This study is part of a series of OECD country reviews of innovation policy devoted to member as well as non-member countries.* It was requested by the Peruvian authorities, represented by the Ministry of Economy and Finance, and was carried out under the auspices of the OECD Committee for Scientific and Technological Policy (CSTP) with the collaboration and support of the Inter-American Development Bank (IDB).

Peru has achieved outstanding economic growth over the last decade. With average annual growth of GDP and GDP per capita of 6.3% and 4.5%, respectively, it has been among Latin America’s top economic performers. It weathered the recent financial and economic crisis well and picked up vigorously in 2010. Underpinning this excellent performance are sound macroeconomic policies, structural reforms to improve the functioning of product and labour markets, and the openness of the economy to international trade and foreign investment. These policies have fostered investment, productivity and job creation. They have allowed Peru to exploit its comparative advantages in natural resource-based sectors and traditional industries and reap the benefits of increased demand from both developed and emerging economies. They have also begun to have positive, albeit moderate, effects on living standards and poverty reduction.

Durante la última década, el Perú ha logrado un crecimiento económico excepcional. Con un crecimiento anual promedio de 6,3% en el PIB y 4,5% en el PIB per cápita, ha sido uno de los actores económicos latinoamericanos de mejor desempeño. Pudo sortear la crisis económico-financiera reciente y en 2010 registró una sólida recuperación. Este excelente desempeño estuvo fundamentado en políticas macroeconómicas sanas, reformas estructurales dirigidas a mejorar el funcionamiento de los mercados de bienes y de mano de obra y una apertura de la economía al comercio internacional y la inversión extranjera. Estas políticas han fomentado la inversión, la productividad y la generación de empleo. Asimismo, han permitido que el Perú aproveche sus ventajas comparativas en los sectores de recursos naturales y en las industrias tradicionales, logrando cosechar los beneficios de una creciente demanda tanto en economías desarrolladas como en mercados emergentes. Estas políticas también han comenzado a tener efectos positivos, aunque moderados, sobre los niveles de vida y la reducción de la pobreza.

This chapter first provides a short overview of Peru’s economic performance in the medium-term and discusses emerging issues of the sustainability of a high-growth path, including a weak diversification of exports, the predominance of technologically undeveloped business firms and the productivity challenge faced by Peru. Attention is next drawn to the potential role of innovation as a key driver of sustainable future growth. Subsequently the focus is put on major aspects of the framework conditions – such as macroeconomic stability, international openness, an innovation-friendly regulatory regime, well-functioning financial and other markets, infrastructure and, importantly, qualified people – which are necessary for innovation performance to take off although they need to be complemented by additional measures. Pointing at a currently insufficient information base, the final section benchmarks Peru’s innovation performance which is characterised as being at a low level by international standards overall.

The composition of a country’s innovation system and the quality of interactions between the main actors in innovation have major implications for innovation performance and influence the mix and balance of policies needed to improve the overall innovation performance. Deriving appropriate policies therefore requires a systemic approach. With this perspective in mind, this chapter provides an overall characterization of the innovation and research activities of the business sector, public research institutes and the higher education sector, complemented by an assessment of intermediary institutions. It begins with business firms which are the central actors in advanced innovation systems, but in order to play this role they first need to build and develop the necessary capabilities in the process of development. The sectoral dimension plays an important role in this context. Next, attention is drawn to the system of public research institutes, including its current state, governance and funding, as well as its prospective role. It next turns to the higher education sector. A final section covers the relatively young set of intermediary institutions which play a role in linking the research sector and industry.

Governments have important roles to play in shaping the performance of their national innovation systems. The specific roles and actions taken by governments depend, among others, on the innovation system’s level of development. They shape the basic framework conditions that affect innovation and typically apply a mix of dedicated STI policies involving a range of instruments. Adequate institutional set-ups for this mix and overall governance arrangements are critical for the coherence and effectiveness of STI policy. This chapter first provides a brief account of the evolution of Peru’s STI policy from its early beginnings – about half a century ago – to the present. After the introduction of relevant concepts and experiences, the institutions in charge of designing policies as well as implementation instruments are presented. This is followed by an exploration of issues concerning the policy mix and related “blind spots”. Next, the chapter turns to the way forward by discussing political commitment and guiding principles, then focusing on moving towards a more efficient S&T policy and ways to improve the STI governance structure and institutional reform. As Peru today is at a crossroads in moving towards a more efficient innovation policy, different options concerning the country’s future STI governance architecture are discussed.