Globalization in Peru A way out of the Sub-Development By Ing. MA. María Andrea Vásquez Castillo

Content Introduction Definition of Globalization Characteristicts – Positive and Negative effects. Influence in Peru 4.1 Basic Data 4.2 Political context 4.3 Technology 4.4 Agriculture 4.5 Mining and Energy 4.6 Textile 4.7 Tourismous 4.8 Fishing 4.9 Transport Inter-Oceanic Peru-Brazil-Bolivia Highway 4.10 Peru-Germany relations 4.11 Peru: ready to the Globalization Recomendations

Introduction

Definition of Globalization

Characteristicts – Positive and Negative effects.

Influence in Peru

4.1 Basic Data

4.2 Political context

4.3 Technology

4.4 Agriculture

4.5 Mining and Energy

4.6 Textile

4.7 Tourismous

4.8 Fishing

4.9 Transport

Inter-Oceanic Peru-Brazil-Bolivia Highway

4.10 Peru-Germany relations

4.11 Peru: ready to the Globalization

Recomendations

I. Introduction Globalization, everybody knows this word but not everybody knows ist meaning. It lives between us since many time ago. Globalization represents for the third world a way out of Sub-development.

Globalization, everybody knows this word but not everybody knows ist meaning.

It lives between us since many time ago.

Globalization represents for the third world a way out of Sub-development.

II. Definition The worldwide process of homogenizing prices, products, wages, rates of interest and profits. [1] [1] Shariff,Ismail. GLOBAL ECONOMIC INTEGRATION: PROSPECTS AND PROBLEMS. The growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology. (IMF- International Monetary Fund)

The worldwide process of homogenizing prices, products, wages, rates of interest and profits. [1] [1] Shariff,Ismail. GLOBAL ECONOMIC INTEGRATION: PROSPECTS AND PROBLEMS.

The growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology. (IMF- International Monetary Fund)

III. Characteristic Positive effects.- Engine of commerce Improving of standard living to developing countries. Negative effects.- Cultural assimilation from strong countries Inhibition of authentic local community, ecology and cultures.

Positive effects.-

Engine of commerce

Improving of standard living to developing countries.

Negative effects.-

Cultural assimilation from strong countries

Inhibition of authentic local community, ecology and cultures.

IV. Influence of the Globalization in Peru. Basic Data Surface area: 1,285,216 km² Capital: Lima Languages: Spanish, Qechua, Aymara Population: 27,9 million GDP: 79,4 Mrd. US$ (12/2005) GDP per head: 2.481 US$ (12/2005) GDP growth rate : 6,6 % (January- June 2006) Unemployment rate : 9,6% (Lima, 12/2005) External debt : 26,0 Mrd. US$ (03/2006) Currency reserves : 14,5 Mrd. US$ (03/2006) Import (cif): 12,5 Mrd. US$ From Germany: 0,40 Mrd. US$ Export (fob): 17,0 Mrd. US$ To Germany: 0,52 Mrd. US$ Inflation: 2.5 (2006) President of the Republic : Alan García

Basic Data

Surface area: 1,285,216 km²

Capital: Lima

Languages: Spanish, Qechua, Aymara

Population: 27,9 million

GDP: 79,4 Mrd. US$ (12/2005)

GDP per head: 2.481 US$ (12/2005)

GDP growth rate : 6,6 % (January- June 2006)

Unemployment rate : 9,6% (Lima, 12/2005)

External debt : 26,0 Mrd. US$ (03/2006)

Currency reserves : 14,5 Mrd. US$ (03/2006)

Import (cif): 12,5 Mrd. US$

From Germany: 0,40 Mrd. US$

Export (fob): 17,0 Mrd. US$

To Germany: 0,52 Mrd. US$

Inflation: 2.5 (2006)

President of the Republic : Alan García

Geographical position: Excellent position at the centre of South America Easy access to the markets of South-East Asiatic and USA Access to the markets of the Asia Pacific Economic Cooperation (APEC) integrated by 21 South-East Asiatic economies. Access to the market of Andean Community of Nations (CAN), with more than 100 millions people and GDP in average of 250 billions dollars.

Geographical position:

Excellent position at the centre of South America

Easy access to the markets of South-East Asiatic and USA

Access to the markets of the Asia Pacific Economic Cooperation (APEC) integrated by 21 South-East Asiatic economies.

Access to the market of Andean Community of Nations (CAN), with more than 100 millions people and GDP in average of 250 billions dollars.

Political Context Internal Politics International relations Bilateral trade-promotion agreement (TPA) with the US ratified in late June. Process of negotiating an FTA with Singapore Peru-Chile Economic Complementation Agreement. Peru is a member of the Andean Community . Peru is in favour of an Association Agreement between the EU and the CAN

Internal Politics

International relations

Bilateral trade-promotion agreement (TPA) with the US ratified in late June.

