A recent study published by the consulting firm A.T. Kearney, point out that the next wave of growth will come from what they call the “2020 – Seven growth markets”, among which Peru is ranks at number #4.
They are right to mention structural reforms and continued economic liberalization, as well as Peru´s endowment of minerals and natural gas, as key drivers of outstanding growth track record of the last decade but these drivers alone will not sustain the growth in the long run.
In order to reach sustainable growth and become a member of this exclusive “2020 – Seven growth markets” club, Peru will not only need to keep the pace on the economic reforms but more importantly increase productivity by 1.1 percent, at least, annually until 2020.
So, how can we tackle this challenge?
First, infrastructure. According to the study ‘Urban Mobility in the Smart City Age’, mobility is pointed out as a critical difficulty for most cities and experts around the world. Roads, highways, ports, railways, water networks need to be built on a massive scale in Peru, but, as the study says, “with a view to it serving long-term needs of 50 years or more, and not only immediate or short-term needs; the need to treat mobility as one tool to enhance economic, social and environmental well being”. This approach has lots of benefits for potential user groups (travelers, transport operators, urban planners and city governments) and the best part is the resources and technologies are already available. We need to move from industrial-era cities to smart cities that are efficient, livable, as well as economically, socially and environmentally sustainable cities. This vision can be realized today, using innovative operational and information technology, and leveraging meaningful and reliable real-time data generated by citizens and city infrastructure.
Second, simplification. In order to embrace this new era and new businesses, it is important to rethink laws, norms and procedures, and to do it quickly. This new “train” of growth is already leaving the station and will not wait for us. At the same time, reducing the fiscal pressure and increasing the pressure on the black economy (a big problem) to become formal should boost the economy without damaging the government finances.
Finally, efficiency. I believe there is still room for improvement on the efficiency arena at private level. The technologies are available to make it happen and they can reduce, for instance, energy consumption by up to 30% with almost immediate results. The Government can put efficiency at the heart of every business discussion, by proving soft loans, tax incentives, etc. That’s what happened to Germany that came in first in a new energy efficiency ranking of the world’s major economies, according to the 2014 International Energy Efficiency Scorecard published today by the nonprofit American Council for an Energy-Efficient Economy (ACEEE).
Peru can also be a prime example of a nation that has made energy efficiency a top priority and the beauty of this Efficiency Plan is that the monetary resources to fund it can be deducted from the reduction in infrastructure investments avoided in the coming years. For instance, a national plan that aims to reduce energy consumption by 1 to 2% per year can reduce significantly the investment needed in building new power plants to fuel economic growth. And this is just one example…
So, in order to insure Peru does not miss the next growth wave, we need to focus our efforts in Infrastructure, Simplification and Efficiency. Peru has all the resources needed to earn its membership to the “2020 – Seven growth markets” club, let´s make sure it happens!