Objective and subjective conditions for the continuity of the Peruvian extractive development model

ABSTRACT

The Peruvian economy depends for its growth on the export of its mineral resources. The core of the current economic development model is the export of the country's commodities and a free and (relatively) unregulated functioning of the markets. We argue that the continuity of the country's extractive development model is the consequence of the interplay between the objective and subjective conditions of Peruvian capitalist development. The analysis of the objective conditions is focused on the role of the country in the international division of labour, the relation between this role and the country’s economic and business structure, and the functionality of the extractive development model for the Peruvian State. In the case of the subjective conditions, the strength of the political Left, the labour movement and the social movements against mining capital are analyzed

KEYWORDS:

• Peru
• international division of labour
• extractive development model
• dependency
• mining

Disclosure statement

No potential conflict of interest was reported by the author.

ORCID

Jan Lust http://orcid.org/0000-0002-8093-1010

Notes

1. The Global North consists of those countries that are used to be called advanced capitalist countries. Advanced capitalist countries form part of the Organization for Economic Co-operation and Development (OECD). However, not all countries that pertain to the Global Norte form part of the OECD or are advancec capitalist countries. Although China is not considered an advanced capitalist country and does not pertain to the OECD, on the basis of its global economic power we consider it part of the Global North.

2. Sources: Minería peruana tiene la segunda mayor cartera de inversiones en América Latina. Retrieved from http://www.americaeconomia.com/negocios-industrias/mineria-peruana-tiene-la-segunda-mayor-cartera-de-inversiones-en-america-latina. Gold's Top 20 – Mines, miners and countries. Retrieved from http://www.mineweb.com/news/gold/golds-top-20-mines-miners-and-countries/.

3. The definition of micro companies, small companies, medium-sized companies and big companies is based on annual sales. A micro company is valued at a maximum rate of 150 Taxation Units. The annual sales of a small company lie between 150 and 1.700 Taxation Units. The sales of medium sized and big companies are considered to be higher than 1700 Taxation Units. The value of 1 (one) Taxation Unit varies year by year. In 2012 it was around US$ 1.363 and in 2015 US$ 1.206 USD (although the Taxation Unit in nuevos soles increased, the reduction is caused by the depreciation of the Peruvian currency).

4. In July 2015, the Peruvian Minister of Economics and Finance explained that the reduction of poverty in the years 2011–2014 was for 87% the consequence of the implemented social programmes and only 13% was caused by economic growth, in Las ‘tibias’ cifras de la economía en las voces de los peruanos. Retrieved from http://larepublica.pe/impresa/economia/17961-las-tibias-cifras-de-la-economia-en-las-voces-de-los-peruanos.

5. The last organizational presence of the Left in Peruvian Congress was in the period 1995–2000 when the socialist-oriented electoral front Izquierda Unida (IU) had two seats in Congress.

6. According to the IMF (2013, p. 5), over the period 2000–2012 the economy almost doubled in size and real GDP grew at an average annual rate of 6.3% (the highest 10-year average growth in Peru's history).

7. The rate of underemployment indicates the percentage of the EAP that works less than 35 h a week but who would like to work more hours, and the persons who work 35 h or more a week but receive a wage below the real minimum wage level.

8. Source: Instituto Nacional de Estadística e Informática, Encuesta Nacional de Hogares [Household Surveys], 1998–2016, http://series.inei.gob.pe:8080/sirtod-series/ and www.mintra.gob.pe.

9. According to Mendoza and De Echave (2016, p. 41), there were just eight companies that contributed 80.7% to this private fund, none of them paid mining royalties.

Additional information

Notes on contributors

Jan Lust

Jan Lust has a PhD. in Development Studies. He is a researcher and professor at the Faculty of Economic and Business Sciences of the University Ricardo Palma in Peru and forms part of the Board of Directors of the University's Research Centre. He is the author of Lucha revolucionaria: Perú, 1958–1967 (2013), a path-breaking work on the early history and revolutionary struggle of the Peruvian Left. He is currently doing research on the labour conditions of individuals that are employed in micro companies in Peru in the years between 1990 and 2018. His academic interests encompass international political economy, Peruvian political, economic and social development, labour issues, class, social movements and guerrilla struggle.