Aggravating the Resource Curse: Decentralisation, Mining and Conflict in Peru

Abstract

In the early part of this decade, at the beginning of the recent international commodity price boom, Peru adopted major components of the new ‘localist’ policy paradigm for the management of natural resources. A large fraction of revenues were transferred to the subnational governments in the mining areas. Additionally, the government encouraged mining companies to assume a more active role locally. The results have been disappointing. Statistical and fieldwork evidence shows that these policies have exacerbated local political conflicts. The new ‘localist’ policy paradigm is unlikely to be effective when, as in contemporary Peru, national political institutions are not supportive.