Normalcy and Economics

Posted on 08. Jun, 2008 by in peru

The honeymoon phase has been over for a while. I don’t get a warm feeling for the views. I don’t drool over the food. I don’t think every person I meet is really interesting. Things aren’t bad. They just aren’t as great as they were when I first arrived. I am slipping into normalcy.

Everything’s going well. I have a girl, I’m on a basketball team, I have friends, I’m getting along. I go to Bogotá, Colombia next week to meet a buddy from America, then we’ll come back here together.

Economics Again

As much as the US dollar has fallen in the last few years, it’s still the world standard. The dollar is of utmost importance in Peru. There are dozens of businesses downtown that are simply titled “Dolares.” My ATM asks me if I want to take out soles or dollars before every transaction. Carlos can only pay his rent in US dollars. His apartment complex doesn’t accept anything else. My roommate charges all his clients in dollars, regardless if the client is in Perú, Italy, England, Brazil, or Germany.

America may have lost a lot of influence in the last decade, but it’s still in the top spot. The United States comes up in conversation regularly. If somebody is talking about a computer they want to buy, they ask how much it costs in the States before they ask how much it costs here. Computers, television sets, iPhones, television shows, basketball shoes, protein powder, music. All these things come from America. Even European and Japanese cars come from America. People only talk about Europe in the sense that they would like to live there for a while.

In the past, I have always been motivated by success and self-actualization. Although I always wanted to make good money and always liked spending money, I never thought about it as much as I do now. Carlos and I have some ideas. We might start a company to teach English. He would take care of all the business aspects: finding clients, charging them, advertising, etc. I would teach English.

Carlos’ favorite idea is to start a tourism agency in Cusco. We’d make every last arrangement for visiting gringos and charge them double what everything costs. I’m not too hot on that idea. A better one is to sell cars. One of my teammates sells cars with his brothers. He buys slightly used, intermediate-sized cars in America and ships them to Perú. He buys the cars for $10,000 and sells them down here for $13,000 – $15,000. I’d rather sell cars than teach English, but it’s a greater risk given the initial investment.

Half of my reasoning to move down here was to live and work in an emerging market. I didn’t really know what that meant or what I was going to do differently, but I knew I wanted to be in the middle of it when it happened. I think I’m starting to understand. There’s a ton of new money floating around, up for grabs. In America, starting a business is a risk. There’s a chance you won’t have enough customers to stay afloat. Here, almost anything would work. If we put out ads in the paper for English classes, there will be clients. If we import half a dozen cars, they will sell.

It’s hard to think about where all this money is coming from. At the root of economics is a country’s GDP – Gross Domestic Product. How much does a country produce? Perú’s GDP grew at 9% last year. In the midst of the worldwide economic downturn, it is projected to grow at 5.6% for 2008 (5.6% is high for developed countries). Because Perú is so far behind, its productivity can grow at an explosive rate. To significantly boost productivity in America, some genius has to invent something like the cotton gin, the automobile, mass production, the radio, the computer, the Internet, etc.

Peru’s a country where it’s cheaper to hire a full-time maid than to buy a dishwasher. There’s a lot of catching up to do with productivity-enhancing advancements that have already been invented. The people of developing countries are becoming more productive at a lightning-fast pace. And they are lining their pockets in the process.

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One Response to “Normalcy and Economics”

  1. matthew b

    27. Jan, 2012

    Good assessment. These countries’ economies have nowhere to go but up. One factor to look at is fdi, foreign direct investment. Fdi has been like doubling on a yearly basis in Colombia now that the security situation has greatly improved in the past few years. I’m sure the situation is similar in Peru.

    I don’t know any Peruvians here in the states but it seems like most Colombians I meet have plans to start or are already importing clothes and electronics from usa to colombia. I’d think real estate prices would be rising accordingly.

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