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Peru’s Tourism Cluster Microeconomics of Competitiveness – Group Assignment Widharmika Agung | Malika Anand | Sonny Bhardan | Daniella Ilanos | Ateeq Nosher
Peru’sTourismClusterMicroeconomicsofCompetitiveness–GroupAssignment
WidharmikaAgung|MalikaAnand|SonnyBhardan|DaniellaIlanos|AteeqNosher
1
ExecutiveSummary
Inthispaper,weexaminePeru’scompetitiveness,bothatthenationalandtourism
clusterlevels.Wedrawonseveraldatasources,includingglobalcomparativestudies,
academicliteratureanddetailedPeruvianreports.Wesupplementthiswithover15expert
interviews,includingtheViceMinistersofCommerceandTourism,theDirectorofthe
PeruvianNationalTourismObservatoryandthePresidentoftheHotel’sAssociation.
Atthenationallevel,weshowthatPeruisheavilyreliantonendowment‐basedclusters,
andthatitsrecentimpressivegrowthhasbeendrivenbyminingwithdisproportionally
littlebenefitforPeruvians.Wefindstrongmacroeconomicpoliciesbutweakersocial
infrastructure.Inthenationalbusinessenvironment,wehighlightstrengthsinthecontext
forfirmstrategyandrivalrybutsignificantweaknessesinotherareas.Ouroverarching
proposalisforPerutodiversifyitsexportbasket,whichwerecommenditdoesby(i)
promotingclusterdevelopment(ii)investinginhealthandeducation(iii)tackling
corruptionand(iv)securingafairrevenuestreamfromminingcompanies.
Forthetourismcluster,wefindthatPeruhaspostedimpressiverecentgrowthinboth
numberoftouristsandrevenues,butthatthisisgrowthfromaverylowbase.Wefindthat
Peruhasawealthofhigh‐qualitynaturalandculturalendowments,butthattheclusteris
overlyreliantonasinglesiteandtypeoftourist.Weidentifysignificantpotentialrelatedto
thegastronomicboomintherelatedfoodcluster,butnotecriticalweaknessesintransport
infrastructureandinstitutionsforcollaboration.Ourstrategyfortourismistodiversify
awayfromMachuPicchuandattractbothmoreandhighervalue‐addtouristsby(i)
initiatinganationaltourismstrategy(ii)developingnewtourismproducts(iii)upgrading
thetransportinfrastructureand(iv)strengtheningtheinstitutionsforcollaboration.
2
I. Peru–CountryAnalysis
PeruisaSpanishspeakingSouthAmericancountrywithapopulationof29.8million1
andaGDPpercapitaof$8,7222.Ithas3,362kilometersofPacificcoastline3,andshares
borderswithEcuador,Colombia,Brazil,Bolivia,andChile.
1. OverallEconomicPerformance
1.1. EconomicHistory
WithGDPgrowingatarateof9.2%,PeruwasthefastestgrowingcountryinLatin
Americaandthe14thfastestgrowingcountryintheworldin20084.In2009,Peru
continuedtoshowimpressiveresults,posting1%growthwhilemostcountriesfaced
shrinkingeconomies5.
Thisimpressivegrowthfollowsalmost
twodecadesoflostprogress.Likemany
LatinAmericancountries,Peru
experiencedadisruptivemilitaryrule
duringthemiddleofthecenturyandthena
periodofdamagingimportsubstitution
policiesintheeighties.In1983,Peruwas
adverselyaffectedbytheElNinoweatherphenomenon,whichcausedfloodinginsome
areasanddroughtsinothers.Followingthisepisode,commoditypricesdroppedtotheir
lowestlevelssincetheGreatDepressionandtheterroristgroups‐ShiningPathandTupac
1INEI.Perú:Poblaciónestimadayproyectada,segúndepartamentos,1990‐2015.2PPPadjustedfiguretakenfromIMF.2009.2009WorldEconomicOutlook3INEI.http://www.inei.gob.pe4CIAFactbook.http://www.cia.gov/library/publications/the‐world‐factbook/geos/pe.html5ibid
3
AmaruRevolutionaryMovement‐gainedprominence,inpartfundedbynarco‐traffickers
whohadgainedastrongholdintheAndeanregion6.
Theninetiesweresignificantlybetterundertheauthoritarianadministrationof
AlbertoFujimori.Fujimoriopenedthecountrytoforeigninvestmentbyreducingthe
averageMFNtariffsfrom16.0%to13.6%between1993and1999,causingFDItoincrease
5‐foldbetween1993and2000(EIU2008,WTO2000).Fujimorialsosucceededin
dismantlingtheShiningPath,thoughusingrepressiveandviolencemeanstodoso(WTO
2000).Moreover,hiscorruptgovernmentstolealmost$600millionwhileinpower
(TransparencyInternational,2004).
MovingfromGDP/capitatooneofitskey
determinants,laborproductivitylevels($22,800
perpersonemployed)arecurrentlyinlinewith
othercountriesofPeru’sincomelevel7,though
therehasbeenpoorgrowthinrecentdecades,
consistentwiththeaveragetrendinLatinAmerica.
Thislacklustergrowthinproductivitypalesin
comparisonwithcountrieslikeIndonesia,whichis
aleadingexporterofcopper,muchlikePeru.
1.2. Recentgrowth:theimportanceandconsequencesofmininginPeru
Thepoliticalstabilityofthe2000sandrisingcommoditypriceshavejointlycontributed
tosignificantgrowthofGDPinPeru.Inparticular,thisgrowthhasbeendrivenbythe
6UnitedStateDepartmentofState.http://www.state.gov/r/pa/ei/bgn/35762.htm7PPPadjustedfiguretakenfromTheConferenceBoardTotalEconomyDatabase,January2010,http://www.conference‐board.org/economics/database.cfm
4
miningsector,whichhasgrownfrom$0.2billiontoover$31billioninthepast60years,
andnowrepresents59%ofexports8.
In2006,miningcompaniesaccounted
forover50%ofmarketcapitalizationofthe
Limastockexchange(foratotalof$30
billion)andwererankedhighestfor
profitability9.TheCentralReserveBankof
Perupredictsminingwilldominate
investmentgoingforward,accountingfor
58%ofprivateinvestmentoverthenext3years10.
Unfortunately,thisimpressivemining‐drivengrowthinGDPhasnotresultedin
improvedincomesforPeru’spopulation,duetothehighlycapital‐intensivenatureof
mining,whichemploysonly1%ofthepopulationwhilegenerating6%ofGDP11.
