Dr. Alejandro Toledo was democratically elected President of Peru, serving from July 2001-July 2006. The fight against poverty through health and educational investment was the central aim of Toledo's presidency. As a result of sustained economic growth and deliberate social policies directed to the most poor, extreme poverty was reduced by 25 percent in five years. Employment grew at an average rate of 6 percent from 2004-2006. During the five years of Toledo’s presidency, the Peruvian economy grew at an average rate of 6 percent, registering as one of the fastest growing economies in Latin America.
Innovations: You are the fighter for democracy and the fighter with the poverty. What is the role of business and managers in thi
s process?
Alejandro Toledo: It’s very important question. Reducing poverty and inequality is good for business, it is profitable for business and it’s good for democracy. 2,6 billion people in the world could not participate in the production process because they don’t have income. If they don’t have income, they can’t buy anything. For the strictly business perspective it is a huge market.
I’m the board director of some companies. When CEO says that they have gained 2% of the share of the market, my question is that how big is your market? You have a potential 2,6 billion people who can buy your products. Look strictly for business perspective. Such business activity is very profitable one. Forget about poverty and inequality from the ethical or moral issue. It is strictly business perspective.
So, I think business plays really important role. The contribution through entrepreneur social responsibility plays an important role for business and for creating stability in a region. And when you have economic, political, social, legal stability, then country risk reduces, interest rate reduces, and your costs of production are less.
I: The inflation rate during your presidency had been stabilized at the level 1,5%. How did you achieve this result?
A.T.: When I got to New York, I received a lot of applause because I received the economy on recession, and I left growing at the 6% during 5 years. Now it is growing 8,5 %.
Inflation was 1,5%, as you suggested. We opened up markets in China, in India, we’ve just concluded a free trade agreement with the United States, and we are now beginning a free trade agreement with the European Union. We have broken away from monolithic relationship between the United States and Latin America. The internal composition of economic growth has changed – we don’t sell only gold, silver, oil or other raw materials. Now we sell grapes, mangos, lemons, spurges – the products that are more labor insensitive and job generators, and are less vulnerable to the changes of prices of commodities in the international market.
Latin America and Peru have very good relations with the United States (33% of our export goes there and it increases as we implemented free trade agreement), but still we are more independent than before.
However, all claps that I received for being a good boy, for making a job (we reduced poverty for 10 points – from 54 to 45,5), I am not pleased. I am not satisfied because the numbers are still very high. I just saw some of the numbers of Ukraine – you are moving according to similar trend, it is not enough to grow. And we need to redistribute better the benefits of economic growth and have the business of inclusion – this business is very profitable and good for democracy and construction of the stability.
I: What can You suggest in terms of educational reforms that You have initiated in Peru and importance of its results for Ukraine?
A.T.: Nothing can substitute to embossment nutrition, health and education. I wish God would have not been so kind to Latin America. He got murdered us because he put too much natural resources and so government has an easy task to govern by exporting minerals, raw material instead of creating a knowledge economy and investing in nutrition, health and education.
Education is the key point. I am not saying as just a professor from a Stanford or Harvard. I am great evidence what education can do. Without an education, coming from I came from, I would never been a President.
I: You are talking a lot about knowledge economy. What specific things did You do as president to promote knowledge economy, and what do You suggest should be done in the future both in Peru and Ukraine.
A.T.: We need to increase government need to have the courage to invest more in a good quality of health and education. The most important is quality of educational system. I doubled budget of education in my country. On the first day that I assumed power I signed decreed about reducing by 23% military spending to reorient it on investment in health. The journalists didn’t like it because it was very risky as they said.
I doubled budget of the education sector. And I doubled the salaries of teachers in real terms, because we had inflation. However, we need to know more closely what the net impact of those decisions had been.
We have to ask those who know better, what is a combination of education policy that can produce a good quality of education. That is why I’m working in The Social Agenda for Democracy for Latin America together with 12 former presidents of other countries in Latin America.
The most important is to understand the results that you are looking for. We need to clearly understand the net impact of each social policy. And we need good managers that can organize not only business but social programs of government.
21.04.08
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