Diversify away from raw exports, Peru tells Latin Americans

Nov. 22, 2011 at 5:56 PM
share with facebook
share with twitter
Sign up for our Energy newsletter

LIMA, Nov. 22 (UPI) -- Latin America needs to diversify its economic output to get out of a current vicious cycle of living off earnings from raw material exports, Peruvian President Ollanta Humala told neighbors as he opened a business summit in the Peruvian capital.

Recent rises in commodity export prices have given Latin American countries an unprecedented liquidity but Humala warned the boom could be short-lived and didn't solve the problem of continued dependence on raw materials exports.

Instead, he said, Latin American countries need to diversify their economies, industrialize and cut back on imports.

"We sell oranges and they send us back orange marmalade. That needs to change," Humala said.

The Peruvian president has vowed to recast his country's economy to move away from endemic poverty, deprivation and dependence on vagaries of the global commodities markets.

Multiethnic Peru has moved toward democratic rule but still needs to catch up with neighbors Brazil, Chile and Colombia, and just manages to surpass northern neighbor Ecuador, an OPEC member with one of the smallest oil outputs in the group, which is also struggling with poverty.

About one-third of Peru's population of 29.5 million is judged by available data to be poor and about one-third of those is considered extremely poor. The country's exports of copper, gold, zinc, textiles and fish meal aren't enough to lift Peru out of poverty.

Humala said he favored closer ties with China, increasingly a major player in Latin America both as a financier with the deepest pockets and as a customer for raw materials feeding its gigantic economy.

But, Humala said, the need in Latin America now was to turn more raw materials into goods and merchandise and export less of natural wealth as unprocessed merchandise.

Closer ties with China would be good both for Peru and the Latin American region at large, Humala told the Fifth China-Latin America Business Summit.

"We have talked about trade and this is important, because today China is Peru's main trading partner but we have to improve exchange terms," Humala said. Manufacturing and processing was the key, he said.

"It's important that we export software, intelligence, talent, our professionals' expertise, which is our real main renewable resource and which we must develop," he said. "It is important that we explore all that brings added value to our trade with China."

More than 400 Chinese businesspeople and officials and 600 Latin American representatives attended the event. The Chinese side was represented by Hua Jianmin, vice chairman of the Standing Committee of the Chinese National People's Congress.

Peru has indicated it wants to capitalize on the presence of a Chinese community in the country and hopes that will help Peru develop closer relations with China. About 1.6 million Peruvians are of Chinese descent.

Humala says he wants more Mandarin taught in Latin America and greater propagation of Spanish in China. Many Chinese Peruvians also speak Portuguese, which helps them in dealings with Brazil, because they migrated from Macau, a former Portuguese colony.

Officials say Peru's economic performance remains strong, pointing to a 8.98 percent growth in 2010 and an average of 6 percent over a decade. They say Peru's stable exchange rate and foreign exchange reserves of $49 billion should reassure investors and potential economic partners.

China has invested about $2.2 billion in Peru, mostly in hydrocarbons, mining and fishing -- areas that form part of China's energy and food security strategy pursued worldwide. Peru wants more Chinese funds to go into infrastructural projects, including airports and ports, railroads, electricity generation and distribution and tourism.

Related UPI Stories
Trending Stories