Peru: A Lesson in Rapid Development and Organizational Corruption

Peru is a nation that has experienced significant economic growth over the past fifteen years. Despite this growth, Peru still struggles with a poverty rate in the 30 percentile range, a third of whom are considered extremely poor. In addition, the wealth gap that has been created as a result of this growth is clearly visible within Peru. One of the things that most strongly struck me during my 13 day trip around the South American country was how I could actually see where the recent economic growth has not yet reached. You could be in a clean, new, metropolitan area, and within minutes be surrounded by collapsing mud brick buildings. Still, Peruvians are proud of how far their country has come with good reason, for it was not a short or easy pathway that they traveled to get where they are now.

Decades of political violence and oppressive governmental created an organizational and social structure within peru that was unstable at best. This resulted in, since Peru’s economy is heavily tied to exports, a generally weak economy. In addition, the governmental instability within Peru prevented the nation from capitalizing on their wealth of historical sites and tourist attractions. To develop despite these restrictions, William Whyte argues that Peru began to imitate the organizational structures of other nations. Whyte’s article states that this is often a dysfunctional model for a developing nation to follow, but it helps one to understand current Peruvian structures and teaches the observer a valuable lesson.

Current Peruvian structures are still, despite significant growth over the past decade an a half, struggling with corruption and inefficiencies on a large-scale. Coming out of the attempts to copy the structures already developed nation and rapidly develop, corruption has become widespread within the Peruvian system. At the organizational level corruption has therefore become one of the most pressing issues in Peruvian politics because it is identified as a factor that poses a significant threat to Peru’s future development. One solution, Proposed in an article by Wayne Sandholtz and Mark Gray, focuses on further international integration as a means of motivating individuals to resist corruption in hopes of bringing additional capital into Peru. Wether or not this solution is viable, there is still an important lesson to learn from Peru’s rapid development and the problems that have come with it.

At an organizational studies level there are two important things to take away from Peru’s rapidly changing environment over the past 15 years. First, it is clear that there are huge gains to be made from taking institutional policies and structures that have worked well in the past an applying them to new situations. Through this model Peru was able to create large economic growth by imitating the structures of developed nations like the United States. Still, the second lesson one must take from Peru’s experiences is that not all structures work well in all environments. As contingency theory stipulates, some structures are better suited for different environments. In Peru rapid deregulation might have created swift economic growth, but it also created corruption that threatens the future of the system itself. Ultimately, it becomes clear that systems that have been successful in the past are valuable tools for creating growth, but that they must relate well to the current environment in order to prevent organizational abuses.

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2 Responses

  1. Where did Whyte make that point about Peru and imitating other structures?

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