Miningcompaniescurrently
benefitfromhighlyfavorable
contracts.TheseLegalStability
Agreementswereawardedunderthe
Fujimoriadministrationand
guaranteethestabilityofthelegal
frameworkinplaceatthetimethe
investmentwasmade,includinglabor,tax,andincomepolicy(UnitedNations,2000).Asa
8CentralBankofPeruhttp://estadisticas.bcrp.gob.pe/9LimaStockExchange.2006.InformeBursatil.http://www.bvl.com.pe/pubdif/infmen/M2006_04.pdf10CentralBankofPeruhttp://estadisticas.bcrp.gob.pe/11CentralReserveBankofPeru.http://www.bcrp.gob.pe
5
result,25ofthe27topminingcompaniescurrentlypaynoroyalties,eventhoughcurrent
lawswouldrequireroyaltiesofbetween1‐3%ofrevenues12.Hadroyaltiesbeencollected
inthefiscalyear2006‐7,Peruwouldhavecollectedanadditional$2.7billionintaxes13.
1.3. CompositionoftheEconomy
Moregenerally,thePeruvianeconomyhascometorelyheavilyonendowment‐based
industriessuchasmining,oilandgas,goldandsilverjewelry,andagriculture.Thelargest
oftheseindustriesarestillgrowing,agoodsignforPeru’seconomy.However,somewhat
worrisomeisthesparsenessoftheclustermap;therearefewclustersandevenfewerthat
qualifyashighvalue‐added.Onepromisingcluster,tourism,wewilldiscusslater.Another
isthenon‐traditionalsub‐componentoftheagriculturecluster,asectorthanhasrecently
shownpromisinggrowth.Exportsofasparagusandartichoke,whichgrew33%and19%
in2007,respectively,havereceivedpositiveattentioninthepressandfromdonorsfor
theirinclusivesupplychains
(Shimizu,2006)14.
Peru’srelianceonendowments
isnotsurprisinggiventhe
abundanceandhighqualityof
theseresources.Peruisthethird
largestcountryinLatinAmerica
andboaststhreediverseclimates–
12AccordingtotheMinistryofEnergyandMinesasquotedinSalazar,Milagros.“GovernmentGenerositySwellsMiningCompanyProfits”.IPSNewsService4February2009.http://ipsnews.net/news.asp?idnews=4106113Ibid14PROMPERU.2008.TendenciasdelaAgro‐Exportacion.http://www.siicex.gob.pe/siicex/resources/sectoresproductivos/d92ddd0c‐f3ae‐4d16‐b528‐7e046ef0a7b3.pdf
6
coastal,Amazon,andAndeanhighlands.ThisdiversityinclimatesprovidesPeruwith
extremebiodiversity.Asoneoftheworld’s10“megadiverse”countriesPeruisfirstinthe
numberoffishspecies;secondinbirdfauna;thirdinamphibians;andthirdinthenumber
ofmammals15.Thisabundanceextendstotherealmofminerals.Today,Peruistheleading
producerofsilver,secondincopper,andthirdinbismuth,tin,andzinc16.
2. MacroeconomicFactors
2.1. Strongmacroeconomicpolicy17
ThePeruviangovernmenthas
pursuedprudentfiscaland
monetarypolicy.Afteralongperiod
ofhyperinflation,(from1984to
1990wheninflationsurpassed
7000%)recentadministrations
havebeenabletobringinflation
undercontrolandmaintainastable
realexchangerate.Thismonetarydisciplinehasbeenmirroredbyfiscaldiscipline.Peru
wasabletopostafiscalsurplusoverthepastfewyears(e.g.,2.1%ofGDPin2008)andhas
halveditsdebtbalance.In2009,thebudgetwentbackintodeficit(‐1.9%ofGDP),asthe
governmentengineeredafiscalexpansionaspartofacountercyclicalpolicyresponseto
theeconomicdownturn.Ingeneral,globalmarketshaverecognizedthisdiscipline.Peru’s
15TheEarthdayNetworkhttp://www.earthday.org/countries/peru16CIAFactbook.https://www.cia.gov/library/publications/the‐world‐factbook/geos/pe.html17Unlessotherwisenoted,thissectiondrawsondataprovidedbythestatisticsbureauoftheCentralBankofPeru.http://estadisticas.bcrp.gob.pe/
7
emergingbondmarketindexshowsasmallerspreadthantheLatinAmericanaverageand
in2008,Peruwasawardedinvestmentgradestatusbyleadingratingagencies18.
2.2. Weaksocialinfrastructureandpoliticalinstitutions
Thisfiscalrestraintmayhavecomeatthecostofsocialpolicypriorities.Perushows
concerningeducationandhealthoutcomes.Whileschoolattendanceandyearscompleted
haveincreased19,thequalityofeducationispoor.PeruhasthelowestProgramfor
InternationalStudentAssessment(PISA)scoreforallLatinAmericancountries,andthe
highestinternalinequalityofPISAscores(WorldBank,2007).In2006,investmentin
educationwasonly2.5%ofGDP,puttingit157thoutof182countries20.Similarly,
investmentinhealthistroubling;at4.3%ofGDP,Peruvianinvestmenthealthisthelowest
inLatinAmerica21.TheWorldHealthOrganizationranksPeru’shealthsystempoorly,
129thoutof190countries(WorldHealth
Organization,2000).
Despite,strongeconomicgrowth,Peru
continuestofacesignificantpovertywith36%
ofthepopulationunderthepovertylinein
200822.Someprogressagainstpovertyhas
beenmadesince,in2003,52%ofPeruvians
livedunderthepovertyline.Similarly,
extremepovertyhasbeenreducedfrom21%
18http://www.reuters.com/article/idUSN024602622008040319TeamAnalysisofENAHOHouseholdsurvey2008,e.g,today’s6‐15yearoldswillreceiveoverelevenyearsofeducationcomparedtojustsevenyears,thelevelattainedbytoday’s56‐65yearolds.20CIAFactbook.http://www.cia.gov/library/publications/the‐world‐factbook/geos/pe.html21WHO2006numbers.http://www.who.int/countries/per/en/22INEI.2009.LaPobrezaenPeruenel2008.
8
in2003to14%in2008.However,mostofthisimprovementhasbeenconcentratedin
Cusco,Limaandothercoastalareas,givingrisetoseveregeographicinequalitiesand
contributingtoaGinicoefficientincreasefrom46.2in1996to52.0in200823.
