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The contributors provide background analysis and thorough diagnosis of Peru's economic problems. They explain how inconsistent populist policies and the ensuing economic crisis have caused the standard of living to deteriorate dramatically, paving the way for significant expansion of social violence, political instability, and isolation from the international financial community.
Peru's Path to Recovery offers an adjustment program that is sound but also is complemented by a social support program to assist the poor - those who have suffered the most from previous disadjustment. This combination makes the program both equitable and politically sustainable. With the inauguration of Alberto Fujimori, Peru has the opportunity to embrace a new economic strategy to stabilize the economy, curtail the extreme poverty, and reduce the massive unemployment and underemployment. Such a course will not be easy: patterns of government, business, and social behavior will have to change. But through such changes Peru can hope to become a stable, thriving country once more.
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Carlos E. Paredes is a research associate in the Brookings Economic Studies program and a former executive director of GRADE, an economic research center based in Lima, Peru. Jeffrey D. Sachs of Harvard University has helped design different stabilization programs around the world and is currently an economic adviser to several Latin American and East European governments.
