Loreto, Peru

Head shot of Ricardo Hausmann

Ricardo Hausmann

Director
Rafik Hariri Professor of the Practice of International Political Economy, HKS

Ricardo Hausmann is the founder and Director of Harvard’s Growth Lab and the Rafik Hariri Professor of the Practice of International Political Economy at...

Read more about Ricardo Hausmann
Office Address: Rubenstein-338

Mailing Address
John F. Kennedy School of Government
Mailbox 34
79 JFK Street
Cambridge, MA 02138

Assistant: Alexandra Villegas
p: 617-496-3740
Hausmann, R., et al., 2022. Overcoming Remoteness in the Peruvian Amazonia: A Growth Diagnostic of Loreto.Abstract

Is there a tradeoff between environmental sustainability and economic development? If there is a place where that question can be approximated, that is Loreto. Located on the western flank of the Amazon jungle, Loreto is Peru’s largest state and the one with the lowest population density. Its capital, Iquitos, is the largest city without road access in the world. For three decades, the region’s income and development has diverged from that of Peru and its other Amazonian peers by orders of magnitude. And yet, despite plummeting contributions from natural resources – that predominate in the policy discussion in and on the state – Loreto has developed a more complex productive ecosystem than one would expect, given its geographical isolation. As a result, it has a stock of productive capabilities that can be redeployed in economic activities with higher value-added, able to sustain higher wages and better living standards.

We deployed a thorough Growth Diagnostic of Loreto to identify the most binding constraints preventing private investment and development in sustainable economic activities. In the process, we relied on domestic databases available to the public in Peru and international datasets, combining and validating our analytical insights with extensive field visits to the Peruvian Amazonia and lengthy interviews with policymakers, private businesses, and academia. Improving fluvial connectivity, developing the capacity to sort out coordination failures associated with the process of self-discovery, and substituting oil for solar energy, are the three policy goals that would deliver the largest bang for the reform buck. The latter presents an opportunity for environmental organizations – subsidizing solar – to move away from their status quo of preventing bad things from happening, to a more constructive one that entails enabling good things and sustainable industries to happen.

Project page: Economic Growth and Structural Transformation in Loreto, Peru

Hausmann, R., et al., 2021. Loreto’s Hidden Wealth: Economic Complexity Analysis and Productive Diversification Opportunities.Abstract

The Growth Lab at Harvard University, with funding provided by the Gordon and Betty Moore Foundation, has undertaken this investigation with the aim of identifying the existing productive capacities in Loreto, as well as the economic activities with potential to drive the structural transformation of its economy. This paper is part of a broader investigation – Promoting Sustainable Economic Growth and Structural Transformation in the Amazon Region of Loreto, Peru – which seeks to contribute with context-specific inputs for the development of national and sub-national public policies that promote productive development and prosperity in this Peruvian state.

Jessie Lu headshot

Jessie Lu

Former Research Assistant

Jessie Lu started at the Center for International Development’s Growth Lab as a Research Assistant in August 2019. Prior to joining the Growth Lab, she...

Read more about Jessie Lu
Yang Li

Yang Li

Postdoctoral Fellow

Yang LI joined the Center for International Development's Growth Lab as a Postdoctoral Fellow in 2019.

His research focuses on the patterns,...

Read more about Yang Li
Frank Muci headshot

Frank Muci

Former Research Fellow
Policy Fellow, London School of Economics and Political Science

Frank Muci is a Policy Fellow at LSE. He is an international economic development practitioner with experience advising governments in Latin America...

Read more about Frank Muci
Mailing Address
John F. Kennedy School of Government
Mailbox 34
79 JFK Street
Cambridge, MA 02138