CorruptionhasalsobeenaprobleminPeru.In2009,Peruranked75outof180
countriesonTransparencyInternational’sCorruptionPerceptionsIndex,farbehindChile,
whichcameinat2524.Asrecentlyas2009,theMinisteroftheInteriorwasaccusedof
negotiatinganovervaluedcontractforpolicecarsinwhichtwomilliondollarsmayhave
beenembezzled.SimilarscandalshaveeruptedoverChinesearmytanks,ambulances,a
handfulofinfrastructurecontracts,andthenationaloilcompany,Perupetro.
3. NationalBusinessEnvironment
WiththesemacrofoundationswecometoPeru’snationalbusinessenvironment,which
showsparticularstrengthsinthecontextforfirmrivalrybutsignificantweaknessesinthe
othermajorcategories.
3.1. FactorConditions25
Peruwillsoonbenefitfrom
a“demographicwindowof
opportunity”.Overthe
nextfewgenerations,as
today’s10‐14yearolds
becomeadults,the
23WorldBank.WorldDevelopmentIndicators.http://data.worldbank.org/24TransparencyInternationalhttp://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table25Unlessotherwisenoted,thissectiondrawsonTeamAnalysisofENAHOHouseholdsurvey2008
9
proportionofworking‐agePeruvianswillgrowastheburdenofdependentgenerations
(elderlyandyouth)shrink,thusboostingtheproductivepotentialoftheeconomy.
Furthermore,laborforceparticipationrateshavebeenimproving,reachingalmost75%in
2008.
However,innovationinfrastructureisaclearweaknessforPeru,ranked105outof133
countriesontheGlobalCompetivenessIndex(GCI).Thisresultsinapoorpatentoutputas
showninthefigurebelow.Underlyingthispoorperformanceisthepooroveralleducation,
particularlyinmathandscience,ranked130thinGCI.
AfurtherissueforPeruis
thatbulkofthepopulation
worksintheinformalsector.
Shareofinformalemployment
intheeconomyhasbeensteady
ataround70.1%since1997,
thusexcludingmanyPeruvians
fromstrongformalsector
growth.
3.2. ContextforFirmStrategyandRivalry
PeruperformswellontheDoingBusinessreport,movingup9placesfromlastyear
toreceiveanoverallrankingof56outof183countriesin2010.Whilethereareareasthat
needparticularfocussuchasconstructionpermitsandclosingbusinessesasshowninthe
figurebelow,only4countriesconductedmorereformsthanPeru26.Recentreformsinclude
26WorldBankDoingBusinessReport2010.http://www.doingbusiness.org/features/Reformers2010.aspx
10
improvementinlandtitling,simplerlaborregulationforsmallbusinesses,onlineservices
forenforcingcontractsandfilingtaxes,and
additionalequipmentattheportstoexpedite
transittimes.
MovingtoFDI,PeruranksbetterthanIndia,
China,andBrazilintermsofFDIopenness
accordingtoOECD27rankings,andalsoearnsa
highrankingof20onGCIfor“businessimpactof
rulesonFDI”and14for“opennesstocapital
flows”.ForeignerscaninvestinPeruunderthe
sametermsasdomesticinvestorswithveryfewexceptions(restrictionsonlyapplynear
theborder).Theyareabletoremitprofitsanddividendswithoutlimit,andhavetheright
tousethemostfavorableexchangerateonthemarket(UnitedNations,2000).Asaresult,
theprevalenceofforeignownershipinPeruishigh,ranking16intheworldaccordingto
theGCI.
In addition, Peru has initiated a number of trade reforms. Peru has free trade
agreementswithMERCOSURmembers,Chile,US,Canada,Singapore,ThailandandChina,
andisseekingdealswithSouthKorea,EFTA,Mexico,Australia,NewZealand,andtheEU28.
MFN tariffshavedroppedeven further, from13%underFujimori to8.2% in200729. In
2008, thegovernment createda singlewindow for foreign tradepaperwork. Inaddition,
Peruhasnineindustrialandcommercialfreetradezones.
27OECD(2006).”OECD'sFDIRegulatoryRestrictivenessIndex:RevisionAndExtensionToMoreEconomies”.http://www.oecd.org/dataoecd/4/36/37818075.pdf28EconomistIntelligenceUnit.2008.Peru:CountryProfile.29Ibid
11
However,bothDoingBusinessandtheWorldCompetitivenessreportsfindthatlabor
regulationsareasignificantweaknessinthebusinessenvironment.IntheDoingBusiness
report,Peru’sworstrankingisinthe“Employingworkers”categorywherePerucomesin
at149outof181countries30.TheGCIalsoidentifieslaborrigidityasaproblem,ranking
Peru102outof133countries.However,ourresearchshowsthatthelabormarketis
actuallyquitecompetitive.LaborcostperhourisnotunusualgivenPeru’sGDPandis
lowerthancountrieswithsimilarproductivitylevelssuchasBrazilandColombia31.
Furthermore,firingcostsandsocialsecuritycostsarebothextremelylowgivenPeru’sGDP
percapitalevels32.Overall,itseemsthatPeru’slabormarketisquiteunrestricted.
3.3. RelatedandSupportingIndustries
ThoughPeruappearstoperformingrelativelywellonbothquantityandqualityof
suppliers,ithasaclearweaknessintheextentofclusterpolicy,ranked103th.Thisisin
partduetothepoorresourcingandlackofcoordinatingpowerofPeru’sinstitutionsfor
collaboration(IFCs).PeruCompite,theNationalCompetitivenessCouncil,isstaffedbyonly
sixpeopleandhasanannualbudgetofonlyUS$0.3million(Tello,MarioDeetal,2010)..
Furthermore,clusterdevelopmentinitiativeshave,untilnow,beenasubsetofSMEpolicy,
ratherthanastand‐aloneinitiative(Tello,MarioDeetal,2010).Assuch,clusterstrategy
hasonlybeenappliedtosectorsdominatedbysmallandmediumenterprises,ratherthan
thefast‐growthsectorssuchasagribusinessandtourism,whicharedominatedbylarger
firms.Ultimately,firmsratePeru’shandfulofIFCsasonlyacceptable,ratingthem3ona
30DoingBusinessReport.http://www.doingbusiness.org/ExploreEconomies/?economyid=15231TeamanalysisofEIUDatabase200832TeamanalysisofEIUDatabase2008,andHeckmanandPages2003
12
scaleof5(Tello,MarioDeetal,2010).GCIrankingshaverecognizedtheseweaknesses,
rankingPeruonly65fortheextentofclusterdevelopment.
