The politics of market reform in Peru

The research studies how economic reforms, because of uneven distribution of costs and benefits, shape the behavior of collective actors in civil society, and simultaneously, how collective actors affect the implementation of these reforms through contestation, negotiation or compromise. Drawing upon an in-depth analysis of three major sets of market-oriented reforms in Peru, the research found evidence that economic reforms involving narrowly concentrated costs or benefits have strengthened previously organized business groups, whereas those involving widely dispersed costs and benefits have had much less impact on the behavior of collective actors. Hence the Peruvian tax reform has generated intense lobbying by business groups for tax cuts and limited tax enforcement because of concentrated costs. Likewise, a small business sector has pushed forward the social security pension reform as a result of the benefits which they continue to reap. In contrast, the poverty alleviation reform has failed to generate an organized response from civil society and has been gradually molded to match the political interests of state actors. This variation in societal responses, which is documented on the basis of interview data and statistical analysis, has important implications for the long-term viability of market-oriented reforms.