Business Cycle and Concepts

Business Cycle and Concepts

Unemployment in Peru

South American countries have lagged behind in terms of economic development and growth as compared to the North America. This has resulted from a number of economic, political, social, and technological factors. This report addresses the issue of unemployment in Peru and how this is related to the country. Geographically, Peru is considered as the third largest country in South America with Lima as the capital city. The country has a constitutional form of government and the gross domestic product in the year 2010 was $153.92 billion. The major natural resources in the country include; silver, zinc, iron ore, iron, natural gas, forestry, copper, and gold. Manufacturing sector in the year 2010 represented 15% of the gross domestic product and agriculture represented 7.5% with the main products farmed including coffee, cotton, and asparagus.

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However, Peru is adversely affected by the impacts of increased unemployment whereby youths are living for a long period of time without securing a job. Employment can be defined as the aspect of having large numbers of people in a country who are not earning (U.S. Department of State, 2012). In most cases, this issue is contributed to by lack of good economic growth in a country, racism, corruption, lack of education, nepotism, and population increase. It should be noted that with increased unemployment in the agricultural sector in Peru, many people have moved to the towns especially in Lima in order to seek for employment (World Bank, 2011).Business Cycle and Concepts This has resulted in expansion of city population and since job opportunities are not increasing, the number of unemployed increases.

There is a clear relationship between unemployment and the economy of Peru. As indicated earlier, most people in a country are either employed in agriculture or manufacturing sector and hence these two sectors therefore contribute a considerable percentage to the gross domestic product (North & South America CEIC Database Team, 2011). As can be seen in Peru, manufacturing sector contributes only 15% of the gross domestic products hence indicating that there may not be a large number of people employed. Business Cycle and Concepts This is because more people are absorbed in a sector that is contributing heavily to the GDP. In Peru agriculture contributes only 7.5% of the total gross domestic products hence indicating that the numbers of people employed in this sector are not high (U.S. Department of State, 2012). This is because a sector employs as many people as possible as it increase making profits. Since these two sectors are mostly involved in absorbing many employees in developing countries, their situation in Peru has contributed to increased unemployment (World Bank, 2011).

The other aspect if poverty. It has been indicated by experts that poverty exhibits unemployment in a number of ways. For instance in Lima alone, the number of poor people is almost twice that of wealthy people (North & South America CEIC Database Team, 2011). This shows that when most of the people in a country are poor, they are not in a position to produce to a lot for their country and hence the economic growth of that country retards. Following the economic stagnant of Peru in 1990s, the country was not in a position to absorb a lot of people to in manufacturing and agricultural sectors and hence the rate of unemployment increased drastically (U.S. Department of State, 2012).Business Cycle and Concepts However, in the year 2011, the unemployment rates in this country fell resulting from economic growth in the first and second quarter of the year. It should be noted that the literacy rate in Peru was very low in 1990s and hence many people were poor as they did not attend schools to acquire technical skills and knowledge.

The issue of population has effectively contributed to increased unemployment in Peru. According to the U.S. Department of State (2012), most people in Peru have migrated to cities and towns in search of greener pastures but since the rate of getting a job is low in towns, the populations live in poverty.Business Cycle and Concepts For instance Lima, which is the country’s capital city, has more than 30% of the total population. This shows that since very few people are absorbed by manufacturing and agricultural sectors as employees, large numbers are left unemployed (North & South America CEIC Database Team, 2011).

There are clear trends in data sets especially when considering the rate of economic growth and unemployment. According to North & South America CEIC Database Team (2011), the rate of unemployment in Peru is decreasing with increase in economic growth. In the year 2011, the unemployment rate was reported at 7.3%. This was a decrease as in the year 2010 it was reported at an average of 8.93%. The highest unemployment rate in the country was in the year 2005 when it reached 13.00% and lowest in 2009 when it was reported at 7.3%. From this trend it can be deduced that with economic growth in Peru, the rates of unemployment are shrinking.Business Cycle and Concepts This is evident in that when comparing the rates from the year 2005 to 2011, it is clear that unemployment rates are decreasing. The government has played a critical role in ensuring that most of its citizens are employed in different sectors. It does this by encouraging foreign investors and increasing the level of education as well as literacy rates.



North & South America CEIC Database Team. (2011). Peru: Unemployment Falls to 7.7% After Rapid GDP Growth in 2010. Retrieved on Jan 28, 2012 from


U.S. Department of State. (2012). Background Note: Peru. Retrieved on Jan 28, 2012 from

World Bank. (2011). Peru: Country Program Evaluation of the World Bank Group, 2003-09. New York: Prentice Hall.