Globalization in PeruA way out of the

Sub-DevelopmentBy Ing. MA. María Andrea Vásquez Castillo

Content

I. IntroductionII. Definition of GlobalizationIII. Characteristicts – Positive and Negative effects.IV. Influence in Peru

4.1 Basic Data4.2 Political context4.3 Technology4.4 Agriculture4.5 Mining and Energy4.6 Textile4.7 Tourismous4.8 Fishing4.9 Transport

Inter-Oceanic Peru-Brazil-Bolivia Highway4.10 Peru-Germany relations4.11 Peru: ready to the Globalization

V. Recomendations

I. Introduction

• Globalization, everybody knows this word but not everybody knows ist meaning.

• It lives between us since many time ago.

• Globalization represents for the third world a way out of Sub-development.

II. Definition

• The worldwide process of homogenizing prices, products, wages, rates of interest and profits.[1] [1] Shariff,Ismail. GLOBAL ECONOMIC INTEGRATION: PROSPECTS AND PROBLEMS.

• The growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology. (IMF- International Monetary Fund)

III. Characteristic

Positive effects.-• Engine of commerce • Improving of standard living to

developing countries.Negative effects.-• Cultural assimilation from strong

countries• Inhibition of authentic local community,

ecology and cultures.

IV. Influence of the Globalization in Peru.

Basic Data• Surface area: 1,285,216 km² • Capital: Lima• Languages: Spanish, Qechua, Aymara• Population: 27,9 million• GDP: 79,4 Mrd. US$ (12/2005)• GDP per head: 2.481 US$ (12/2005)• GDP growth rate: 6,6 % (January- June

2006)• Unemployment rate: 9,6% (Lima,

12/2005)• External debt: 26,0 Mrd. US$ (03/2006)• Currency reserves: 14,5 Mrd. US$

(03/2006)• Import (cif): 12,5 Mrd. US$• From Germany: 0,40 Mrd.

US$• Export (fob): 17,0 Mrd. US$• To Germany: 0,52 Mrd. US$• Inflation: 2.5 (2006)• President of the Republic: Alan García

• Geographical position: • Excellent position at the centre of South America• Easy access to the markets of South-East Asiatic and USA• Access to the markets of the Asia Pacific Economic Cooperation

(APEC) integrated by 21 South-East Asiatic economies.• Access to the market of Andean Community of Nations (CAN),

with more than 100 millions people and GDP in average of 250 billions dollars.

Political Context

• Internal Politics• International relations

• Bilateral trade-promotion agreement (TPA) with the US ratified in late June.

• Process of negotiating an FTA with Singapore

• Peru-Chile Economic Complementation Agreement.

• Peru is a member of the Andean Community.

• Peru is in favour of an Association Agreement between the EU and the CAN

• Economical Situation• Accumulated growth Jan-Jun 2006 was 6.6%• Jul-Dec 2006 the most dynamic component

was private investment.• Mining companies in Peru will pay a voluntary

contribution of about US S 770 million to a social fund will administrate and manage social projects.[1]

[1] http://ec.europa.eu/comm/external_relations/peru/intro/index.htm The EU's relations with Peru,

26/12/2006, 17:17h

Technology sector

• Import• Liquefaction of gas and mining industry• Textile industry and food manufacturers need

modern plants for their export production • Transport and Communication sectors • Trade, commercial and service sector • Building of hydro-electric power plants and gas

power stations.

• Export • Small manufacturing

Agriculture sector

• The agricultural sector represents only 7.5% of GDP.• 400 new farming products are exportable • Main exporter of asparagus and paprika around the

world • Farming products exports have grown thanks

external factors ATPA (Andean Trade Preferential Act) y ATPDEA (Andean Trade Promotion and Drug Eradication Act) with USA and SPG (systems of generalized preferences) with EU.

• El Niño phenomenon, strong raining and floods, making disasters in the rice and cereals production and lasting droughts in the south.

Mining and Energy

Energy• 08/2004, Peru inaugurated the

Camisea natural gas project.• In a second phase, liquefied natural

gas (LNG) will be exported to the west coast of the United States and Mexico.

• Gas and condensates from Camisea are around equivalent 2.4 billion barrels of oil.

Mining and Energy (II)

Mining• Peru is the world’s second-largest producer of silver.• sixth-largest producer of gold and copper • a significant source of the world’s zinc and lead • Mineral exports have most significant portion of

Peru’s export revenue.• around 50% of total earnings in 1998 to 2005.[1]• Counts at present altogether 276 mining industry

projects with an investment volume of 10 Mrd billion US$.[2]

[1] http://www.state.gov/r/pa/ei/bgn/35762.htm U.S. Departament of State, 29/12/2006, 2:39 h [2] http://www.bfai.de/DE/Navigation/Fachfunktionalitaeten/Matrixsuche/sucheMatrixGT.html

Branche kompakt - Maschinen- und Anlagenbau - Peru, 2006, 29/12/2006, 16:16h

Textile sector

• Cloth exports to the United States went from US$147 million in 1996 to US$390 million in 2002, with a 160% increase in six years.

• This increment was achieved before the approval of the Andean Trade Promotion and Drug Erradication (ATPDEA) law in the U.S.A.