3.4. DemandConditions
EventhoughtaxrevenuesasapercentageofGDPreachedonly13.8%in200933,many
governmentinstitutionsdonothavethecapacitytousetheselimitedresources.For
instance,in2008,localgovernmentsusedonly55%ofresourcesbudgetedfor
investment34.Governmentdoesnotactassophisticatedbuyerwith“government
procurementofadvancedtechnologyproducts”and“successinICTpromotion”ranking
verypoorly,95and99respectivelyonGCI.
Demandconditionsamongthepopulationareimproving,butareunremarkable.Wages
havebeenstagnantforoveradecade.Privateconsumptionhasgrown7%annuallyinthe
pastfiveyearsbutprimarilyinconsumptioncreditandexpendituresinretailstores.This
improvementisalsoevidentintheGCIrankingsinwhichPeruranks45outof74countries
forimprovingdemandsophisticationasaresultofanemergingmiddleclass.Accordingto
PeruvianAssociationofMarketResearchFirms,themiddleclassinLimagrewfrom14.0%
to16.5%between2003and2009(as%oftotalsocioeconomiclevels)35.
4. NationalRecommendations
WhilePeruhasshownimpressivegrowth,tobesttakeadvantageofthisgrowthandto
sustainitgoingforward,Peruneedstodiversifyitsexportbasket,andreduceitsreliance
onmining.Thecountry’sgrowthiscurrentlylargelydeterminedbycommodityprices,and
33CentralReserveBankofPeru.www.bcrp.gob.pe34GobiernosLocalesconbajaejecucionpresupuestalinElComercio,May2009.http://elcomercio.pe/impresa/notas/gobiernos‐locales‐baja‐ejecucion‐presupuestal/20090511/28499335“El16.5%delosLimenosyaesdeclasemedia”Givonio,Sonia.February2010,Gestion.http://gestion.pe/noticia/413012/165‐limenos‐ya‐clase‐media
13
isthusatthewhimofexternal,andoftenvolatilefactors.Furthermore,thehighlycapital‐
intensivenatureandlowtaxrevenuegeneratedbythissectorresultsinlimited
employmentorfinancialbenefitfromminingforPeruvians.Thegovernmentisfacing
decreasingapprovalratesandasurgeinriotsinthefaceofrisingdomesticinequalityand
limitedwagegrowth,soatimelyresponseisneeded.
Whilestrongendowmentshavebeenastrongbaseforgrowth,Peruneedstoexpandits
nationalvaluepropositiontootherarenas.Withastrongfinancialsector,politicalstability,
andgrowingneighbors(Colombia,BrazilandChile),Peruhastheopportunitytodevelop
newclustersthatarelessreliantoncommodities.Ingeneral,thegovernmentmustfinda
waytomovePerufromafactor‐driventoinvestment‐driveneconomy.Weoutlinefour
mainrecommendationsforthePeruviangovernment,privatesector,andcivilsociety
organizationstopursuewiththisgoalinmind.
4.1. PromoteclusterdevelopmentthrougharestructuredPeruCompite
Perushouldapplytheclusterdevelopmentframeworkasanoverarchingnational
policyinitiative,ratherthanembeditasasubsetofSMEdevelopment,whichlimitsthe
scopeofpotentialopportunities.PeruCompitewouldtaketheleadcoordinatingroleand
wouldbetaskedwithidentifyingemergingclusterswithsomedemonstratedlevelof
competitiveness,forupgrading.PeruCompitewouldfacilitatedialoguebetweenkey
privateandpublicactorstoidentifyinitiativesforthegovernmenttoadoptortosupport
thedevelopmentoftheclusters.
Thegovernmentmustsignificantlyincreasefinancialandhumanresourcestoensure
PeruCompitehassufficientcapacityandcapabilitytomeaningfullyplaythisrole.To
accomplishthistask,PeruCompitehastoengagewiththeprivatesectoranddecentralize
14
thescopeofdiscussionandpolicyinitiativestoreachoutsideLima.CreatingRegional
CompetitivenessCouncilswouldalsoproveusefulinachievingthisgoal.
4.2. Investinhealthandeducation
Peru’sabilitytocompeteanddevelopnewclusterswillcontinuetobehamperedwhile
itsuffersfrompoorhealthandeducationaloutcomes.Thegovernmentmustsetthe
improvementoftheseoutcomesasatoppriority;thishasnotbeenthecaseinthepast.
Oneducation,thekeyistomoveorientationfromafocusonquantity,whichhasbeen
largelyachieved,tooneofquality.Thiswillrequireclarificationofstandardsand
accreditationmechanismsandstringentimplementationofaccountabilityandmonitoring
mechanismsbytheMinistryofEducationandrelevantcivilsocietyinstitutions.Thiscanbe
achievedbycreatingaharmonizedteachereducationsystem,ongoingtrainingprograms
forteachers,andbycreatinganationalsystemtoevaluateandaccrediteducativequality36.
Onhealth,themainneedistosignificantlyincreasespending.Werecommenddoubling
spendingtomatchLatinAmericanaverages(Poullieretal,2002).TheMinistryofHealth
willneedtoidentifypriorityinvestmentstoensurethattheincreasedspendingcanbe
efficientlyabsorbedandeffectivelydeployedtoimprovetheconcerninghealthindicators.
Inparticular,thegovernmentshouldallocateeffortsinimprovinguniversalcoverageand
developmentofhumanresourcesforthehealthsector37.
4.3. Tacklecorruption
AsPerulookstodiversifyawayfrommining,developnewPeruvianenterprises,and
attractnewplayerstothecountry,thegovernmentmustinvestinimprovingitscredibility
asalegitimate,nonrent‐seekingpartner.36ConsejoNacionaldelaEducacion.2006.ProyectoEducativoal2021.37Franckeetal.2006.SaludenelPeru:DiagnosticoyPropuestasparaelPeriodo2006‐2011.
15
Totacklecorruption,thegovernmentshouldstreamlineitsprocessesandrevise
regulations.Moreover,thegovernmentshoulddevelope‐governmentprocesses,clarify
procurementstandards,andincreasetransparencyingovernmentprocurement.Finally,
thegovernment,privatesector,andcivilsocietyinstitutionsshouldrequestaccountability
andprogressreportsontheimplementationoftheNationalPlanagainstCorruption.
