The rise of a capitalist subsistence economy in Peru

The Peruvian economy depends for its growth on the export of its mineral resources. This dependency is derived from the country’s role in the international division of labour and is expressed in its export structure, economic structure and business structure. Peru’s dependency on its mineral resources, an economic structure that is principally made up of non-tradable sectors and a business structure dominated by micro businesses, make lasting economic progress very difficult. We argue that although the Peruvian economy is divided into an advanced economy and a capitalist subsistence economy, the country is not a dual economy where two sub-economies are economically and socially separated from each other and have structurally different modes of operation. The capitalist subsistence economy is characterized by low productivity levels and is expressed in remuneration rates at or near the minimum wage level. This structural feature of the Peruvian economy impedes the successful implementation of a process that would make the country less dependent on its natural resources and would set it on a development course of increased value-added production.