Public administration and income distribution in Peru
Government spending and income distribution in Latin America
| Year | : | 1993 |
|---|---|---|
| Author/s | : | Arturo Briceño, Alberto Pasco-Font, Javier Escobal, José Rodríguez |
| Area/s | : | Rural development and agriculture, Poverty and equality |
Escobal, J., Briceño, A., Pasco-Font, A. & Rodríguez, J. (1993). Public administration and income distribution in Peru. En R. Hausmann & R. Rigobón (Eds.), Government spending and income distribution in Latin America (pp. 89-143). Washington, DC: BID.
To provide a framework for evaluating the impact of programs carried out between 1985 and 1990, the first section describes the basic aspects of income distribution in Peru during that period. After describing the characteristics of poverty in Peru, this section summarizes the methods used in the 1985-1990 period to improve income distribution. The APRA government identified the need to redistribute income as a requirement for sustained growth. In accomplishing this, and although some specific spending programs with redistributive objectives were developed (such as the public education program and the Agricultural Revitalization and Food Security Fund, both of which are analyzed in this chapter), the general rule was to improve income distribution through massive intervention in commodities and factors markets, based on price controls.
Chief among the controls used were exchange control (the aim of which was to reduce the costs of producing and importing key goods consumed by the poorest sectors), the provision of credit at subsidized interest rates, and price control of public goods and services. Two of these instruments, the fuel price policy and the policy governing agricultural prices and credit, are analyzed in detail in the next two sections of this chapter. These instruments are not explicit spending programs; rather, they are implicit taxes or subsidies that affect the income of the producers or consumers of the goods involved in the programs.
The final section, which concerns the redistributive effects of public education expenditures, can be described as a traditional impact study. Obviously, education spending programs will have different ef- fects in the short and the long terms; our goal is to analyze the first aspect, i.e., the immediate effect of transfers from the public treasury.
