PERU                                                                       Economic Freedom Score                         ...
PERU (continued)                                       THE TEN EcoNomic FREEdomsBUsiNEss FREEdom: 71.9                    ...
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Peru indice libertad economica 2011

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Peru indice libertad economica 2011

  1. 1. PERU Economic Freedom Score 50 25 75 Least Most free 0 100 free World Rank: 41 Regional Rank: 5 68.6P eru’s economic freedom score is 68.6, making its econ- omy the 41st freest in the 2011 Index. Its score is 1 pointbetter than last year, reflecting improvements that include a Country’s Score Over Time 80notable gain in business freedom. Peru is ranked 5th out of29 countries in the South and Central America/Caribbean 70region, and its overall score is above the world and regional 60averages. 50Despite the challenging global economic environment, Peruhas achieved average growth of close to 7 percent over the 40past five years. Business formation has been streamlined, 1995 ’97 ’99 ’01 ’03 ’05 ’07 ’09 2011and labor regulations have become more flexible. The gov-ernment has entered into trade pacts with Canada, Chile, Country ComparisonsChina, Singapore, and the United States since early 2009.Peru also signed trade agreements with the European Free 100Trade Association in mid-2009 and the European Union in 84.1May 2010. 80Institutional weaknesses include inadequate protection of 68.6property rights, an inefficient judicial system, and a lack of 59.7 60.2 60political will to tackle corruption. Freedom from corruptionand property rights are the only economic freedom compo-nents in which Peru scores considerably below the world 40average. 20Background: Peru has emerged from its political instabil-ity of the late 20th century. Former President Alberto Fuji-mori (1990–2000) has been convicted and jailed for offenses 0 Country World Regional Freeduring a decade of autocratic rule that included a successful average average economiescampaign against the Shining Path and other insurgents.President Alan Garcia, who served one term in the 1980s Quick Factsand was re-elected in 2006, has earned a reputation as the Population: 29.1 millionmarket-friendly regional alternative to Venezuela’s Hugo gdP (PPP): $251.4 billionChávez by maintaining the trend toward economic liberal- 0.9% growth in 2009ism, trade liberalization, and fiscal and monetary stability. 6.8% 5-year compound annual growthSignificant natural resources include gold, copper, and sil- $8,638 per capitaver. More than 40 percent of Peru’s people live below the unemployment: 8.1%poverty line, but economic growth is well above the Latin Inflation (cPI): 2.9%American average. FdI Inflow: $4.8 billion How Do We Measure Economic Freedom? See page 447 for an explanation of the methodology 2009 data unless otherwise noted. or visit the Index Web site at heritage.org/index. Data compiled as of September 2010. 331
  2. 2. PERU (continued) THE TEN EcoNomic FREEdomsBUsiNEss FREEdom: 71.9 + 6.1 coUNTRy’s WoRLd RaNkiNGsDespite notable progress in enhancing the overall regula-tory environment, government inefficiency stemming from Business Freedom No. 65 Investment Freedom No. 38 Trade Freedom No. 41 Financial Freedom No. 38bureaucratic red tape persists. Recently legislated reforms Fiscal Freedom No. 81 Property Rights No. 73have dismantled some barriers to launching private enter- Government Spending No. 10 Freedom from Corruption No. 75prises, but the formation and operation of private busi- Monetary Freedom No. 14 Labor Freedom No. 66nesses can still be cumbersome and costly, with problemsexacerbated by petty corruption. able and weak enforcement of contracts, non-transparentTRadE FREEdom: 86 + 1.0 and burdensome bureaucracy, some restrictive labor regu- lations, and corruption. Residents and non-residents mayPeru’s weighted average tariff rate was 2 percent in 2009.Some import restrictions, services market access restric- hold foreign exchange accounts. There are no restrictionstions, export taxes, price bands for sensitive agricultural or controls on payments, transfers, or repatriation of prof-products, restrictive labeling, sanitary and phytosanitary its. Capital transactions face minimal restrictions. Foreignregulations, domestic preference in government procure- investors generally may not acquire property within 50ment, and improving but still weak enforcement of intel- kilometers of Peru’s borders.lectual property rights add to the cost of trade. Ten points FiNaNciaL FREEdom: 60 no changewere deducted from Peru’s trade freedom score to account Peru’s evolving financial sector provides a wide rangefor non-tariff barriers. of financial services. The banking sector has been trans-FiscaL FREEdom: 79.4 – 0.1 formed through consolidation. Four of the country’s large commercial banks account for over 80 percent of totalPeru has moderate income tax rates. Both the flat incometax rate and the top corporate tax rate are 30 percent. Other loans. Foreign ownership is substantial, and two of thetaxes include a value-added tax (VAT), a property transfer largest commercial banks are majority foreign-owned.tax, and a financial transactions tax. Fuel subsidies have Credit to the private sector has increased steadily. Thebeen eliminated, but excise taxes on selected domestic fuel government has strengthened prudential standards andprices have been increased. In the most recent year, overall disclosure requirements. There is a small stock market.tax revenue as a percentage of GDP was 16 percent. The impact of the global financial crisis on the banking sector has been limited. Banks remain well capitalized, andGoVERNmENT sPENdiNG: 91 – 1.3 non-performing loans are around 3 percent of total loans.In the most recent year, total government expenditures,including consumption and transfer payments, increased PRoPERTy RiGHTs: 40 no changeslightly to 17.3 percent of GDP. A fiscal stimulus measur- The judicial system is slow to hear cases and issue deci-ing 2.5 percent of GDP provided support for employment, sions. Allegations of corruption and outside interferenceinfrastructure, investment, and poverty-reduction spend- are common. Copyright piracy is extensive, and enforce-ing. Authorities are pursuing fiscal consolidation under the ment of intellectual property rights laws is inadequate.Fiscal Responsibility and Transparency Law. The govern- Peruvian law does not provide for protection of patents orment has restructured the privatization agency to focus on protection from parallel imports.large enterprises. FREEdom FRom coRRUPTioN: 37 + 1.0moNETaRy FREEdom: 83.1 + 1.5 Corruption is perceived as significant. Peru ranks 75th out of 180 countries in Transparency International’s Corrup-Inflation has been relatively low, averaging 3.5 percentbetween 2007 and 2009. With the economy growing by an tion Perceptions Index for 2009. Government corruption isannual rate of 8 percent in the first six months of 2010, the viewed as widespread. In October 2008, a kickback scan-government has been challenged to prevent inflationary dal involving a member of the ruling party and a foreignpressures from erupting. Most prices are set in the market, oil company led to the replacement of the prime minister,but the government influences prices through regulation, although investigators have not established that he wasstate-owned enterprises, and utilities, and a special gov- involved in the scandal. + 1.6ernment fund is used to stabilize changes in fuel prices.Five points were deducted from Peru’s monetary freedom LaBoR FREEdom: 67.7score to account for measures that distort domestic prices. Peru’s labor regulations continue to evolve, with more flex- ibility gradually being introduced into the labor market.iNVEsTmENT FREEdom: 70 no change The non-salary cost of employing a worker has become lessPeru provides national treatment to foreign investors. For burdensome as mandatory paid annual leave and sever-most sectors of the economy, Peru does not screen new ance payments have been reduced. Regulations on workinvestments. Deterrents to investment include unpredict- hours remain relatively inflexible.332 2011 Index of Economic Freedom

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