In his book Historia económica del Perú: Desde la conquista española hasta el presente, Carlos Contreras Carranza seeks to paint a comprehensive picture of Peru's economic history by addressing two questions that are frequently asked in Latin American studies. Firstly, why has Peru, along with other countries in the region, been unable to attain much-coveted economic progress? And secondly, to what degree has the colonial legacy contributed to this outcome?
To answer the above questions, Contreras systematically analyses the following variables over a period of 500 years: (i) the population in Peru; (ii) the export sector (natural resources) and its links with the domestic economy; (iii) fiscal and monetary policies; and (iv) institutional changes (i.e. property rights). The analysis of these last two variables constitutes the book's most significant contribution because it deals with little-explored topics in Peruvian economic history and because they emphasise the analysis of endogenous development factors. Likewise, Contreras presents a long-term vision of the impact of relations between the state and the private sector on the Peruvian economy.
Contreras' book engages in a continuous and fluid dialogue with two other books that offer a comprehensive perspective of Peru's economic history: Rosemary Thorp and Geoffrey Bertram's Peru 1890–1977: Growth and Policies in an Open Economy (Columbia University Press, 1981); and Bruno Seminario's El desarrollo de la economía peruana en la era moderna (Universidad del Pacífico, 2015). Contreras' text also explores and connects various topics covered in studies on Peru's economic history during different periods. What sets Contreras' book apart from the others is its focus on institutional analysis and fiscal policies. The most significant contributions in this area can be found in the chapters discussing the colonial and post-independence periods leading up to 1930.
In his text, Contreras highlights the impact of various situations and long-term processes of the Peruvian economy on the development of labour systems, inequalities and informality. Although he does not provide a comprehensive study of these crucial issues, he emphasises their importance in future research agendas towards the end of the book.
A weakness of the book is the lack of analysis that would have allowed for the incorporation of the Peruvian case into the history of the region. It would have been useful to engage in dialogue with classic works by Victor Bulmer Thomas, Rosemary Thorp, Luis Bertola and José Antonio Ocampo to complement Contreras' excellent work.
The book is divided into 14 chapters, with an equal focus on the colonial and republican periods. The first three chapters analyse the formation of the colonial system, highlighting the impact of the demographic catastrophe, ecological crisis and the introduction of new tools like hammers and ploughs. The author's most noteworthy contribution is the analysis of the introduction of notarial protocols, which had a significant impact on the economy and culture of the colonial Andes. This legal tool was used to record commercial activities, contracts and private property, which were all new concepts for the Andean people. Over time, the Indigenous population adapted to the use of these protocols, using them for their commercial transactions and to protect their rights against the Spanish Crown. This adaptation signalled the acceptance of the new rules imposed by the invaders.
The main focus of the chapters on the colonial economy is mining. As explained by Contreras, the colonial state organised the economy around silver mining, making even the development of activities for the domestic market dependent on this extractive activity. This meant that tax revenues were directly affected by fluctuations in the production or price of the metal, making state financing dependent on mining. This reliance on natural resources for tax revenue continued into the republican period. In addition, Contreras discusses colonial trade and agriculture and introduces the Andean peasant economy, which will undoubtedly pique the reader's interest in learning more about it.
In the following chapters, the author delves into the changes that took place in the colonial economy of Peru during the eighteenth century and their effects on the subsequent struggle for independence. Contreras argues that the depletion of the silver mines towards the end of the century led to a severe economic crisis in the Viceroyalty of Peru, which worsened with the onset of the South American War of Independence in 1810. The author highlights the impact of this crisis on the newly independent state, as it made it much harder for diverse interest groups to come to political agreements under constant fiscal pressure and without prior experience in governing a state. He ponders over the consequences of transitioning from an economy where fiscal, monetary and institutional policies were formulated from an imperial capital to one where they are crafted from a weak national state. How can a local state provide subsidies and privileges that a global fiscal structure, like the Spanish monarchy, granted to the private sector? These questions offer a fresh approach to analysing the colonial legacy's influence on the economic development of Peru.
The second part of the book examines the republican Peruvian economy's development. Contreras highlights several key issues that plagued the Peruvian economy in the first half of the nineteenth century: (i) it struggled to integrate effectively with the new global trade system; (ii) due to weak population growth, labour markets and consumer goods remained underdeveloped; (iii) monetary circulation was severely limited; (iv) communication systems were inadequate; and (v) low production, excessive external debts and poor tax-collection capabilities contributed to a chronic fiscal crisis. Despite these challenges, the guano exports produced a fleeting period of fiscal prosperity in the mid-nineteenth century, enabling the Peruvian state to improve communication networks and property rights, and stimulate investment in other sectors of the economy. However, the decline in guano prices and the Nitrate War (1879–83) plunged the Peruvian economy back into a profound depression.
In the late 1800s, Peru's economy successfully reintegrated into the global market and enjoyed a prolonged period of exporting prosperity from 1895 to 1929. Contreras' research reveals that this economic growth was not solely due to the surge in international prices for natural resources, but also resulted from institutional reforms that facilitated private investment, both domestic and foreign, and created a relatively stable financial and monetary system. This perspective offers a valuable contribution to the historical analysis of this era.
In 1929, the Great Depression impacted Peru and other Latin American countries, leading to the consolidation of the state-directed development concept. This model was characterised by the state's control of exchange rates, monetary issuance, external debt to finance fiscal spending, and chronic inflation, as noted by Contreras. In a similar vein, the Peruvian government established sectorial development banks with the intention of providing subsidies to private enterprises. Contreras asserts that mining regained its position as the leading export sector, but it underwent a denationalisation process and became disconnected from the local market, unlike during colonial times.
From 1962 to 1990, the state's role in the economy significantly increased, resulting in the creation of numerous state-owned companies across all sectors. Unfortunately, this process was marred by significant fiscal and macroeconomic imbalances, leading to hyperinflation in 1987. In the later chapters, Contreras provides an overview of the market reforms implemented in the 1990s, as well as the new export boom experienced between 2001 and 2014. These chapters highlight key issues in Peruvian economic history that still require further analysis, such as inequalities, informality and the illegal economy.
Finally, it is not an exaggeration to say that this is a fundamental book, not only for anyone who wants a comprehensive view of Peruvian economic history but also for specialists looking for new approaches and research agendas.
