Seeking for A Development Strategy for Peru In A Volatile Global Economy

In the framework, according to Peru, in managed to raise the total exports to achieving for This growth is explained by the remarkable Abstract This article assesses the possibility of improving the development of the external economic sector in Latin America as a whole and in Peru in particular, by analyzing the theory of international trade and current economic trends in the world. By using statistics from the foreign trade sector and considering global trends in the international trade over the past decade, a special emphasis on the period 2019-2020 assesses Peru's ability to meet the growing differentiated demand, and thus, specialize in advantageous sectors, allowing them to integrate into global supply chains, providing resources (such as inputs or final products), goods and services at different market levels. According to the agency specialized in commercial intelligence, "Fresh Fruit", Peru is among the top 20 food suppliers in the world. Taking into account this potential and its diversified offer, it has been determined that there is a real possibility of creating value chains around the niches of the market that exist within the global trade. This study uses the comparative advantage theory as a basis for quantifying the competitiveness of products from global comparisons, which allows us to indicate how to move towards a higher level of specialization in the production and exporting structure (Lauterbach, 2015). As a result, twenty products were obtained with a positive trend in their exports, and twelve products that, despite having lower figures in their exports, have a higher growth potential.


Introduction
This article aims to reflect on the importance of international trade in Latin American countries in identifying the types of production (products, goods, or services) and exchanges that must be made to achieve sustainable economic benefits.
To this end, the theory of international trade and its model of comparative advantages are studied. ____________________________________________________________________________________ ________________ Oleg N. Zhilkin, Wilmer P. Chavarry G. and Diana P. Chavarry, Journal of Economics Studies and Research, DOI: 10.5171/2021.626027 growth of the non-traditional sector, which reached $13.2 billion (+12.6% compared to 2017). In December 2019, Peruvian exports totaled US$ 45,985 million, a 4.2% fall from December of the previous year. The growth projection for 2020 has gone substantially down with -14% of the GDP, and with a drop of US$9,058 million in the imports and a fall of US$ 8,304 million in the exports, all due to the low external demand generated by the quarantine period in the world together with the long confinement of 3 months and 14 days that have overshadowed the important economic support plan implemented by the government in Peru, and which caused significant job losses.
Despite the significant macroeconomic gains over the past decade, the economy has not yet emerged from its middle-income trap and has not significantly raised its median income range. This result is due to Peruvians owning only a small part of the domestic economic growth, and the continued dependence on the natural resource market state industry. This is because the Peruvian economy is open, which means it is highly susceptible to fluctuations in the external environment, as in the 2014 crisis.
Based on the above, the implementation of structural reforms related to greater diversification of the economy into more promising sectors will lead to an increase in new highly skilled jobs and an increase in value-added exports, which will reduce the dependence on the external demand for raw materials (Lauterbach, 2015).).
In this context, and given the current composition of the Peruvian export basket, this study seeks to identify export products with potential for international trade. To this end, the study considers two important elements. First, it analyses those types of products in which the country has gained comparative advantages in recent years and which would benefit from meeting the growing global demand. Second, products that have the lowest share in the export basket but can continue to grow and gain market dominance over time are evaluated.
For the development of this research, the methodology of the IBCR and IB was applied, which is based on various theories of comparative advantages that have emerged over the years. As a result, a study was conducted based on thirty-two products, as mentioned above.
As a result of the study, Peru has already been identified as having leading products in the export of goods nationwide, such as copper and gold minerals; agricultural products such as fresh asparagus, dried beans, quinoa, maca, fresh blueberries, sour bark (lemon), fresh mangoes, fresh grapes, fresh mandarins; frozen marine products such as cuttlefish, squid and pota; and textile products such as fine vicuña and alpaca wool, among others. However, the export offer is much larger and leaves room for international trade in other products with comparative advantages, such as jewelry, gemstones or semiprecious, agricultural seeds, styrene polymer residues, and other products that offer hidden comparative advantages.

