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 to growth. This has certainly been the case in Peru’s economic history, particularly during 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 consists of the creation of new technologies, products, and processes; (2) education, which disseminates innovation and develops knowledge and skills; (3) efficiency, which ensures the effective use and allocation of productive resources; and (4) physical and institutional infrastructure, which provides public goods and services to support the economy. Despite Peru’s undeniable economic progress over the past 25 years, most areas affecting productivity still lag behind. Compared to regional and global leaders, the state of innovation, education and training, and government institutions and physical infrastructure is relatively weak. Efficiency in resource allocation is in a better position, primarily due to the dynamism of the private sector. Only in macroeconomic management does Peru reach the highest international standards. The strategy for improving productivity should be tailored to each of its components. In innovation and education, the right strategy calls for investing more and with better judgment. Regarding efficiency and infrastructure, the strategy requires improving the use of resources already allocated.