1982–83, which caused widespread flooding in some parts of the country, severe droughts in others, and decimated the schools of ocean fish that are one of the country's major resources.
Belaúnde's successor, Alan García, was elected to office in 1985. His administration applied heterodox policies
through the expansion of public expenditure
and limitations on external debt
payments. With a parliamentary majority for the first time in APRA
's history, García's administration showed economic promise much as Belaúnde's had. Despite his initial popularity, García's term in office was marked by bouts of hyperinflation, which reached 7,649% in 1990 and had a cumulative total of 2,200,200% over his five-year term, profoundly destabilizing the Peruvian economy. As a result of this chronic inflation, the Peruvian currency, the sol
, was replaced by the inti
in mid-1985, which itself was replaced by the nuevo sol
in July 1991; the new currency had an equivalent value of one billion old soles. During García's administration, the per capita annual income of Peruvians fell to $720 (below 1960 levels) and Peru's GDP dropped by 20%. By the end of his term, national reserves were a negative $900 million.
García's term was also characterized by heavy increases in poverty. According to studies by the National Institute of Statistics and Informatics and the United Nations Development Programme, at the start of his presidency, 41.6% of Peruvians lived in poverty. By 1991, this figure had increased to 55%. García also attempted to nationalize the banking and insurance industries. He incurred the wrath of the International Monetary Fund
and the financial community by unilaterally declaring a limit on debt repayment equal to 10% of the gross national product, thereby isolating Peru from the international financial markets. One of his administration's most glaring failures was a multi-million dollar electric tram
project for Lima that was never completed; the supports for the elevated track still stand in many places around the city.
Critics of García's presidency claim that his many poor decisions while in office created an environment that led to the rise of an authoritarian leader like Alberto Fujimori
, who came to power in 1990. Fujimori implemented drastic measures that caused inflation to drop from 7,650% in 1990 to 139% in 1991. Faced with opposition to his reform efforts, Fujimori dissolved Congress in the auto-golpe of April 5, 1992. He then revised the constitution; called for new congressional elections, and undertook a process of economic liberalization which put an end to price controls
, discarded protectionism
, eliminated restrictions on foreign direct investment
and privatized
most state companies. The reforms allowed sustained economic growth
, except for a slump after the 1997 Asian financial crisis.
Positive results have begun to appear after 15 years, reflecting an expanding global economy; according to figures provided by the INEI, in 2007 the gross national product grew by 8.99%, exports grew by over 35% (reaching US$ 27.8 billion), private and public investments accounted for 21% of the GDP (24.4% in 2008), net international reserves (including gold
) reached US$ 35.1 billion, state income from taxation increased by 33%, national debt with respect to GNP was reduced from 50% in 2000 to 34% in 2006; finally, the national budget has grown by 50% in the five years before 2007.
Since 1990, the Peruvian economy has undergone considerable free market reforms, from legalizing parts of the informal sector to significant privatization in the mining, electricity and telecommunications industries. Thanks to strong foreign investment and the cooperation between the Fujimori government and the International Monetary Fund
and World Bank
, growth was strong in 1994-97 and inflation was brought under control. In 1998, El Niño's impact on agriculture, the financial crisis in Asia, and instability in Brazilian markets undercut growth. 1999 was another lean year for Peru, with the aftermath of El Niño and the Asian financial crisis working its way through the economy. Lima did manage to complete negotiations for an Extended Fund Facility with the IMF in June 1999, although it subsequently had to renegotiate the targets.
Peru's per-capita growth rates have diverged from overall growth rates over the last quarter century. Peru’s GDP per capita peaked in 1981 and is only now returning to that level. By the end of 2006 the government had enacted measures that allowed the economy to improve by increasing investments, expanding production and exports. Raw materials and agroindustrial products represent the bulk of potential exports. By the end of the decade of 2010
, investment is expected to total US$25 billion for mining
activities, US$20 billion in energy and petroleum
, US$12 billion for commerce
, US$8 billion for agricultural industries, and US$5 billion for tourism
. Thanks to the discovery of large petroleum and natural gas
reserves, Peru is expected to become an important exporter of hydrocarbons by 2010, after being a net importer for decades.
Peru
Peru , officially the Republic of Peru , is a country in western South America. It is bordered on the north by Ecuador and Colombia, on the east by Brazil, on the southeast by Bolivia, on the south by Chile, and on the west by the Pacific Ocean....
has its traditional roots in natural resources such as mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
, farming, fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
, and agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
. In precolonial times, during the reign of the Inca empire
Inca Empire
The Inca Empire, or Inka Empire , was the largest empire in pre-Columbian America. The administrative, political and military center of the empire was located in Cusco in modern-day Peru. The Inca civilization arose from the highlands of Peru sometime in the early 13th century...