Process of negotiating an FTA with Singapore

Peru-Chile Economic Complementation Agreement.

Peru is a member of the Andean Community .

Peru is in favour of an Association Agreement between the EU and the CAN

Economical Situation Accumulated growth Jan-Jun 2006 was 6.6% Jul-Dec 2006 the most dynamic component was private investment. Mining companies in Peru will pay a voluntary contribution of about US S 770 million to a social fund will administrate and manage social projects. [1] [1] http:// ec.europa.eu/comm/external_relations/peru/intro/index.htm The EU's relations with Peru, 26/12/2006, 17:17h

Economical Situation

Accumulated growth Jan-Jun 2006 was 6.6%

Jul-Dec 2006 the most dynamic component was private investment.

Mining companies in Peru will pay a voluntary contribution of about US S 770 million to a social fund will administrate and manage social projects. [1]

[1] http:// ec.europa.eu/comm/external_relations/peru/intro/index.htm The EU's relations with Peru, 26/12/2006, 17:17h

Technology sector Import Liquefaction of gas and mining industry Textile industry and food manufacturers need modern plants for their export production Transport and Communication sectors Trade, commercial and service sector Building of hydro-electric power plants and gas power stations. Export Small manufacturing

Import

Liquefaction of gas and mining industry

Textile industry and food manufacturers need modern plants for their export production

Transport and Communication sectors

Trade, commercial and service sector

Building of hydro-electric power plants and gas power stations.

Export

Small manufacturing

Agriculture sector The agricultural sector represents only 7.5% of GDP. 400 new farming products are exportable Main exporter of asparagus and paprika around the world Farming products exports have grown thanks external factors ATPA (Andean Trade Preferential Act) y ATPDEA (Andean Trade Promotion and Drug Eradication Act) with USA and SPG (systems of generalized preferences) with EU. El Niño phenomenon , strong raining and floods, making disasters in the rice and cereals production and lasting droughts in the south.

The agricultural sector represents only 7.5% of GDP.

400 new farming products are exportable

Main exporter of asparagus and paprika around the world

Farming products exports have grown thanks external factors ATPA (Andean Trade Preferential Act) y ATPDEA (Andean Trade Promotion and Drug Eradication Act) with USA and SPG (systems of generalized preferences) with EU.

El Niño phenomenon , strong raining and floods, making disasters in the rice and cereals production and lasting droughts in the south.

Mining and Energy Energy 08/2004, Peru inaugurated the Camisea natural gas project. In a second phase, liquefied natural gas (LNG) will be exported to the west coast of the United States and Mexico. Gas and condensates from Camisea are around equivalent 2.4 billion barrels of oil.

Energy

08/2004, Peru inaugurated the Camisea natural gas project.

In a second phase, liquefied natural gas (LNG) will be exported to the west coast of the United States and Mexico.

Gas and condensates from Camisea are around equivalent 2.4 billion barrels of oil.

Mining and Energy (II) Mining Peru is the world’s second-largest producer of silver. sixth-largest producer of gold and copper a significant source of the world’s zinc and lead Mineral exports have most significant portion of Peru’s export revenue. around 50% of total earnings in 1998 to 2005. [1] Counts at present altogether 276 mining industry projects with an investment volume of 10 Mrd billion US$. [2] [1] http://www.state.gov/r/pa/ei/bgn/35762.htm U.S. Departament of State, 29/12/2006, 2:39 h [2] http://www.bfai.de/DE/Navigation/Fachfunktionalitaeten/Matrixsuche/sucheMatrixGT.html Branche kompakt - Maschinen- und Anlagenbau - Peru, 2006 , 29/12/2006, 16:16h

Mining

Peru is the world’s second-largest producer of silver.

sixth-largest producer of gold and copper

a significant source of the world’s zinc and lead

Mineral exports have most significant portion of Peru’s export revenue.

around 50% of total earnings in 1998 to 2005. [1]

Counts at present altogether 276 mining industry projects with an investment volume of 10 Mrd billion US$. [2]

[1] http://www.state.gov/r/pa/ei/bgn/35762.htm U.S. Departament of State, 29/12/2006, 2:39 h

[2] http://www.bfai.de/DE/Navigation/Fachfunktionalitaeten/Matrixsuche/sucheMatrixGT.html Branche kompakt - Maschinen- und Anlagenbau - Peru, 2006 , 29/12/2006, 16:16h

Textile sector Cloth exports to the United States went from US$147 million in 1996 to US$390 million in 2002, with a 160% increase in six years . This increment was achieved before the approval of the Andean Trade Promotion and Drug Erradication (ATPDEA) law in the U.S.A. Total export of Peruvian textiles and clothes reached from US$ 1.092 Million in 2004 to 1.274 Millions in 2005.

