In addition Peru is second largest producer of zinc, third in copper and tin, fourth in lead, and sixth in gold ("Peru"). Additionally Peru's export revenue is dominated by mineral exports at nearly 63% in 2008("Peru").
According to an article found in the Wall Street Journal, Low metal prices will have a negative impact on Peru's economy well into 2009. The article explains that the Lima Stock Exchange which is dominated by mining shed 60% in 2008. This is the most significant percentage loss in the region. The decrease in stock price coincided with the problems occurring in the global economy.
The article also explains that recovery will be slow because of the condition of economic growth world-wide. According to Gustavo Urrutia, chief of research at Peruvian brokerage Centura SAB, "In terms of metals prices, I don't think the outlook will change much (Josephs, 2009)." However, the exchange's president asserts that recovery is most likely at the end of 2009. He asserts that "Stronger activity on the exchange will start when the international economy shows some sign of recovering (Josephs, 2009)." The article also reports that
"The exchange's performance over the last two years was a marked contrast to the advances posted the previous year. The Lima Stock Exchange experienced a record high in 2007 and gained 36%, after a 168% surge in 2006. But a plunge in commodities prices midway through 2008 sent the index into a downward spiral. Last January, macroeconomic indicators showed that Peru's breakneck growth would continue in 2008. But lower metal prices and global financial instability, particularly in the fourth quarter, dispelled ideas that Peru was immune to the international crisis. The index lost more than 37% since Sept. 30. The exchange's General Index closed 2008 at 7048.67 (Josephs, 2009)."
Other literature discusses the prevalence of poverty in Peru and the reasons why the recent economic growth in the country has not led to reduced amounts of poverty. For instance, Altamirano et al. (2004) explains that Peru is stuggling to reconcile the rapid economic growth thtat the company has experienced with the poverty that still exist in the country (Altamirano et al., 2004). The article explains that one of the reasons for the disparities between the rich in the poor is that many people in Peru only have skill sets that are consisten with traditional Peruvian jobs (Altamirano et al., 2004). Many of the jobs are either obsolete or they do not offer the type of income that newer jobs offer (Altamirano et al., 2004). Carnoya and. Luschei (2008) explains this clearly. The authors insists that if sustained economic development is to be realized countries and regions must have the capacity to implement new technologies and educate their labor force to use these technologies (Carnoya and. Luschei, 2008). The authors also explain that within the context of the current global economy, which is characterized by factors such as mobility of capital, economic competition, and expanded information and communications portals, there is a unique opportunity for many countries in Latin America including Peru (Carnoya and. Luschei, 2008).
In addition, Zwane (2007) aserts that poverty may have a profound effect on deforestation. The author asserts that
The contention that poverty causes households to degrade the environment has been made in several contexts (e.g., United Nations , World Commission on Environment and Development. In the case of deforestation, the story goes, households would like to invest in maintaining the quality of soil on existing cleared land, or increasing yields on this land, but are unable to do so because they cannot finance the necessary investments (Zwane, 2007)."
The deforestation can lead to a host of other problems in Peru. For this reason many studies have sought to understand how deforestation can be stopped in a way that still provides the people of the country with some type of economic benefits.
The final issue that is extremely important is the current global economic crisis. This crisis is currently affecting Peru as it relates to industries that are connected to mining and hospitality services. Both Mining and the services industries are substantial percentages of GDP in Peru. As is pertains to mining, stock prices are dropping as it relates to metals. Because Peru's natural resources are plentiful as it pertains to precious metals, this decline in worldwide prices for these metals can be economically damaging.
In addition to the metals industry, hospitality services are also affected by poor economic conditions. The poor economic conditions throughout the world mean that people are not traveling as frequently. A good percentage of Peru's economy is dependent upon tourist. The decrease in the number of tourist because of the economic crisis can have a devastating effect on Peru's economy. With this understood the country must adapt certain strategies to ensure that it will be able to weather this financial storm. This might be a very difficult task because of the types of industries that Peru is dependent upon for economic growth.
Overall a preliminary review of the literature reveals that Peru's economy has been quite robust for many years. However, there are still many Peruvians who live in poverty. The research indicates that this is the case because a large percentage of the population does not have the ability to work in certain industries, and they depend on more traditional jobs to survive. As a result jobs that are more geared toward technology and other industries that require additional education and training cannot be performed by many Peruvians. This created huge gaps between the rich and the poor in Peru. In addition, the recent economic woes all over the world have also affected Peru's economy. As a result Peru must extremely mindful of the economic decisions that it makes. Like other nations around the world, Peru must work with other nations around the world during these difficult economic times.
A critical analysis approach will be utilized for the purposes of the proposed research. A critical analysis approach is subjective because it simply states the opinion of the writer based on the information presented in the study. This approach was chosen because it allows for the explication of the literature. This is also important because it provides insight concerning how the problem can be addressed. In other words, this approach will allow the researcher to cultivate a solution to the economic issues facing Peru.
This methodology will utilize secondary research. Secondary research is information that already appears in the literature available about the topic. Secondary research is used because it provides the broadest scope of information. A broad range of information is needed in order to determine how Peru should behave during these difficult economic times.
Altamirano, T., Copestake, J. Figueroa, A. Wright-Revolledo K. (2004) Universal and Local Understanding of Poverty in Peru. Global Social…