, the economy was mainly agricultural, though it reached some animal husbandry and mining development. The primary goal of the Incan economy was substinence, with a system based on reciprocity and exchange of products.
In recent years, there has been a noticeable increase in slight industries, services, and high technologies. In 2007, the Peruvian economy grew 9%, the largest growth rate in the world.
Pre-colonial
The Tahuantinsuyo was organized in dominions with a stratified society, in which the ruler was the Inca. It was also supported by an economy based on the collective property of the land. In fact, the Inca Empire was conceived like an ambitious and audacious civilizing project, based on a mythical thought, in which the harmony of the relationships between the human being, nature, and gods was truly essential. The economy was mainly agricultural, though it reached some animal husbandry and mining development. The primary goal of the Incan economy was substinence, with a system based on reciprocity and exchange of productsColonial
The colonial economy was dominated by mineral wealth, and labor was initially provided through enslavement of the indigenous peoples. Peru’s precious mineral resources and large indigenous population placed it at the core of the South American colonies; according to Palmer, Peru could be ranked second on a scale of colonial penetration (Mahoney, 66). Textiles, minerals, and sugars from the colonies were exported back to Europe.After the war of succession of 1700, Spain began to lose its monopoly over colonial trade. In the mid-18th century, liberal factions began to appear within the colonial elite; these questioned the legitimacy of the crown’s rule in the Americas. These “Creole patriots”, which had originally been marginalized to the periphery of the empire (Venezuela, Argentina, etc.), provided the necessary conditions for successful economic development during the late colonial period (Mahoney, 52, 80). The introduction of free trade led to explosive growth throughout the empire, with Spain receiving ten times more imports by the end of the 18th century. Despite this overall growth of the colonies, the trend observed in Peru over the course of the century and a half following the war of secession was one of stagnation. The regional socioeconomic hierarchy inverted itself, as core territories where liberals were absent experienced much lower levels of economic development. Their marginalization actually allowed them to benefit from expanded trade opportunities. According to Mahoney, “regional specialists have argued that underdevelopment throughout [areas such as Peru] can be traced to colonial patterns of economic dependence, Hispanic culture, and inefficient markets and economic arrangements".
Attempting to protect its colonial possessions and reverse its faltering role in colonial trade, the crown implemented liberalizing reforms, hastening the removal of trade restrictions and weakening colonial monopolies. This continued the decay of the core regions, leaving them more exposed to the uncertainties of the free market. By the mid-19th century, the reversal of the socioeconomic hierarchy was complete; Peru would not recover its Viceroyalty-era supremacy (Mahoney, 86).
Post-colonial
Peru embarked on a railroad building program. Henry Meiggs built a standard gauge line from Callao across the Andes to the Interior, Huancayo; striking for Cuzco he built the line but also bankrupted the country.In 1879, Peru entered the War of the Pacific which lasted until 1884. Bolivia invoked its alliance with Peru against Chile. The Peruvian Government tried to mediate the dispute by sending a diplomatic team to negotiate with the Chilean government, but the committee concluded that war was inevitable. Chile declared war on April 5, 1879. Almost five years of war ended with the loss of the department of Tarapacá and the provinces of Tacna and Arica, in the Atacama region.
Originally Chile committed to a referendum for the cities of Arica and Tacna to be held years later, in order to self determine their national affiliation. However, Chile refused to apply the Treaty, and both countries could not determine the statutory framework. In an arbitrage that both countries admitted, the USA decided that the plebiscite was impossible to take, therefore, direct negotiations between the parties led to a treaty (Treaty of Lima, 1929), in which Arica was ceded to Chile and Tacna remained in Peru. Tacna returned to Peru on August 29, 1929. The territorial loss and the extensive looting of Peruvian cities by Chilean troops left scars on the country's relations with Chile that have not yet fully healed.
After the War of the Pacific, an extraordinary effort of rebuilding began. The government started to initiate a number of social and economic reforms in order to recover from the damage of the war. Political stability was achieved only in the early 20th century.
20th century
On October 29, 1948, General Manuel A. OdríaManuel A. Odría
Manuel Arturo Odría Amoretti was the President of Peru from 1948 to 1956.Manuel Odría was born in 1897 in Tarma, a city in the central Andes just east of Lima. He graduated first in his class from the Chorillos Military Academy in 1915. He joined the army and as a lieutenant-colonel was a war...
led a successful military coup
Coup d'état
A coup d'état state, literally: strike/blow of state)—also known as a coup, putsch, and overthrow—is the sudden, extrajudicial deposition of a government, usually by a small group of the existing state establishment—typically the military—to replace the deposed government with another body; either...
and became the new President. Thanks to a thriving economy, Odría was able to implement expensive, populist social reconstruction, including housing projects, hospitals, and schools. His government was dictatorial, however, and civil rights were severely restricted, and corruption was rampant throughout his régime.