Cloth exports to the United States went from US$147 million in 1996 to US$390 million in 2002, with a 160% increase in six years .

This increment was achieved before the approval of the Andean Trade Promotion and Drug Erradication (ATPDEA) law in the U.S.A.

Total export of Peruvian textiles and clothes reached from US$ 1.092 Million in 2004 to 1.274 Millions in 2005.

Tourisms sector UNESCO has inscribed on the World Heritage list the following properties: [1] Cultural Chan Chan Archaeological zone (1986) Chavin (Archaeological site) (1985) City of Cuzco (1983) Historic Centre of Lima (1988) Historical Centre of Arequipa city (2000) Lines and Geoglyphs of Nasca and Pampas de Jumana (1994) Natural Huascarán National Park (1985) Manú National Park (1987) Mixte Historic Sanctuary of Machu Picchu (1983) Río Abiseo National Park (1990) They make Peru a country with big opportunities for development of tourism investment. [1] http://whc.unesco.org/en/statesparties/pe Peru, 30/12/2006, 17:33

UNESCO has inscribed on the World Heritage list the following properties: [1]

Cultural

Chan Chan Archaeological zone (1986)

Chavin (Archaeological site) (1985)

City of Cuzco (1983)

Historic Centre of Lima (1988)

Historical Centre of Arequipa city (2000)

Lines and Geoglyphs of Nasca and Pampas de Jumana (1994)

Natural

Huascarán National Park (1985)

Manú National Park (1987)

Mixte

Historic Sanctuary of Machu Picchu (1983)

Río Abiseo National Park (1990)

They make Peru a country with big opportunities for development of tourism investment.

[1] http://whc.unesco.org/en/statesparties/pe Peru, 30/12/2006, 17:33

Fishing sector Peru is the most important fishmeal producer in the world . The total export of Peruvian fishing reached from US$ 284 Million in 2004 to 331 Millions in 2005. [1] Peru doesn’t have many influence with the international prices, fishmeal represents only 10% from world-wide food balanced producers for animals, and could be replaced by soya. Problems due to the ‚Informality‘ [1] http://www.bfai.de/nsc_true/DE/Navigation/Fachfunktionalitaeten/Matrixsuche/sucheMatrixGT.html Wirtschaftsdaten kompakt - Peru , 29/12/2006 23:40h

Peru is the most important fishmeal producer in the world .

The total export of Peruvian fishing reached from US$ 284 Million in 2004 to 331 Millions in 2005. [1]

Peru doesn’t have many influence with the international prices, fishmeal represents only 10% from world-wide food balanced producers for animals, and could be replaced by soya.

Problems due to the ‚Informality‘

[1] http://www.bfai.de/nsc_true/DE/Navigation/Fachfunktionalitaeten/Matrixsuche/sucheMatrixGT.html Wirtschaftsdaten kompakt - Peru , 29/12/2006 23:40h

Transport sector Airports 36 airports Lima, Arequipa, Chiclayo, Pisco, Pucallpa,Iquitos, Cusco, Trujillo and Tacna Ports Sea Port Callao (Lima), Paita (Piura), Salaverry (La Libertad), Chimbote (Ancash),San Martín (Ica), Ilo (Moquegua) and privates. Roads 78,000 km of roads, Pan-American Highway (North and South) Marginal Jungle Highway links up the towns in the northern jungle with the south, near the Bolivian border. Central Highway starts out in Lima and runs up to the central highlands.

Airports

36 airports Lima, Arequipa, Chiclayo, Pisco, Pucallpa,Iquitos, Cusco, Trujillo and Tacna

Ports

Sea Port Callao (Lima), Paita (Piura), Salaverry (La Libertad), Chimbote (Ancash),San Martín (Ica), Ilo (Moquegua) and privates.

Roads

78,000 km of roads,

Pan-American Highway (North and South)

Marginal Jungle Highway links up the towns in the northern jungle with the south, near the Bolivian border.

Central Highway starts out in Lima and runs up to the central highlands.

