This essay seeks to present how contemporary globalization has impacted on Peru. The succeeding sections will first provide an overview of Peru, followed by the specific effects of globalization to the country. In the second half of the essay, this author relates the experience of Peru to the ideas presented by Christian Parenti in his book Tropic of Chaos. The essay then brings together the ideas presented in the concluding section.
Definition of globalization
Ward & Gleditsch (2004) defines globalization as the “increasing internationalization of processes previously confined to nation-states” (, (p. 161). This could include processes that are political, social, and economic. They further explained that economic globalization is not limited to international trade but also encompasses other economic flows such as “human capital through so-called foreign investment, on to the flow of financial instruments [either private or governmental] throughout the globe.
There are several waves of globalization. Contemporary globalization is considered the last wave. The present type of globalization focuses on the economic restructuring and its accompanying cultural, social, and political processes (Friedman, 2003). Contemporary globalization is “characterized by an end to conflict between rival superpowers (the United States and the Soviet Union) and the increasing cooperation of rich countries” (Schaeffer, 2003, p.10). Considered as the last wave of globalization, this phenomenon brings with it new patterns of migration, western popular culture, as well as global networks of communication and transport (Held, 1999). The people have different countries have become more interconnected with one another.
Country Profile
Peru is a country located in the Western part of South America with Ecuador and Chile at its borders. The total area of its territory is 1,285,216 sq km and its 2013 estimated population has reached 29,849,303 (CIA Factbook). Peru is rich in natural resources such as gold, silver, copper, iron ore, and petroleum. Its environmental problems include deforestation, overgrazing, and water pollution. Peru has experienced extreme economic conditions. Literacy rate is 92.9 % and unemployment rate is 16.2% as of 2011. In terms of investments in education, Peru only utilizes 2.6% percent of its GDP on education, ranking 155th in the world. Peru has a weak educational system. This low investment is manifested in the nation’s high number of unskilled workers.
Ward and Gleditsch (2004) surmised that based on the criteria of countries that would be negatively affected by globalization, Peru is a most likely “loser”. This is because its economy depends largely on agricultural products, its workforce is mostly unskilled and there is still substantial corruption in the country. However, Peru proved to be not the typical country. It was able to bounce back from periods of extreme monetary inflation and is already experiencing a booming economy in the present.
Effects of globalization
Peru has demonstrated positive effects of globalization. According to Ward & Gleditsch, (2004) beginning in the 1980s, the economy of Peru had grown to become more market-oriented. Mining, electrical services, and telecommunications were privatized. The inflows of investments from international sources as well as loans from international finance institutions has enabled the country to bounce back. The Economist (2013) reports that the country has been growing faster than its neighbors in Latin America with an average of 7% annual growth. Its currency which had suffered tremendously in the past decades has strengthened substantially. The Finance Minister points out that Peruvin economy is “one of the most open economies in Latin America” and introducing controls would not be very consistent with that open policy.
The OECD (2011) attributes Peru’s impressive performance to “sound macro-economic policies, structural reforms to improve the functioning of product and labour markets, and the openness of the economy to international trade and foreign investment” (p. 13). These policies, according to the OECD had increased jobs, attracted more investments, and improved productivity. These policies have also positively affected living standards and the efforts to reduce poverty in the country.
Agricultural economy
The agricultural production of countries from the Global South and Peru are at opposite poles. Peru has a diverse crops which are sold in domestic and international markets while countries in the Global south have limited agricultural products. Peru currently boasts of a strong agricultural industry which comprises the 8% of the gross domestic product (Mahesh, 2013). There is an expected 20 percent increase of agricultural output of certain products like mangoes, coffee, and avocados. The reason for this is increased demand from both domestic and international markets. In contrast, communities in Afghanistan chose to maintain poppy fields despite the crop being illegal. The reason is that this crop is very drought resistant and uses on 5% of the amount of water a normal farmer would use (Parenti, 2011). Afghanistan has been experiencing drought for a very long time, as long as the people can remember and the poppy fields have become the only source of income for families. As these are illegal products, the government destroys fields of poppy plants leaving communities with no other income source.
Investment on local infrastructure
The present Peruvian government invests on local infrastructure while countries from the Global South lacks local infrastructure. For example, in Kenya, despite the increasing ethnic conflicts demonstrated by the cattle raid, government has not engaged in region-wide projects that would address the pastoralists’ problem on decreasing water sources. Parenti mentions veterinarian services, additional water sources like wells, and alternative livestock more suitable to an environment frequently affected by drought.
The Tropic of Chaos
These positive views of Peru’s economic growth contributed by globalization are very much in contrast with the views of Christian Parenti in his book Tropic of Chaos. Parenti (2011) has emphasized that neoliberal policies have negative effects on countries in the Global South. Macro-economic policies dictated by international organizations and the introduction of the free markets have negative effects on the countries he has described making them ill-equipped to handle the exacerbating effects of climate change. Peru on the other hand has been able to implement policies that proved to be effective. The leadership has cut down on the debt payments and financed social infrastructures. Peru’s currency also managed to bounce back from its hyper-inflated state.
Bibliography
Democracynow. (2011). Christian Parenti on Tropic of Chaos: Climate change & the new geography, June 30. [video] Retrieved from http://www.youtube.com/watch?v=9CbQkDsNVNk.
Mahesh, A. (2013). Peru’s Exploding Economy. Bellarmine Political Review, February 14. Retrieved from http://bpr.bcp.org/?p=715.
OECD (2011). OECD Reviews of Innovation Policy: Peru 2011. OECD Publishing. Retrieved from http://dx.doi.org/10.1787/9789264128392-en
Parenti, C. (2011). The Tropic of Chaos: Climate Change and the New Geography of Violence. New York: New Books.
The Economist. (2010).Ruined: Making do without Macchu Picchu.The Economist, February 11. Retrieved from http://www.economist.com/node/15501877.
The Economist. (2013). Hold on tight: Peru’s roaring economy. The Economist. February 2. Retrieved from http://www.economist.com/news/americas/21571162-biggest-threats-latin-americas-economic-star-are-overconfidence-and-complacency-hold.
Ward, M.D. & Gleditsch, K.S. (2004). Globalization’s impact on poverty, inequality, conflict, and democracy. In J. O’Loughlin, L. Staeheli & E. Greenberg (eds.) Globalization and its Outcomes. New York: The Guilford Press, pp. 159-189.
