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Hispanic American Historical Review 81.2 (2001) 414-415



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Book Review

Searching for a Better Society:
The Peruvian Economy from 1950


Searching for a Better Society: The Peruvian Economy from 1950. By JOHN SHEAHAN. University Park, Pa: Pennsylvania State University Press, 1999. Tables. Figures. Bibliography. Index. xi, 211 pp. Cloth, $55.00. Paper, $18.95.

This is a balanced review of the troubled evolution of the Peruvian economy over the last half century. It is mainly a history of missed opportunities; of a policy evolution, which, while following the standard phases for the major Latin American countries, had a different timing and a greater level of instability; and of a lower than average level of competence in policy design and implementation. These features interacted with each other and with the evolving polity in interesting and usually unfortunate ways.

As in so many countries, the effective channelling of pressures for socioeconomic reform ran afoul of institutions, personalities and rivalries. The 1930s saw the first major pressures from the Left. De la Torre's newly founded APRA party survived the period, though with the permanent enmity of the military; but it worked against other reformist movements and eventually became a conservative force collaborating to block reforms in the 1960s. The country was thus left with no opening for the kind of state-led change occurring elsewhere in this period. Failure to implement a sensible land reform in the 1960s under Belaunde's first presidency was a second missed opportunity, in this case courtesy of a coalition between the landowners and APRA, against a background involving available USAID funds which unfortunately were contingent on the acceptance of foreign [End Page 414] investment. Though the reformist wing of the military which deposed Belaunde initiated the sort of reform de la Torre had promised 40 years before, it was ill-designed (with its focus on cooperatives) and ultimately much less beneficial than it could have been.

On the trade-industrial policy side, Peru clung to the primary export model longer than any other major Latin country. The early postwar conservative governments favored the market, trade and foreign investment; though they presided over most of the fast growth period 1950-65, they did little to counteract rural poverty or the high concentration of land ownership, while repressing labor organization. Although the import substituting industrialization (ISI) model which followed was to blame for much of the difficultly of the quarter century to 1990, Sheahan asks the right question, "Are there any necessary connections between import substitution and the macroeconomic mismanagement that characterized this period?" (p. 148). Policy direction veered next to conservatism, then back to the erratic interventionism of Alan GarcĂ­a and finally to the neoliberalism of Fujimori, who had not campaigned on that platform (his opponent had) but had been quickly persuaded by the IFIs that this was the only option for Peru.

Peru has suffered, along with many Latin and other countries, from alternating extremes in the attention given to different aspects of economic managment. The focus in development thinking on structural problems, induced by the depression and the postwar wave of independence for countries with weak productive capacities, had left little room for the "more prosaic" issues of incentives, efficiency and macroeconomic balance got shorter shrift and tended to be viewed as more secondary matters. Now the pendulum has swung in the other direction, with structural differences ignored. "To pay too much attention to them can and did lead to a dead-end economic strategy. But the opposite extreme is no better. The world offers more possibilities than either the version of state-led development that worked so badly in Peru or the particular model of liberalization that has, for the time being, replaced it" (p. 11).

For a volume whose main focus is Peru's economic development, Sheahan's study is unusual for its knowledgeable and insightful discussion of political economy issues and the relevant history. It is accessible both to specialists and generalists, to economists and noneconomists, and will be very rewarding to all...

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