Transport sector (II) Roads Inter-Oceanic Highway Peru-Brazil-Bolivia

Roads

Inter-Oceanic Highway Peru-Brazil-Bolivia

Transport sector (III) Objectives Transfer of Brazilian goods to the Pacific coast (and to Asian markets), and of Asian products to the Atlantic coast (and to US, European, and Brazilian markets) Access for Peruvian products in Brazilian markets, resulting in an annual increase of 1.5 percent of Gross Domestic Product. [1] [1] http://www.biceca.org//en/Article.28.aspx#notes The Brazil-Peru Transoceanic Highway, 29/12/2006, 18:10h

Objectives

Transfer of Brazilian goods to the Pacific coast (and to Asian markets), and of Asian products to the Atlantic coast (and to US, European, and Brazilian markets)

Access for Peruvian products in Brazilian markets, resulting in an annual increase of 1.5 percent of Gross Domestic Product. [1] [1] http://www.biceca.org//en/Article.28.aspx#notes The Brazil-Peru Transoceanic Highway, 29/12/2006, 18:10h

Social and Environmental Impacts Environmental Forest degradation caused by unregulated, non- renewable extraction. Illegal hunting for meat, leather, and furs, and trafficking of live animals in particular. Chemical pollution of soil and water caused by the abuse of agro-chemicals or mining. Loss of biodiversity and extinction or rarifying of species. Social Displacement of indigenous populations, invasions of other indigenous territories, and Inter.-group conflicts. Trafficking of drugs, arms, wild animals and other general smuggling. Spread of shantytowns (“barriadas” or “favelas”). Increase in female and child prostitution. Loss of traditional cultural values.

Environmental

Forest degradation caused by unregulated, non- renewable extraction.

Illegal hunting for meat, leather, and furs, and trafficking of live animals in particular.

Chemical pollution of soil and water caused by the abuse of agro-chemicals or mining.

Loss of biodiversity and extinction or rarifying of species.

Social

Displacement of indigenous populations, invasions of other indigenous territories, and Inter.-group conflicts.

Trafficking of drugs, arms, wild animals and other general smuggling.

Spread of shantytowns (“barriadas” or “favelas”).

Increase in female and child prostitution.

Loss of traditional cultural values.

Peruvian-German relations Political relations Bilateral political relations between Germany and Peru under the government of Alejandro Toledo, in office since July 2001 In development cooperation Germany is assisting Peru in the pressing task of reducing poverty.

Political relations

Bilateral political relations between Germany and Peru under the government of Alejandro Toledo, in office since July 2001

In development cooperation Germany is assisting Peru in the pressing task of reducing poverty.

Peruvian-German relations Economical relations Source: Statistisches Bundesamt, Wiesbaden This report was concluded in the middle of June 2006. 262.915 221.591 520.113 374.768 Total 1.523 1.654 2.163 809 other goods and - procedures 20.105 17.617 15.388 11.694 Finished products 126.415 106.826 4.146 960 Machines and vehicles 48.964 34.997 107.548 75.427 Vorerzeugnisse 57.300 53.022 5.926 5.793 Chemical products 139 73 216 178 Animal/vegetable oils 961 1.430 0 0 Fuels/technical oils 6.249 5.027 166.911 109.594 Raw materials 285 195 83 29 Beverages/tobacco 974 750 217.732 170.284 Food/living animals Export 2005 Export 2004 Import 2005 Import 2004 Goods Foreign trade of Germany with Peru (in 1000 € )

Economical relations

Graphic 1: Import Germany from Peru in 2005 Graphic 2: Exports Germany to Peru 2005

Peru: ready to the Globalization Investments Protection Agreements Expansion of Marketplaces International Arbitration

Investments Protection Agreements

Expansion of Marketplaces

International Arbitration

V. Recomendations In agricultural sector , more support from the government to the small producers. Preventive measures against El Niño phenomenon, in order to protect culture fields In energy sector , more attention to the quality control of natural gas projects in order to prevent fails in pipelines and protect the environment. In mining sector , control of pollutions to mining companies, in order to protect culture fields, water resources and population around. In textile sector , more support from the government to small producer Strong fight against contraband and second hand cloths import Create laws in order to protect Peruvian producers against Asia cloths import with low prices. In fishing sector , the target is to develop its fishing sector beyond the anchoveta, especially products for exporting like prawns, shells and others. In transport sector , make a review of the EIA for the Inter-Oceanic highway, in order to prevent disasters socio-environmental.

In agricultural sector , more support from the government to the small producers.

Preventive measures against El Niño phenomenon, in order to protect culture fields

In energy sector , more attention to the quality control of natural gas projects in order to prevent fails in pipelines and protect the environment.

In mining sector , control of pollutions to mining companies, in order to protect culture fields, water resources and population around.

In textile sector , more support from the government to small producer

Strong fight against contraband and second hand cloths import

Create laws in order to protect Peruvian producers against Asia cloths import with low prices.

In fishing sector , the target is to develop its fishing sector beyond the anchoveta, especially products for exporting like prawns, shells and others.

In transport sector , make a review of the EIA for the Inter-Oceanic highway, in order to prevent disasters socio-environmental.

Thank you !