In a nod to Peru's banner economic performance of 2010, Americas Quarterly's Senior Editor Jason Marczak explains a principal driver of this growth: free trade and economic alliance with Asia.
Peru is again on pace to end the year as one of the world's fastest-growing economies, due in no small measure to its ambitious strategy of economic diversification. In 2010, it finalized four new free-trade agreements (FTAs) -- three with Asian partners -- and launched the test phase of a joint stock exchange, Mercados Integrados Latinoamericanos (Integrated Latin American Markets, or MILA), with Colombia and Chile. Peru's global and regional trade diplomacy has resulted in more domestic investment and a larger network of export markets for Peruvian goods.
Peru's open-market policies can also be partially credited with the country's rapid recovery from the world economic crisis. Peru's economy is forecast to grow by 8.6 percent in 2010 -- a quick rebound to pre-crisis levels, which included 9.8 percent growth in 2008. In addition, Peru's capital, Lima, recently earned the distinction of being the third-fastest among 150 global metropolitan areas to recover from the crisis, trailing only Istanbul, Turkey, and Shenzhen, China.
The decreased vulnerability to international shocks through a diversified international market has been key to Peru's success.
Since the 2001-2006 presidency of Alejandro Toledo, Peru has embarked on an ambitious path of solidifying FTAs with the world's most-powerful economies -- a strategy that gained greater importance since President Alan García took office in 2006. The first step was the entry into force of the U.S.-Peru Trade Promotion Agreement in February 2009, which made permanent the duty-free status that Peruvian exports to the U.S. had been enjoying under the Andean Trade Preferences and Drug Eradication Act. As of 2009, the U.S. was Peru's largest trading partner, representing approximately 18.4 percent of its overall commercial relations.
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