4.4. Secureafair,competitiverevenuestreamfromtheminingcompanies
Therecommendationsaboveallrequiresignificantfunding.Whilethegovernmentmay
beabletoreprioritizeotheractivitiesordeployfundingthatmightotherwisehaveformed
afiscalsurplus,webelievethatitisessentialtosecurerevenuesfromthemining
companies.Theycurrentlyenjoycontractsthat,duetolegacyagreements,aresignificantly
beyondwhatisnecessaryforinternationalcompetitiveness.Forexample,mining
companiespaybetween4‐5%ofroyaltiesinChile,totaling$24.8billionintaxesoverthe
pastfiveyears38.Thegovernmentshouldatleastchargewhatthelegalroyalty
requirementsstipulate,whichwouldgenerateanestimated10%increaseinbudget39.Ifa
negotiationimpasseisreached,andgovernmentcontinuestobeunabletosecuredirect
taxesinatimelyfashion,onecreativeoptionwouldbefortheminingcompaniestodirectly
fundPeruCompiteactivities,butwithnomembershipontheboard.Thismayprovide
themwithafacesavingopportunityonthetaxfront,whilstallowingthegovernmentto
pursueitsaims.
38BloombergNewshttp://www.bloomberg.com/apps/news?pid=20601086&sid=afTImVbrHf6E39Estimated$2.7billionincreasesinrevenuesfrom1‐3%royalties,onanestimatedbudgetof$26billionin2007
16
II. TourismClusterAnalysis
TheWorldTourismOrganizationdefinestourismas“travelandstayinplacesoutsidea
person’susualenvironmentformorethantwenty‐fourhoursandnotmorethanone
consecutiveyearforleisure,businessandotherpurposesnotrelatedtotheexerciseofan
activityremuneratedfromwithintheplacevisited."40
Tourismcanbeofseveraltypes.ThePeruviangovernmenthasidentifiedthemost
importantonestobe:urban(cities),cultural(archeologicalsites,museums,etc.),nature
(naturalreserves,etc.),community,adventure,andbeachtourism41.Inthissection,our
discussionwillcenteroninternationaltourism,acrossalltheabovetypes,asitcanbe
definedasanexportandismorescalablethandomestictourism.
1. Theriseoftourism
1.1. Globaltrends42
In1950,therewereonly25millioninternationaltouristarrivals43worldwide
comparedto922millionin2008.Thisrepresentsanaverageannualgrowthrateof6.5%,
makingtourismnowoneofthelargestandfastestgrowingeconomicsectorsworldwide.
Thetravelandtourismsectornowaccountsfor9.9%ofglobalGDP,10.9%ofexports,9.4%
ofinvestment44and30%ofcommercialserviceexports.Theshareofarrivalsreceivedby
developingcountrieshasrisenfrom31%in1990to45%in2008.Thesestatisticsshowthe
potentialofinternationaltourismtocontributetoeconomicgrowth.
40WorldTourismOrganization.1995.CollectionofTourismExpenditureStatistics.41PROMPERU.2007.Perfildelturistaextranjero.42AllfigurestakenfromUNWO2009“ToursimHighlights”unlessotherwisestated43UNWTO“HistoricalPerspectiveofWorldTourism”,http://unwto.org/facts/menu.html44WTTC,figuresincludeestimatesofT&Tsectordirectandindirectactivities
17
1.2. HistoryofPeruviantourism
AstheonlyseatoftheancientIncanempire,Peruisunique.In1983,MachuPicchuand
cityofCuscoweredeclaredWorldHeritagesitesbyUNESCO.Anadditionalfivesiteswere
addedintheeighties,twointhenineties,andtwomorethisdecade,bringingthetotalto
eleven45.ThisplacesPeruinthetop20countriesglobally,andthirdinLatinAmerica
behindMexico(29)andBrazil(17).
In1988,fiveyearsaftertheinitialWorldHeritageSitedeclaration,Perustillreceived
lessthan200,000touristsayear46.Akeyturningpointoccurredin1992,whenAbimael
Guzman,leaderoftheShiningPathwascaptured.Thedisintegrationoftheterrorist
organizationledtoincreasedsafetyandstabilityinthecountry,enablinganincreasein
tourism.ThegovernmentcreatedtheCommissionforthePromotionofPeru,PROMPERU,
in1996anddeclared1997astheyearof600,000tourists47,acknowledgingforthefirst
timethattourismshouldbeapriority.In1999,theViceMinistryofTourismwascreated,
andtheNationalStrategicTourismPlanwascreatedin2004.In2007,intheassociated
foodcluster,theNationalGastronomicAssociation(APEGA)wascreated.Inthesameyear
MachuPicchuwasdeclaredoneofthe7newwondersoftheworld.
2. TourismEconomicPerformance
2.1. Growthandcurrentperformance
ThePeruviantourismindustryhasgrownatstrikingratesastheeconomyhas
stabilizedandpublicsafetyhasincreased.Since2004,tourismarrivalshavegrown12%
annually,over3timesasfastasaveragegrowthratesintheworld(UNWTO,2009).
45UNESCOwebsitehttp://whc.unesco.org/en/statesparties/pe46ObservatorioTurísticodelPerú,http://www.observatorioturisticodelperu.com/badatur.php?pa=peru&id=datecoperu47Targetmissedby1year–576Kin1997,616Kin1998
18
Thestoryregardingtotalreceipts(spendingbytourists)issimilarlyadvantageous.
Whilethisgrowthisimpressive,ithasbeenhighonalowbaselevel.AsfigureCshows,
Perureceivesonly71touristsper1000capita,whichislowrelativetootherLatin
19
AmericancountriesandalsotoothercountriessuchasCambodia,Egypt,Thailandand
JordanthatarecompetitorsforPeru48andhelpsetabenchmarkfordesirableoutcomes.
AsPeruhasMachuPicchuandthecityofCusco,theseselectedcountriesalsohave
uniquehistoricalandculturalendowments,suchasthepyramidsinEgypt,AngkorWatin
CambodiaandPetrainJordan.However,thesecountrieshavemanagedtobuildtourism
intoamoreimportantpartoftheireconomy,representing6‐9%ofGDP,comparedtoonly
3%ofGDPinPeru(WEF,2009).
2.2. TheimportanceandlimitationsofMachuPicchu
PartoftheexplanationofPeru’slimitedvolumeoftourismisthatthecountryrelieson
thesinglemajorattractionofMachuPicchu,whichdominatesthesector.Touristscurrently
donotexploretherestofthecountry.InsteadtheyflyintoLima,maketheirwaytoCusco,
visitMachuPicchuandthenleave.Touristsareconcentratedinthesefewareas:73%of
internationaltouristsenterLima,primarilyintransitoronbusiness,and40%visitCusco
andMachuPicchu49.Only20%ofinternationaltouristsgoontovisitthenextmost
popularsites,ArequipaandLakeTiticaca.
