Productivity as the Key to Growth and Development in Peru and the World

One of the most important lessons in economics is that productivity is the key for growth. And so it has been in the economic history of Peru, particularly in the economic transformation that began in the 1990s. Productivity, defined as the value of output per unit of input, comprises four main components: (1) innovation, which involves the creation of new technologies, products and processes; (2) education, which disseminates innovation and develops knowledge and skills; (3) efficiency, which seeks to use and efficient allocation of productive resources; and (4) physical infrastructure and institutions, which provides public goods and services to support the economy. Despite the undeniable economic progress of Peru in the last 25 years, most areas that affect productivity are still lagging behind. In comparison to regional and world leaders, the state of innovation, education and training, and government institutions and physical infrastructure is relatively low. Efficiency in the distribution of resources is in better position, mainly as merit the dynamism of the private sector. Only in macroeconomic management, Peru reaches levels of the highest international quality. The strategy for improving productivity should be different for each of its components. In innovation and education, the correct strategy requires investing more and with a better judgment. As for efficiency and infrastructure, strategy requires a better use of the resources already allocated. (Audio: Department of Economic Publications)