Microfinance in Peru and Zimbabwe

Zimbabwe experienced a “Lost Decade†starting with the year 2000 and Peru suffered through a “Lost Decade†in the 1980’s.  These lost decades demonstrated are denoted by a decline in gross domestic product (GDP) and periods of hyperinflation. Peru has recovered and has led South America with strong economic growth starting with the year 2000 (including the global economic crises 2007 -2009).  Zimbabwe continued to struggle throughout these same years.  Peru is a developing economy with a limited global presence but with an economic growth of 9 percent in 2007 (the largest growth rate in the world during the global economic crises) whereas Zimbabwe has continued to struggle with a negative growth rate of 14 percent in 2008.  Peru has continued this growth at an average rate of 5.7% during the period 2009-2015 ((OECD, p. 17).  This paper provides the argument that the well-managed informal economy of Peru using microfinance to provide funding provides a solid base for their economic growth.  The reliance on foreign capital inflows and the lack of a dependable informal economy has hindered the economic growth of Zimbabwe.

 

 

 

Key words: globalization, Zimbabwean economy, Peruvian economy, Microfinance