Between 1990 and 2012, Peru’s middle class grew four times faster than the rest of Latin America’s. Why? Because it is an emancipation movement that has been metamorphosing for half a century: From low-income classes to migrants, then to “informals,” the sector from which the new middle class has emerged as the engine of Peru’s impressive economic growth.
The story of how this transformation took place has never been told before. Over the past 14 years, many of the events, reforms and achievements that so many Peruvians lived through -- and died for -- have been forgotten. Quite frankly, we at the ILD were surprised to realize how much we, too, had forgotten about our own role in Peru’s current success story.During the past year, however, we have been refreshing our memories -- by reviewing ILD archives and the files of Peru’s top newspapers and magazines; and by talking to scores of people, including former Peruvian government officials, army officers, and leaders of informal organizations. This article is a preliminary report on what will eventually be a history of the legal, economic, social and political reforms at the genesis of Peru’s rise out of the political and economic ashes of the 1980s. I believe that the facts we are compiling will not just help prevent current and future leaders of Peru from repeating mistakes of their predecessors but also guide reform-minded governments of the developing world serious about ending poverty and creating economic growth -- for all their people.
The story begins amidst events that Peruvians will never forget: a bloody battle with a homegrown, radical Maoist insurgency that called itself “The Shining Path”; with 60% of the country under martial law; upwards of 7,600% inflation; and a drop in GNP of 13.4%. Two successive and ideologically very different Peruvian Presidents pressed for major institutional reforms that resulted in more than a thousand laws and regulations making it easier for informal property holders and entrepreneurs to enter the formal economy. The ILD was at the center of this transformation, nurturing it through boots-on-the-ground research in Lima’s shanty towns and rural villages, reform recommendations and political awareness building efforts that changed how the Government, political parties and the armed forces viewed the country’s poor majority operating outside the law -- not just as Peru’s problem but as a major part of the solution.
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