23, August, 2012

The Mighty Few vs. the Silent Majority – Barriers to Resource Extraction for Poverty Reduction in Peru

Peru is rich in natural resources and the former president García believed extraction would lead to development. However, he had only limited success in spite a strong presidential system. This paper analysis social and judicial forces that limited the level of resources extraction.

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Peru is rich in natural resources like minerals, gas, oil, forests and potential farmland. However, most of them are still unexploited, and a large part of the population (34.8%) is deeply poor. Even though the benefits from resource extraction are visible through some indicators, there is a deep mistrust in the local population to resource extraction. However, there is no reason to believe the losses from irregularities in management of state income from resource extraction are higher in Peru than in any other western countries. New concessions are given in open auctions, and there is little leeway for shadow deals.


The president has a strong position within the Peruvian democratic system. He has a right and a duty under the constitution to develop the country. Generally, he can even decide to exploit large reserves without the explicit acceptance of the congress as long as he follows the technical laws of procedure in that sector. Furthermore, the constitution states that sub-terrain and some surface natural resources, e.g. trees, are public assets and can be exploited by the state, even though the land surface itself is a private property. However, there is a marked inability of the president to carry out development projects and maintaining internal order to allow the exploitation of natural resources through concessions. This paper has two preliminary explanations for the inability of the president to act: First, the central state lacks territorial control. Secondly, the given procedures, regulations and laws are quite complex and time consuming.



Authors: Henrik Wiig, Jorge Balarezo
Orginal publication date: May, 2012
Publisher: Norwegian Institute for Urban and Regional Research

Click here to download the complete working paper in PDF format


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