This table corresponds to the delivery that precedes this one:
“Chapter I.- 5. Foreign direct investment by country of origin
Foreign Direct Investment in Latin America and the Caribbean • 2024 of the CEPAL, a UN institution. The aforementioned report confirms which is the main imperialism that dominates us, Yankee imperialism, through foreign direct investment (FDI), one of the forms that the export of capital from imperialist countries to oppressed nations takes. And, it also confirms the prominent role of China in trade (export/import of goods) with Latin America and its secondary place in FDI, one of the main forms that the export of capital takes in the imperialist stage.
Continuing with our NOTES AND MATERIALS ON CONTEMPORARY PERU, with the comments on the report: Foreign Direct Investment in Latin America and the Caribbean • 2024 by ECLAC, a UN institution.
With the above theoretical basis, we will deal with foreign direct investment in our country in relation to the report already mentioned at the beginning: Foreign Direct Investment in Latin America and the Caribbean • 2024 by ECLAC, a UN institution. The report of the imperialist economic institute CEPA, begins by recognizing the generalized crisis that the countries of Latin America and therefore Peru are going through, in this regard it says:
“The report Foreign Direct Investment in Latin America and the Caribbean in its 2024 edition is presented at an extremely challenging time, since Latin America and the Caribbean is in a development crisis that is expressed in three major traps: a trap of low capacity to grow, characterized by low, volatile, exclusionary and unsustainable economic growth, a trap of high inequality, with low mobility and social cohesion and a trap of low institutional capacity and ineffective governance” (from the Executive Summary of the Report).
Another report from the same institute says:
“Over the course of the last decade, Latin American countries have exhibited a low level of economic growth, with an average rate of 0.9% in the period 2015-2024, lower than the 2.0% recorded in the so-called “lost decade” of 1980. Boosting growth is a primary task for the region to be able to respond to the environmental, social and labor challenges it faces today (…)”
The same report concludes:
“The macroeconomic scenario that the countries of the region face, both externally and internally, is characterized by low growth in economic activity, uncertainty and limited space in the area of fiscal and monetary policies” (Economic Survey of Latin America and the Caribbean • 2024 Executive Summary).
It is clear, according to this imperialist institute that establishes the guidelines for economic policy for Latin America and the Caribbean, that they do not even speak of economic development, but simply of “growth of economic activity” and they say that this “growth...” in the previous period has been less than that of the lost decade of the 1980s. Where is the “capitalist” economic development that the LOD speaks of? It is impossible because what develops, as Chairman Gonzalo says, on a semi-colonial and semi-feudal basis, is bureaucratic capitalism as the dominant path that imperialism imposes on our countries.
From here we continue with the subject:
This major “development crisis” from the 80s to the present has occurred within the framework of the so-called “economic opening” and the record of capital exports to Latin America from the mid-90s until its fall recorded since the second decade of this century and recovery from the present decade. See table on this subject:
What they call the “development crisis” is none other than the crisis of the semi-colonial, semi-feudal society in which bureaucratic capitalism operates at the service of imperialism, mainly Yankee, and of its superstructure, mainly the old landowning-bureaucratic State. Who are the culprits of this situation? The three mountains that exploit and oppress the people: imperialism, bureaucratic capitalism and semi-feudalism.
Despite the irrefutable relationship between imperialist domination, capital export, plunder, backwardness and crisis of our countries, the Report tries to sow illusions about how beneficial imperialist FDI can be if it is used properly; when, as we have already said, we know that the development of bureaucratic capitalism at the service of imperialism and its lackeys through imperialist investment (capital export) is contrary to national development. This fact is expressed precisely in what they call the “three great traps”, that is, greater backwardness, with cycles of economic growth in exports and major economic indicators, to then fall deeper, but without true economic development; what they themselves have called “three lost decades” (1980-2020), “growth without development”, “countries with a heterogeneous economy, with islands of modernity”, “de-industrialization and re-primarization”, “reversal in the fight against poverty”, etc. We quote the paragraph from the Report mentioned above:
“In this context, analyzing the dynamics of foreign direct investment (FDI) in the region and how these are linked to productive development policies is key to designing policies that allow the best possible use of the potential of investments by transnational companies to support countries and their territories to face the low growth trap.”
Regarding FDI and Sustainable Development, point B., as a confession of the party, the report says:
“Specifically (...), FDI is called to play a leading role in the productive development policies of the countries of Latin America and the Caribbean and their territories to address the structural challenge of stagnation, and even the decline, of productivity. (...) the reprimarization of the 1990s and 2000s, with important exceptions, such as Mexico and Costa Rica. Despite the adoption of FDI attraction policies in the region, their results in terms of technology absorption and economic complexity have not been sufficiently positive compared to those obtained in Asia “(Executive Summary: B. Policies to attract foreign direct investment and promote its positive effects on the economy)”.
When they talk about FDI and productive development policies, it is counterproductive because by following this path our economies have not only stagnated but have even regressed, see underlined in previous quote.
Regarding the “exceptions” they refer to, they confirm the control of imperialism over the economic process of our countries, the development of bureaucratic capitalism in the service of imperialist interests and the role of FDI, but we will return to this later when we see the sectors into which FDI enters and other aspects of it, such as mergers and acquisitions, for example.
But let us make an interpolation here, to talk about the so-called “reprimarization of the 90s and 2000s” of the report on FDI-CEPAL-24 as a consequence of the greater control of our economic process by imperialism, mainly Yankee, with the greater opening of the country to foreign investment and of the economy in general, taking the case of Peru as a study of economic development from the 90s onwards, we quote the following:
“The country’s current economic-productive profile.