Moreover,thenumberoftouriststhatMachuPicchucanabsorbislimitedbytheneed
topreservethesite.Currently,thedailycapontouristsallowedintothesanctuaryis2,000
people.MachuPicchuiseffectivelysaturatedasatouristdestinationandcannotberelied
uponasafuturesourceofgrowthforthecluster.
48Intermsofattractions,anddistancefromthecountryoforiginwherelargestshareoftouristscomefrom.Source:MINCETUR.2008.PlanNacionaldeTurismo.49PROMPERU.2007.PerfildelTuristaExtranjero.http://www.peru.info/s_ftoPublicaciones.asp?HidAccion=Grupo&HidId=2&ic=1&SubTipo_ZP=1
20
3. TourismCluster
Peruhasdevelopedafairlyrobusttourismcluster,whichisdisplayedbelow:
Atthecenterofthemaparethekeyelementsofthecluster:theattractionsand
activities,restaurants,accommodations,andlastly,transport.Wehavealreadydiscussed
Peru’sstrengthsintermsofculturalattractions.Theseareaugmentedbyactivitiessuchas
hikingandtrekkingintheAmazon,communitydevelopmenttourisminLakeTiticaca,and
wildlifetourisminthemountains.
Alsoofnoteistherestaurantsector,whichisthelinktotheassociatedfoodcluster,an
increasinglyimportantsectorinPeruthatwillbediscussedlaterinthisdocument.Wewill
alsoreturntotheissueoftransportationinthefollowingsection.
21
Onthelefthandsideoftheclustermaparetherelatedandsupportedindustriesforthe
tourismclusterwhichrangefromhospitalityservicesandsuppliers,toartisanand
handicrafts,toconservationandpreservationservicestomaintainhistoricalandnatural
sites.Ontherighthandsidearethesupportinggovernmentagencies.Itisclearthatthere
areplentyoftheseagencies,thoughtheirefficacycouldbeimproved,aswewilldiscuss.
4. TourismBusinessEnvironment
Peru’stourismclusterisextremelypromising,buthasyettoperformtopotential.At
thecoreoftheclusterarerichhistoricalandculturalendowments,whichserveasakey
driverfortourism.Beyondtheseendowments,Perualsohasthebenefitofavibrant
culinarycluster,whichis
showingpromisinggrowth.
However,criticalissues
remainacrossallcomponents
ofthediamond,including
poortransportinfrastructure,
weakIFCs,limited
competition,andthelackof
diversificationawayfrom
MachuPicchu.
4.1. FactorConditions
TheIncanruinsandthebiodiversityprovideastrongbasefromwhichtoattract
tourists.AstheTourismCompetitivenessratings(WEF2009)furtherillustrateinfigureG
22
below,Peruhasastrongcompetitiveadvantagehere,particularlyonnaturalresources
whereitranks8thglobally.
However,fortourismtothrive,a
robusttransportinfrastructureisneeded
inadditiontotheattractions.Perudoes
notperformwellhereasillustratedby
verypoorrankingsongroundtransport
andairtransportinfrastructure.On
groundtransport,therearequantity
issuesintermsofroaddensitywhichis
ranked114thoutof133countries.One
mayarguethatthismetricislessrelevant
foracountrywithlargeareasofmountainousandjungleregions.Howevermoreworrying
isthepoorqualityoftheexistinginfrastructure.Theroadqualityisranked99thandthe
overallqualityofgroundtransportnetwork,whichreflectsthecountry’sinabilitytooffer
efficient,accessibletransportationtokeybusinessandtouristattractions,isranked120th.
Thisislikelyaresultoflowinvestment;publicinvestmentininfrastructureislessthat1%
ofGDPcomparedtoover3%inColombiaandBolivia50.
Onairtransportinfrastructurethepictureismorecomplex.Perudoeswellinterms
ofthecarryingcapacityofitsairlines,withacompetitiveadvantageinavailableseat
kilometers(ranked33rddomesticand47thinternationallyaccordingtoWEF2009).Lima’s
JorgeChavezairportrecentlyretaineditspositionasthebestairportinSouthAmericain
50Drees‐gros(2006),“InfraestructuraparaelPerudemanana”usingdatafromEasterlyandServen(2003).
23
Skytrax2010WorldAirportAwards.Thisairportisoperatedunderathirty‐year
concessionbyaGermanconsortium.Underthisconcession,thefirmwillbuildasecond
runway,constructanewterminalcomplex,expandtheretailstrategy,anddevelopnewair
cargofacilities.
Howevermovingbeyondthisairport,thequalityofairporttransportinfrastructureis
low,ranked94thbytheWorldEconomicForum.Furthermore,forthesizeofthecountry,
Peruhasfewairports,leadingtoarankingof73rdonairportdensity,puttingitbehindits
neighborsEcuador,Chile,ColombiaandBolivia.Perualsodoesparticularlypoorlyinterms
ofinternationalairtransportnetwork,ranked90th,primarilyduetorestrictiveAirService
Agreementsasdiscussednext.
4.2. FirmRivalry
RestrictiveAirServiceAgreementsmeanthatthenumber,size,andpricesofflightsin
andoutofPeruaresubjecttoreviewbythegovernment.Expertsfoundthatonlyoneof
Peru’sairserviceagreementswouldqualifyastruly“openskies”,thatwiththeUS
(Intervistas‐EU,2009).In2004,PeruwithdrewfromanopenskiesagreementwithChile,
thesecondlargestorigin/destinationcountryfromPeru(Intervistas‐EU,2009).Forecasts
saythatliberalizingtheAirServiceAgreementswouldincreaseinternationaltraffictoPeru
by2.2millionpassengers,anincreaseof56%from2007numbers(Intervistas‐EU,2009).
Thesamereportfoundthat,forpassengers,fareswoulddeclineby35%ifbothmarket
accessandownershiprestrictionswererelaxed(Intervistas‐EU,2009).
Theairlineindustryisrestrictedmuchliketheairinfrastructuresector.Forexample,
Perurestrictsforeignownershipandcontrolinaircarriersto49%(Intervistas‐EU,2009).
Asaresult,LanPeru,asubsidiaryofLanChile,serviced80%oflocalflightsin2010.Star
24
Peru,anotherlocalfirm,reached12%ofdomesticflightsbutmostsmallairlineshavevery
limitedparticipationandmanyhavegonebankrupt51.
