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WEEKLY NEWSLETTER
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Peru
Index
The guano boom, made possible by the droppings from
millions
of birds on the Chincha Islands, proved to be a veritable
bonanza
for Peru, beginning in the 1840s. By the time that this
natural
resource had been depleted three decades later, Peru had
exported
some 12 million tons of the fertilizer to Europe and North
America, where it stimulated the commercial agricultural
revolution. On the basis of a truly enormous flow of
revenue to
the state (nearly US$500 million), Peru was presented in
the
middle decades of the nineteenth century with a historic
opportunity for development. Why this did not materialize,
but
rather became a classic case of boom-bust export
dependence, has
continued to be the subject of intense discussion and
debate.
Most analysts, however, concur with historian Magnus
Mörner that
"guano wealth was, on the whole, a developmental
opportunity
missed."
On the positive side, guano-led economic growth--on
average 9
percent a year beginning in the 1840s--and burgeoning
government
coffers provided the basis for the consolidation of the
state.
With adequate revenues, Castilla was able to retire the
internal
and external debt and place the government on a sound
financial
footing for the first time since independence. That, in
turn,
shored up the country's credit rating abroad (which,
however, in
time proved to be a double-edged sword in the absence of
fiscal
restraint). It also enabled Castilla to abolish vestiges
of the
colonial past--slavery in 1854 and the onerous native
tribute--
modernize the army, and centralize state power at the
expense of
local caudillos.
Data as of September 1992
Consolidation of the State
The guano boom, made possible by the droppings from
millions
of birds on the Chincha Islands, proved to be a veritable
bonanza
for Peru, beginning in the 1840s. By the time that this
natural
resource had been depleted three decades later, Peru had
exported
some 12 million tons of the fertilizer to Europe and North
America, where it stimulated the commercial agricultural
revolution. On the basis of a truly enormous flow of
revenue to
the state (nearly US$500 million), Peru was presented in
the
middle decades of the nineteenth century with a historic
opportunity for development. Why this did not materialize,
but
rather became a classic case of boom-bust export
dependence, has
continued to be the subject of intense discussion and
debate.
Most analysts, however, concur with historian Magnus
Mörner that
"guano wealth was, on the whole, a developmental
opportunity
missed."
On the positive side, guano-led economic growth--on
average 9
percent a year beginning in the 1840s--and burgeoning
government
coffers provided the basis for the consolidation of the
state.
With adequate revenues, Castilla was able to retire the
internal
and external debt and place the government on a sound
financial
footing for the first time since independence. That, in
turn,
shored up the country's credit rating abroad (which,
however, in
time proved to be a double-edged sword in the absence of
fiscal
restraint). It also enabled Castilla to abolish vestiges
of the
colonial past--slavery in 1854 and the onerous native
tribute--
modernize the army, and centralize state power at the
expense of
local caudillos.
Data as of September 1992
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