The economy took on a primarily export-oriented character: it abandoned industry and family and self-consumption agriculture (where around 30% of the economically active population, EAP, participates), and with it the internal market, betting on international trade and extractive industries (mining and agro-exportation) and the high prices of commodities.
The economic reforms shaped a new type of productive, business and power structure that Gonzales de Olarte has called “economic model: primary-export and services (PESER)”.
This structure was built on privatized or concessioned public companies (in the extractive sector, mining and hydrocarbons, and services, electricity and telephony, among others) (…) The PESER is a model that is not capable of creating employment (for an EAP of more than 16 million, extractive industries account for only 1.5% of the EAP as direct employment). It is also characterized by a reduced State that, in economic terms, plays a subsidiary role. The State was prevented from carrying out business activity (which would contribute to food and energy sovereignty and security with a stake in companies in strategic sectors, such as ports, gas, oil and airlines, among others). The State's business activity was limited to sectors where private (individuals, our note) do not plan to invest because it is not profitable for them.
Another element that characterizes the PESER is that there is a strong foreign investment by transnational groups, which are becoming the majority in several companies. The economic elites are the extractive ones (mining, gas, electric energy and the logistics apparatus linked to the export and industrial sector) and the banking sector. The most important bank, the Banco de Crédito del Perú, has as its main shareholder Crefast, a North American investment fund, with more than 50%; AFPs have 12% of the shares, and 24% is in the hands of a Panamanian offshore company. For their part, the Romeros have a small percentage of shares. The economy has become foreign-owned “through direct investments by Repsol, Yanacocha, etc., or through the purchase of shares in Peruvian companies such as Graña y Montero, Ferreyros, Intercorp. Emerging groups have more control over their property because they are very reluctant to sell shares on the stock market. They know what will happen to them” (Durand, 2017). (…) they have been generating monopolies and oligopolies in various sectors. This has made it vulnerable to the ups and downs of international trade, giving rise to enclave economies with little internal connection, and generating little or low-productivity employment.
The mass of unemployed workers was swelled by workers laid off due to factory closures between the 1970s and 1990s (in the leather, car assembly, textile and privatized public companies sectors, among others) and by the growing entry of young people into the labor market. The alternative will be small urban businesses (mainly in commerce and services). Thus, a growing business structure will be formed, made up mainly of micro and small enterprises (mypes) 5(…)
It occurred from the seventies and, in a sharp way, in the eighties (during the internal armed conflict): a process of migration without industrialization that harmed the countryside,(…) the predominance of informal employment over formal employment. In 2007, the informal employment rate rose to 79.9%, while formal employment was only 20.1%; a decade later, the variation is little: the informal employment rate is 72% and the formal employment rate is 28%. Informality in employment has to do with the predominantly micro-enterprise business structure, which, as seen above, develops its activities in precarious conditions and –for this reason– has a high mortality rate.(...)
The conditions of insertion in the labor market or the impossibility of finding work lead to migration (Table 8). By 2017, 3,583,219 Peruvians had emigrated abroad, representing 11.1% of the population in 2018, 32,162,184 inhabitants according to estimates. Of the total number of migrants, 88.1% (3,157,876 people) were between 20 and 69 years of age. 6 It can be noted that the majority of Peruvians migrate to work and develop their professional careers, which, in turn, allows them to send resources (remittances) to their families in Peru. Remittances sent by Peruvians abroad totaled 3,051 million dollars, which represents 1.4% of the GDP and an increase of 6% in remittances compared to the previous year (BCR, 2016)” (from: The challenges of productive transformation in Latin America, National profiles and regional trends, Volume 1: Andean Region, Friedrich-Ebert-Stiftung, CHAPTER V Peru —Luis Ángel Rodríguez Salcedo).
And we ask: Who has brought us to this situation of greater backwardness, as the report admits? Who are those responsible? The three mountains that exploit and oppress the people: imperialism, bureaucratic capitalism and semi-feudalism. Therefore, FDI is the cause and not the solution. The solution is to destroy the three mountains through the people's war to complete the democratic revolution and immediately move on to the socialist revolution.
FDI as one of the forms of export of imperialist capital to our countries does not come to bring us progress, economic development, as we have already said, but to control the economic process of our country and suck the blood of our people.
As was said at the beginning of the 1960s: "A continuous torrent of money flows from Latin America to the United States: about four thousand dollars per minute, five million per day, two billion per year, ten billion every five years" (Second Declaration of Havana, February 4, 1962). That is just calculating the flow to the US without considering the rest. Later, the economist Carlos Malpica in his book The Myth of Foreign Aid, in the middle of that decade, calculated that for every dollar that comes (considering the various forms of export of imperialist capital that enters the country) 3 to 4 dollars go out.
In the 70s, see “Voz Popular” on the General Corporate Readjustment 1977, in which number 3 of “VP” of 1972 is cited. It was said about the export of imperialist capital to our country, in its various forms, that it is, “an apparent inflow of financing and in reality a great plunder; and continuing with the rule that for every dollar that enters Latin America the imperialists take out four, evidently this source of financing is not such but the root of national oppression, imperialist exploitation and plunder... Through this path of imperialist financial contribution, private (now we say particular, because the state also has a private character) or state, the country only reinforces its subjection and Yankee colonial domination in particular." As we said, quoted from Voz Popular No. 3, 1972."
We will continue with these comments in the next installment.