Military juntas continued to majoritarily rule Peru over the next three decades. The economic policies of the 50s, 60s, and 70s in particular, were based on the substitution of imports, and had little effect on the size of the economy. General Francisco Morales Bermúdez
Francisco Morales Bermúdez
Francisco Morales Bermúdez Cerruti is a Peruvian general who came to power in Peru in 1975 after deposing his predecessor, General Juan Velasco. His grandfather and all his original family were from the old Peruvian department of Tarapacá, which is now part of the Chilean territory...
replaced leftist General Juan Velasco Alvarado
Juan Velasco Alvarado
Juan Francisco Velasco Alvarado was a left-leaning Peruvian General who ruled Peru from 1968 to 1975 under the title of "President of the Revolutionary Government."- Early life :...
in 1975, citing Velasco's economic mismanagement, among other factors. Morales Bermúdez brought about a more conservative period, beginning the task of restoring the country's economy.
In 1980, after 12 years of military rule, Fernando Belaúnde Terry
Fernando Belaúnde Terry
Fernando Belaúnde Terry was President of Peru for two non-consecutive terms . Deposed by a military coup in 1968, he was re-elected in 1980 after eleven years of military rule...
was elected President. After a promising beginning, his popularity eroded under the stress of inflation, economic hardship, and terrorism; his government's lukewarm liberalization attempt failed in the context of the Latin American debt crisis
Latin American debt crisis
The Latin American debt crisis was a financial crisis that occurred in the early 1980s , often known as the "lost decade", when Latin American countries reached a point where their foreign debt exceeded their earning power and they were not able to repay it.-Origins:In the 1960s and 1970s many...
, as per capita income declined, Peru's foreign debt burgeoned, and violence by leftist insurgents (notably Shining Path
Shining Path
Shining Path is a Maoist guerrilla terrorist organization in Peru. The group never refers to itself as "Shining Path", and as several other Peruvian groups, prefers to be called the "Communist Party of Peru" or "PCP-SL" in short...
) rose steadily during the internal conflict in Peru, which was launched the day before Belaúnde's election. He continued many of the projects that were planned during his 1963-1968 term, including the completion of the Carretera Marginal de la Selva, a roadway linking Chiclayo
Chiclayo
Chiclayo is the capital city of the Lambayeque region in northern Peru. It is located 13 kilometers inland from the Pacific coast and 770 kilometers from the nation's capital, Lima...
on the Pacific coast with then-isolated northern regions Amazonas and San Martín.
During the next years, the economic problems left behind by the junta government persisted, worsened by an occurrence of the El Niño weather phenomenon in 1982–83, which caused widespread flooding in some parts of the country, severe droughts in others, and decimated the schools of ocean fish that are one of the country's major resources.
Belaúnde's successor, Alan García, was elected to office in 1985. His administration applied heterodox policies
Heterodox economics
"Heterodox economics" refers to approaches or to schools of economic thought that are considered outside of "mainstream economics". Mainstream economists sometimes assert that it has little or no influence on the vast majority of academic economists in the English speaking world. "Mainstream...
through the expansion of public expenditure
Government spending
Government spending includes all government consumption, investment but excludes transfer payments made by a state. Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final...
and limitations on external debt
External debt
External debt is that part of the total debt in a country that is owed to creditors outside the country. The debtors can be the government, corporations or private households. The debt includes money owed to private commercial banks, other governments, or international financial institutions such...
payments. With a parliamentary majority for the first time in APRA
APRA
APRA or Apra may refer to:* American Popular Revolutionary Alliance , a Peruvian political party* Australasian Performing Right Association, a copyright collecting society...
's history, García's administration showed economic promise much as Belaúnde's had. Despite his initial popularity, García's term in office was marked by bouts of hyperinflation, which reached 7,649% in 1990 and had a cumulative total of 2,200,200% over his five-year term, profoundly destabilizing the Peruvian economy. As a result of this chronic inflation, the Peruvian currency, the sol
Peruvian sol
The sol, was the currency of Peru between 1863 and 1985. It had the ISO 4217 currency code PEH. It was subdivided into 10 dineros or 100 centavos.-History:...