Thelimitedcompetitionintheairlineindustryismirroredbylackofcompetitionin
thehigh‐endhotelmarket.Thoughthenumberofhotelshasincreased,occupancyratesfor
hotelroomsremain
highrelativetoother
touristdestinations.
Thissuggestsa
higherthanaverage
profitmargin,
especiallywhen
combinedwiththe
insightfromour
interviewsthathigh‐endhotelroomstendedtobeoverpriced52.Inacompetitivemarket
wewouldexpectthisapparentprofitabilitytoattractentry,resultinginareductionin
occupancyandpricestomorecompetitivelevels.However,wemightbeobservingatime
lag,asnewspapersarenotingtheappearanceandconstructionofseveralnewfivestar
hotelsinPeru,includingthreebytheStarwoodGroup53.Thesestatisticsshouldbe
monitoredgoingforwardtoseeiftheymovetolevelsthatsuggestthereisacompetitive
environmentwithoutsignificantbarrierstoentry.
51AmericaEconomicahttp://www.americaeconomia.com/notas/perudebatesobreunacompetenciaparalaaerolineachilenalan52InterviewwithDiegoComin(HBS)afterhisworkstudyingtourisminPeru,supplementedbyDanielAlfaro’s(headofPENTUR)viewofindustryconsolidationleadingtolackofcompetition53NASDAQhttp://www.nasdaq.com/aspx/stock‐market‐news‐story.aspx?storyid=201003221725dowjonesdjonline000394&title=hotels‐hot‐in‐peru‐as‐new‐developments‐drive‐boom
25
Thoughcompetitivenessintheairlineandhotelindustriesappearslimited,signsforthe
futureseempromising.Awardingaconcessionfortheairportwasagoodfirststep.The
governmenthasgonefurther,enactingataxbreaktohelpboostthesector.Asof2001,the
salestaxontourism‐relatedindustriesincludinghotels,touristpackages,andrestaurants
waseliminated54.
4.3. Relatedandsupportingindustries
Asinthenationalbusinessenvironment,theinstitutionsforcollaborationinthe
tourismclusterarequiteweak.Therearethreemaingovernmentbodiesinfluencingthe
tourismclusterdevelopment.PROMPERU,thePeruvianPromotionAgency,hascentered
itseffortsinpromotingMachuPicchuasthemaindestinationinPeru.CENFOTUR,the
educationalinstitutionfortourism,issupposedtobedecentralized;however,asmostof
thetourisminstitutions,itspresenceisconcentratedinLimaandCusco.Finally,
PROINVERSION,theinvestmentpromotionagency,hasallocatedmoreeffortstoattract
investmentsinminingandinfrastructure,whileinvestmentinthetourismsectorhasnot
beenapriority.
ThemainprivatesectorIFCsareCANATUR,theregionalchambersoftourism,and
APEGA.CANATUR,themainindustrygroup,iscomposedofnineofthemostimportant
nationalchambers,includinghotels,airlines,andtravelagenciesassociations.CANATURis
basedinLima,asisitsscopeofdiscussion.Althoughregionalchambersexist,accordingto
ourinterviews,theyarepoorlycoordinatedwiththenationalchambers55.Moreover,Lima
andCuscodominatediscussionsandinfluencethecluster’sinitiatives.
54EconomistIntelligenceUnit.2008.Peru:CommerceReport.55HenriqueUrbanoandManuelIzaguirre.ObservatorioTuristicodelPeru.InterviewheldinMarch2010.
26
AnotherIFC,APEGA(NationalGastronomicAssociation)showspromise.Itsleader,
GastonAcurio,isaleadingrestaurateurandhasgarneredbroadpublicandprivatesupport
fortheorganization.Thisbringsustothecriticalrelatedfoodcluster,whichislinkedtothe
tourismclusterthroughtherestaurantindustry.
Peruisexperiencingagastronomic
boomreflectedbyaneardoublingof
restaurantsoverthelasttenyears.The
cuisinebenefitsfromthebiodiversity
oftheregionandisoneofthemost
diverseintheworldwithalmost500
typicaldishes56.In2009,BonAppetitemagazinecalledPeruviancuisine“thenextbest
thinginworldcuisines”.ChefGastonAcuriohasbeenattheforefrontoftheexpansionof
PeruvianrestaurantsandhasopenhighlyratedrestaurantsinSanFrancisco,MexicoCity,
andColombia,makinghimtheonlyLatinAmericancheftoopenaninternationalchainof
restaurants.
Thisboomhasbenefittedthetourismindustryaswell.42%oftouristsnotethat
PeruviancuisinewasafactorintheirdecisiontocometoPeru57.Over90%oftouristsare
highlysatisfiedwiththefoodandwouldrecommendittotheirfriendsandrelatives58.
Evenmoredirectly,anumberoftouristsarecomingonlyforthefood.5%oftourists
describethemselvesas“gastronomic”tourists.InMexicoandSpainthesetouristsmakeup
56ExpatPeru,http://www.expatperu.com/peruvian‐food.php57PROMPERU.2007.PerfildelTuristaExtranjero.http://www.peru.info/s_ftoPublicaciones.asp?HidAccion=Grupo&HidId=2&ic=1&SubTipo_ZP=158Ibid
27
8%and10%oftouristsrespectively59.Travelagenciesarenowoffering“gastronomic”
toursofPeru.Thisindustrycouldprovetobearealadvantageforthetourismsector.
DemandConditions
Perucurrentlyappearstoattractapredominatelylow‐profit‐marginbackpacker
segment.Whiletouristsspendonaverage$970pervisit60,thisisspreadoveran11‐day
triponaverage61.46%oftouristsstaymorethan2weeks,and26%staymorethan3
weeks62.VisitorstoPerutendtobelesswealthy‐48%haveanannualfamilyincomeof
lessthan$40,000.52%stayinlow‐endaccommodations(1‐2starorcamping)63.An
additionalpartoftheexplanationofloworlow‐marginspendisseeninthecountryof
originoftourists.Currently,Perureceivesthevastmajorityofitsinternationaltourists
fromLatinAmericancountries.Whilethe
USisthesecondlargestsender,theother
topfivesendingcountriesareallneighbors.
