Can Peru be a New Economic Miracle

This paper estimates the probability that Peru becomes a new economic miracle. However, since economic theory does not define what exactly an economic miracle is, we must develop a definition based on the top quintile of the distribution of maximum 10-, 15- and 20-year average rates of growth over the period 1961-2002. By using this criterion, we identify 19 “miracle” economies, which will be compared with a similar number of “average” and “disaster” economies. Through a ordered choice model based on a set of initial conditions we determine the probability that Peru lies in the first group over the next 10, 15 and 20 years. The probability that Peru becomes a miracle in the next 10 years is very high; however, the evidence is less conclusive for longer periods.