Infrastructure, Health Care, and Education: Key Priorities to Maintain Peru’s Progress

Infrastructure, Health Care, and Education: Key Priorities to Maintain Peru’s Progress

Infrastructure, Health Care, and Education: Key Priorities to Maintain Peru’s Progress

The FINANCIAL -- To improve its national wealth and the well-being of its citizens, Peru needs a concerted effort by the public and the private sectors in four areas, according to a new report by The Boston Consulting Group (BCG).

Furthermore, progress in these areas—expanding Peru’s economic diversification, building out critical infrastructure, increasing health care coverage, and improving education—must be broad-based and designed to reduce disparities across regions and socioeconomic groups. The report, Peru: Climbing the Andean Heights of Wealth and Well-Being, is being released on November 29.

BCG, which opened an office in Lima earlier in 2016, argues in the report that while Peru has had relatively high and stable economic growth and has converted its economic gains into improvements in well-being at a rate that is above the global average, the country still ranks only in the middle of nations globally on these important socioeconomic measures.

“Successful countries do a few things very well when it comes to sustainable development,” said Joaquín Valle del Olmo, a BCG partner and a coauthor of the report. “Perhaps most important, they prioritize aggressively, make smart investments in high-impact projects and initiatives, and ensure that government is a leader—not a follower—on economic and sustainability issues. These are powerful prescriptions for a country such as Peru, which is on the right track and making strong progress but needs to step up its efforts aggressively if it wants to move out of the middle of the pack and into the ranks of its more prosperous and productive peers.”

To help understand where Peru stands today and to develop recommendations on how the country can best move forward, BCG applied its Sustainable Economic Development Assessment (SEDA), a powerful diagnostic tool designed to provide government leaders with a perspective on the well-being of citizens, including how effectively their countries convert wealth, as measured by income levels, into well-being. This analysis helps countries set national priorities by pinpointing both the areas most in need of improvement and those in which improvement can have the biggest national impact.

The analysis found that Peru faces several structural economic issues. These include a highly centralized economy in which Lima accounts for a disproportionate share of economic activity; wide regional disparities in economic activity, growth, and well-being; insufficient economic diversification; exports that are heavily dependent on a few commodities, such as copper and silver; and a need to increase public revenue generation to avoid severe constraints in the government’s ability to fund the priority action plans that are critical to sustained, inclusive growth.

Part of the SEDA analysis involves a comparison of Peru’s circumstances with those of its peers, including other Latin American nations and countries with economies that have substantial mining sectors. This comparison highlights the need for Peru to take the following actions.

Promote the diversification of its economy by creating conditions in which new enterprises can thrive and existing enterprises can expand their range of activities and increase their productivity.

Develop a well-targeted, prioritized, and unified infrastructure plan to address the bottlenecks affecting specific industries and to improve connectivity among cities and mobility within them.

Increase the quality and delivery of health care by devoting additional resources to expand coverage and outreach and to enhance services and treatments.

Improve the educational system by paying particular attention to aligning educational content with employers’ evolving needs, updating infrastructure, and boosting teacher quality.

“Given that a new government is beginning its administration, setting priorities and strategies for the next five years, this is an opportune time for Peru to assess where it stands and to highlight the areas in which concerted effort to make improvements can have an outsize impact in converting the country's increasing wealth into greater well-being,” said Jorge Becerra, a BCG senior partner and a coauthor of the report.



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