• Total export of Peruvian textiles and clothes reached from US$ 1.092 Million in 2004 to 1.274 Millions in 2005.

Tourisms sector• UNESCO has inscribed on the World Heritage list the following properties:[1]

   Cultural • Chan Chan Archaeological zone (1986) • Chavin (Archaeological site) (1985) • City of Cuzco (1983) • Historic Centre of Lima (1988) • Historical Centre of Arequipa city (2000) • Lines and Geoglyphs of Nasca and Pampas de Jumana (1994)    Natural • Huascarán National Park (1985) • Manú National Park (1987)    Mixte • Historic Sanctuary of Machu Picchu (1983)• Río Abiseo National Park (1990)

They make Peru a country with big opportunities for development of tourism investment.

[1] http://whc.unesco.org/en/statesparties/pe Peru, 30/12/2006, 17:33

Fishing sector

• Peru is the most important fishmeal producer in the world.

• The total export of Peruvian fishing reached from US$ 284 Million in 2004 to 331 Millions in 2005.[1]

• Peru doesn’t have many influence with the international prices, fishmeal represents only 10% from world-wide food balanced producers for animals, and could be replaced by soya.

• Problems due to the ‚Informality‘

[1] http://www.bfai.de/nsc_true/DE/Navigation/Fachfunktionalitaeten/Matrixsuche/sucheMatrixGT.html Wirtschaftsdaten kompakt - Peru, 29/12/2006 23:40h

Transport sector

Airports• 36 airports Lima, Arequipa, Chiclayo, Pisco, Pucallpa,Iquitos,

Cusco, Trujillo and Tacna Ports• Sea Port Callao (Lima), Paita (Piura), Salaverry (La Libertad),

Chimbote (Ancash),San Martín (Ica), Ilo (Moquegua) and privates.

Roads• 78,000 km of roads, • Pan-American Highway (North and South) • Marginal Jungle Highway links up the towns in the northern

jungle with the south, near the Bolivian border. • Central Highway starts out in Lima and runs up to the central

highlands.

Transport sector (II)

Roads

• Inter-Oceanic Highway Peru-Brazil-Bolivia

Transport sector (III)

Objectives• Transfer of Brazilian goods to the Pacific

coast (and to Asian markets), and of Asian products to the Atlantic coast (and to US, European, and Brazilian markets)

• Access for Peruvian products in Brazilian markets, resulting in an annual increase of 1.5 percent of Gross Domestic Product.[1] [1] http://www.biceca.org//en/Article.28.aspx#notes The Brazil-Peru Transoceanic Highway, 29/12/2006, 18:10h

Social and Environmental Impacts

Environmental• Forest degradation caused

by unregulated, non-  renewable extraction.

• Illegal hunting for meat, leather, and furs, and trafficking of live animals in particular.

• Chemical pollution of soil and water caused by the abuse of agro-chemicals or mining.

• Loss of biodiversity and extinction or rarifying of species.

Social• Displacement of indigenous

populations, invasions of other indigenous territories, and Inter.-group conflicts.

• Trafficking of drugs, arms, wild animals and other general smuggling.

• Spread of shantytowns (“barriadas” or “favelas”).

• Increase in female and child prostitution.

• Loss of traditional cultural values.

Peruvian-German relations

Political relations• Bilateral political relations between

Germany and Peru under the government of Alejandro Toledo, in office since July 2001

• In development cooperation Germany is assisting Peru in the pressing task of reducing poverty.

Peruvian-German relations

Economical relationsForeign trade of Germany with Peru (in 1000 € )

GoodsImport

2004Import

2005Export

2004Export

2005

Food/living animals 170.284 217.732 750 974

Beverages/tobacco 29 83 195 285

Raw materials 109.594 166.911 5.027 6.249

Fuels/technical oils 0 0 1.430 961

Animal/vegetable oils 178 216 73 139

Chemical products 5.793 5.926 53.022 57.300

Vorerzeugnisse 75.427 107.548 34.997 48.964

Machines and vehicles 960 4.146 106.826 126.415

Finished products 11.694 15.388 17.617 20.105

other goods and - procedures 809 2.163 1.654 1.523

Total 374.768 520.113 221.591 262.915

Source: Statistisches Bundesamt, WiesbadenThis report was concluded in the middle of June 2006.

Graphic 1: Import Germany from Peru in 2005

Graphic 2: Exports Germany to Peru 2005

Peru: ready to the Globalization

• Investments Protection Agreements

• Expansion of Marketplaces

• International Arbitration

V. Recomendations

• In agricultural sector, more support from the government to the small producers.

• Preventive measures against El Niño phenomenon, in order to protect culture fields

• In energy sector, more attention to the quality control of natural gas projects in order to prevent fails in pipelines and protect the environment.

• In mining sector, control of pollutions to mining companies, in order to protect culture fields, water resources and population around.

• In textile sector, more support from the government to small producer

• Strong fight against contraband and second hand cloths import• Create laws in order to protect Peruvian producers against Asia cloths

import with low prices.• In fishing sector, the target is to develop its fishing sector beyond

the anchoveta, especially products for exporting like prawns, shells and others.

• In transport sector, make a review of the EIA for the Inter-Oceanic highway, in order to prevent disasters socio-environmental.

Thank you !