Peruisunabletoattractsignificant
numbersoftouristsfrommoredistant
countriesbecausePeruisundersold.To
start,despiteallthemanyissuesthathave
beenmentionedthroughoutthisdocument,
59SecretariadeTurismodeMexico.2008.PerfilyGradodeSatisfacciondelTurista.http://www.sectur.gob.mx/wb/sectur/sect_perfil_y_grado_de_satisfaccion_de_los_turista,InstitutodeTurismodeEspana.2008.ElTurismoEspanolencifras.http://www.iet.tourspain.es/paginas/Publicaciones/FichasPSel.aspx?clase=12&option=public&idioma=es‐ES60WorldTravelandTourismCouncil.http://www.wttc.org/eng/Tourism_Research/61Ibid62PROMPERU.2007.PerfildelTuristaExtranjero.http://www.peru.info/s_ftoPublicaciones.asp?HidAccion=Grupo&HidId=2&ic=1&SubTipo_ZP=163Ibid
28
thesatisfactionlevelsoftouristsareveryhigh,reflectedbythefactthat87%ofvisitors
wouldrecommendtoothers“withoutadoubt”64.Interviewsalsosuggestedthattourists
areoften“pleasantlysurprised”byPeru,whichsuggeststheyhadlowexpectationsofthe
country65.Thegovernmentlaunchedamarketingcampaignin2008usingtheslogan“Peru,
LivetheLegend”,whichreplacedtheprevious“Packyoursixsenses,cometoPeru”.The
newcampaignwasintendedtotargetanaudienceof510millionpeopleacrosstheUS,
WesternEuropeandthewealthierSouthAmericancountries.However,advertisingdoes
notappeartobepenetratingsuccessfully,asevidencedbythelackofvisibilityofthe
campaignintheUS,especiallyrelativetoColombianandChileancampaigns66.
5. ClusterRecommendations
PeruneedstodiversifyitstourismofferingsawayfromCuscoandMachuPicchu.It
needstoattractmoretouristsandalsomovetohighervalue‐addtourists,whowillspend
onhighermarginactivities.However,Perushouldnotloseitscurrenttouristbase,asthey
contributetotheeconomyandmayreturninlateryearswhenmorewealthyandableto
spend.Toachievethisaim,weproposefourspecificrecommendations.
5.1. InitiatearobustNationalTourismStrategy
Giventhepotentialoftourism,Perumustpositionthiscluster’sdevelopmentasa
nationalpriority.Itmustdevelopauniquevaluepropositionarounditsimpressive
cultural,naturalandculinarystrengthsandaconcretenationalvisionwithspecifictargets
(e.g.numberoftourists,numberofvisitorstoeachsite),timelinesandintermediate
milestones.Theexistingplans,whichlacksufficientclarityandactionsteps(e.g.,Tourism
64MINCETUR.2008.NationalTourismPlan.65InterviewwithDiegoComin(HBS)afterhisworkstudyingtourisminPeru,66PerceptionsfrominterviewedPeruvianslivingintheU.S.
29
plan,COPESCO,CALTUR)needtobeupdated,revampedandifnecessary,consolidated.We
suggestthattheMinistryandTradeandTourismbeheldaccountablefordeliveringthe
vision,butshouldbeempoweredtodosothroughallocatingappropriateresourcesand
decision‐makingpower.
5.2. Developandpromotenewtourism“products”
Peruneedstoinvestsignificantlyindiversificationofitstourismproducts.First,itmust
acceleratedevelopmentoftheotherruinsandsitessuchasKuelaptobroadentheportfolio
oftourismlocations.Strongertiesanddevelopmentofarcheologicaltrainingcanbeused
aspartofthedriveinthisarea.
Second,inadditiontolocationdevelopment,Perumustalsofocusonthematic
development.Thealready‐emerginggastronomicandecotourismproductsshouldbe
supported.Theybothbuildonstrongnaturalandhistoricendowmentsbutwillbenefit
fromthedevelopmentofspecificinfrastructureandtrainingprograms,whichthe
governmentcansupport,bringingintheprivatesectorwhereprofitincentivesare
sufficient.Perushouldalsolookbeyonditsgeographicboundariestoco‐ordinatecross‐
countryinitiativessuchasAmazonadventureswithBrazilandColombiaorAndeancircuits
withBoliviaandEcuadortotakeadvantageofanddevelopregionalstrengths.
HoweverPerushouldnotassumethatdemandwillgrowsufficientlyjustbyimproving
thesupplyoftouristproducts.PROMPERUshouldbetaskedwithpromotingPeruasa
diversecountrywithseveraldestinationsandactivitiesintradefairs,writtenmedia,and
television.Inadditiontobroadnationalcampaigns,targetedmessagesforparticular
audiencesshouldbedeveloped(e.g.PROMPERUshoulddelegatetoAPEGAtoleadin
marketingtointernationalgastronomicaudiences).
30
5.3. Upgradetransportinfrastructure
Thegovernmentshouldliberalizeitsairserviceagreementsandallowmarket
mechanismstoplayagreaterroleindeterminingthenumber,size,andpricesofflights.
Thegovernmentwillalsoneedtoincreaseinvestmentinregionalairports,giventhelow
airportdensityandourrecommendationofdevelopingnewtouristsitesandlocations.
Thegovernmentshouldacceleraterelevantexistingtransportinfrastructureprojects
byincreasingthebudgetallocatedtotheseinitiativesandunlockingmoreofthebudgetfor
immediatedeployment.However,focusshouldbeappliedtothoseprojectsthatarecritical
totourism.WhiletheMinistriesofTourismandofTransporthavetakenfirststepsin
coordinationthroughthedevelopmentoftheCOPESCOInfrastructurePlan,the
governmentshouldstrengthenthis,andensureadequateoversight,leadershipandbudget.
5.4. StrengthenIFCs
Inordertosupportadiversification,theIFCsshoulddecentralizethescopeof
discussionstopreventLimaandCuscofromdominatingallinitiatives.Thegovernmentcan
encouragetheexistingIFCstodothis,ornewIFCstoemerge,bysharingthenewNational
Strategy,andearmarkingfundsthatcanbeusedforpublicgoodprojectsthatalignwiththe
newplan.AspartofthediversificationtheIFCsmustfocusonimproveco‐ordination
betweenregional,nationalandlocallevels.
Currently,tourism’sIFCsrelytooheavilyongovernmentinvolvementanddrive.
Ownershipmustbesharedwiththeprivatesectortosecurenecessarybuy‐inandensure
sustainability.Whilethegovernmenthassuccessfullyidentifiedafew“champions”the
baseofprivatesectorinvolvementshouldbebroadenedtoincludeentrepreneursfrom
otherregionsandbusinesslinese.g.,travelagencies,Universities,traininginstitutes.
31
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