, was replaced by the inti
Peruvian inti
The inti was the currency of Peru between 1985 and 1991. Its ISO 4217 code was PEI and its abbreviation in local use was "I/." The inti was divided into 100 céntimos. The inti replaced the inflation-stricken sol. The new currency was named after Inti, the Inca sun god.-History:The inti was...
in mid-1985, which itself was replaced by the nuevo sol
Peruvian nuevo sol
The nuevo sol plural: nuevos soles; currency sign: S/.) is the currency of Peru. It is subdivided into 100 cents, called céntimos in Spanish. The ISO 4217 currency code is PEN. It is most commonly referred to just as sol...
in July 1991; the new currency had an equivalent value of one billion old soles. During García's administration, the per capita annual income of Peruvians fell to $720 (below 1960 levels) and Peru's GDP dropped by 20%. By the end of his term, national reserves were a negative $900 million.
García's term was also characterized by heavy increases in poverty. According to studies by the National Institute of Statistics and Informatics and the United Nations Development Programme, at the start of his presidency, 41.6% of Peruvians lived in poverty. By 1991, this figure had increased to 55%. García also attempted to nationalize the banking and insurance industries. He incurred the wrath of the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
and the financial community by unilaterally declaring a limit on debt repayment equal to 10% of the gross national product, thereby isolating Peru from the international financial markets. One of his administration's most glaring failures was a multi-million dollar electric tram
Tram
A tram is a passenger rail vehicle which runs on tracks along public urban streets and also sometimes on separate rights of way. It may also run between cities and/or towns , and/or partially grade separated even in the cities...
project for Lima that was never completed; the supports for the elevated track still stand in many places around the city.
Critics of García's presidency claim that his many poor decisions while in office created an environment that led to the rise of an authoritarian leader like Alberto Fujimori
Alberto Fujimori
Alberto Fujimori Fujimori served as President of Peru from 28 July 1990 to 17 November 2000. A controversial figure, Fujimori has been credited with the creation of Fujimorism, uprooting terrorism in Peru and restoring its macroeconomic stability, though his methods have drawn charges of...
, who came to power in 1990. Fujimori implemented drastic measures that caused inflation to drop from 7,650% in 1990 to 139% in 1991. Faced with opposition to his reform efforts, Fujimori dissolved Congress in the auto-golpe of April 5, 1992. He then revised the constitution; called for new congressional elections, and undertook a process of economic liberalization which put an end to price controls
Incomes policy
Incomes policies in economics are economy-wide wage and price controls, most commonly instituted as a response to inflation, and usually below market level.Incomes policies have often been resorted to during wartime...
, discarded protectionism
Protectionism
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...
, eliminated restrictions on foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
and privatized
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
most state companies. The reforms allowed sustained economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
, except for a slump after the 1997 Asian financial crisis.
Positive results have begun to appear after 15 years, reflecting an expanding global economy; according to figures provided by the INEI, in 2007 the gross national product grew by 8.99%, exports grew by over 35% (reaching US$ 27.8 billion), private and public investments accounted for 21% of the GDP (24.4% in 2008), net international reserves (including gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
) reached US$ 35.1 billion, state income from taxation increased by 33%, national debt with respect to GNP was reduced from 50% in 2000 to 34% in 2006; finally, the national budget has grown by 50% in the five years before 2007.
Since 1990, the Peruvian economy has undergone considerable free market reforms, from legalizing parts of the informal sector to significant privatization in the mining, electricity and telecommunications industries. Thanks to strong foreign investment and the cooperation between the Fujimori government and the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
and World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, growth was strong in 1994-97 and inflation was brought under control. In 1998, El Niño's impact on agriculture, the financial crisis in Asia, and instability in Brazilian markets undercut growth. 1999 was another lean year for Peru, with the aftermath of El Niño and the Asian financial crisis working its way through the economy. Lima did manage to complete negotiations for an Extended Fund Facility with the IMF in June 1999, although it subsequently had to renegotiate the targets.
Peru's per-capita growth rates have diverged from overall growth rates over the last quarter century. Peru’s GDP per capita peaked in 1981 and is only now returning to that level. By the end of 2006 the government had enacted measures that allowed the economy to improve by increasing investments, expanding production and exports. Raw materials and agroindustrial products represent the bulk of potential exports. By the end of the decade of 2010
2010s
The 2010s, pronounced "twenty-tens" or "two thousand tens", is the current decade which began on January 1, 2010 and will end on December 31, 2019...
, investment is expected to total US$25 billion for mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
activities, US$20 billion in energy and petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
, US$12 billion for commerce
Commerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
, US$8 billion for agricultural industries, and US$5 billion for tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
. Thanks to the discovery of large petroleum and natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
reserves, Peru is expected to become an important exporter of hydrocarbons by 2010, after being a net importer for decades.