What more can be done to strengthen the development of knowledge-based industry clusters?
DIEGO DE LA TORRE: It is important to foster a stronger relationship between the business and academic communities. Peru began this process 10 years ago and is only now reaching a significant level.
The country has a very dynamic business community. New start-ups in particular are moving towards obtaining a critical mass. This development is altering the mindset of the population. Just 15 years ago Peruvians students used to say, “I am going to be successful despite being Peruvian.” These days they are saying “I am going to be successful because I am Peruvian.” This has been a great step forward.
But the bottom line is that educational and political institutions in the country have to take advantage of Peru’s current demographics until 2030, as the birth rate is dropping while the population remains young. For the first time in many years, the business community is starting to have a long-term view on the country as a whole, and is making proposals to government to make it more efficient. With hard work, Peru can become a first-world country within 30 years.
A crucial ingredient of further development for any industry is an improvement of the local infrastructure. Public-private partnerships and the legal framework are investor friendly but they have to be kept that way. The quality of key public officials also has to improve.
To what extent has value-added production increased in Peru as of late?
DE LA TORRE: There has been a huge change in the Peruvian business community’s mindset over the last two decades. Peru was once a closed economy, but it began opening up in the 1990s, when companies started competing internationally. Globalisation has not only improved the quality and price of local products, but has also positively affected innovation.
Historically the country has grown on account of its natural resources, but in the past 15 years industry has seen a lot of innovation – in textiles and the production of machinery, for example. Of course there is still a lot of room for improvement, but there has been significant progress nonetheless.
A breakdown of Peruvian exports shows an increasing percentage of industrial products. Now we have to focus on creating cultural industries in the tourism sector and diversify away from traditional segments like mining. We need an environment of innovation and entrepreneurship to boost wealth creation, and this is already happening. Young Peruvians are very entrepreneurial and eager to compete.
Environmental and labour standards are improving through the increasing number of international trade agreements, and the human rights-centred way of doing business is enriching the local business community. Peru used to have a poverty rate of 48%, but this has been reduced to 30% within the past six years. Of course 30% is still a lot, but it indicates the country is moving in the right direction.
Due to competitive pressure, Peruvian society is also becoming more meritocratic, which is crucial to remaining competitive. The younger generations are hungry for education, and they are the ones who take the best positions within companies today.
Which of Peru’s trading partners will be key within the next five years, and in which sectors?
DE LA TORRE: The US, China and the EU will always remain important export markets. The wonderful thing about the Peruvian export market is that the country has very diversified export destinations, and this will increase even further in 2012. Considerable opportunities exist within the agricultural sector, as well as in the textile sector. There is also significant potential within tourism, as well as in marketing Peru as a destination for filmmaking, which could also help change the perception of the country around the globe. Thus far Peru has only 2.3m visitors per year, but this number should be increased to at least 10m.
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