Nationalization and privatization in Peru: Socio-economic images in perpetual conflict?

Margaret Y. Champion (*)

Abstract

This article presents a stylized history of public policy regarding the relative places of government and private enterprise in a developing country-Peru. It is a history of clashing images of appropriate policy in the context of political power struggles and a volatile economic environment. The article covers the period 1968-2001 a time during which Peru first experimented with nationalization of private enterprise; then turned to privatization; and most recently sought to find some sort of workable compromise. A stylized history of this process is presented with an emphasis on the visions of proper policy that were publicly presented by the principal players. The time period of the study is 1968 to 2001. [C] 2002 Elsevier Science Inc. All rights reserved.

1. Introduction

1.1. What is the role of the State?

It is generally accepted that defense of the country is the responsibility of a central government. Next is acknowledged the need for the State to guard the welfare of its citizens.

However, although most agree that the State should be concerned with the administration of the public good, leaving the rest to the private sector, others argue that more is needed. Some call for central planning, with production and distribution directed by the State. Others agree with Cornejo, (1982:251) Lima University economics professor who says that what is needed is for the State to participate in and promote economic activity, to act directly in priority strategic sectors, but without controlling the rest of the economy.