Peru and its Impact on the International Market
For a better study of Peruvian exports, it is important to understand the definition of the terms traditional products and non-traditional products. Traditional exports basically include mining, agricultural, hydrocarbons, and fishmeal products determined by the Supreme Decree 076-92-EF 1. Other tariff headings which are not rated in that standard are considered non-traditional exports and are products that tend to have a higher added value. These non-traditional exports are grouped into agriculture, textiles, fisheries, wood and paper, chemicals, metal-mechanics, metallurgical-steel and jewelry, non-metallic mining, and others. In recent years, Peru has consistently been raising its export volumes, becoming historic (see Figure  1). In 2019, it achieved exports equivalent to $45.9 billion. But not only have its volumes improved, but the export supply has diversified as well. The growth was impressive; in 2000, exports of only 12 non-traditional products worth more than $30 million (mainly metal and clothing production) were recorded; while in 2019, this indicator increased to 72 products, with the most exported being agricultural products.   The country's progress in new exported goods and target markets is based on the 20 trade agreements in force (see Figure 3), such as the free trade agreements with China (in 2019, China imported Peruvian products for a figure equivalent to $13.5 billion), the European Union, the United States, Mexico, and Chile, allowing Peruvian products access to 54 international markets, mostly transported by sea (89.1%, PROMPERU source). According to PROMPERU data, currently, 49.1% of the world's population has access to Peruvian products.  Other major markets include India (4.4%), Japan (4.2%) and Spain (4.2%), among others. (See Figure 4).
China is the main destination market for traditional exports, mainly mining (38%) and fisheries (47%); while the United States is the main destination for non-traditional exports, including textiles and clothing (50%) and agribusiness (32%) .
In addition, 88.7% of the Peruvian exports, which were covered by preferences under existing free zones, include markets in China, the United States, the European Union, South Korea, the Andean Community, EFTA, and Mercosur, among others.
However, there is a concentration of overseas deliveries in both products and markets. It is, therefore, necessary to identify and stimulate new production activities, which are an additional factor in the economic growth, which allows to diversify the export basket and integrate it into global value chains (Production, 2014). It should be noted that Peru, in recent years, has become a world and regional leader in the export of non-traditional products. These 12 products account for 30% of the total exported in value-added products.
A wider inclusion of products in the exported supply has been seen, with an emphasis on a higher proportion of agricultural products (43.5%), chemicals (11.8%), textiles (10.8%), steel (9.8%), and others. However, it is noted that higher export volumes remain focused on natural resources and low value-added products.
Concerning the above, the IMF (2019)  industries, affecting other exports, contributing to the strengthening of non-reimbursable exports with low productivity ("Dutch disease") and low competitiveness at the international level. (See Figure 6).
In recent years, Peru, as part of a strategy to consolidate the revenues of its products in various markets, has initiated negotiations on free trade agreements with countries with which it has had a wider trade to seek greater permanent benefits for Peruvian products and take advantage of expanded market opportunities .).  Relative specialization in the field of natural resources is required, as well as a sectoral policy of diversification of production aimed not only at adding value to potential sectors, but also ensuring that the country develops productively and integrates small products (Ghezzi, 2018). Although the country has great potential that has not yet been fully used, there is a risk of losing significant progress if it stagnates or makes a mistake in continuing to export predominantly traditional products.
Variation in Peruvian exports in the first quarter of 2020.

Results
Traditional and non-traditional products where a comparative advantage was found with the rest of the world. Traditional products based on natural resources that Peru exported between 2010-2020. with greater participation in the trade in these products. This allows you to obtain a positive IBCR, which expresses advantages in trades.
Such products include copper, gold, zinc, silver, lead, molybdenum, fishmeal and fish oil, natural gas, and coffee. It is necessary to take into account the regional strategy, which will allow the export of more complex, specialized, and diverse products to increase not only its competitiveness but also to make the economy less vulnerable to fluctuations in the prices of exported goods. The comparative advantages that the country has at the level of various types of products allow us to continue to promote investments in these sectors and, in particular, to ensure regional development through productive rates that strengthen the business structure, the development of a competitive logistics infrastructure and a network of suppliers, that can be included in the global value chain, which increases the employment and well-being of the population.
Finally, it should be noted that the theoretical model by which this analysis is justified allows us to identify the leading goods in the export of goods at the national level. However, the export basket is wider and leaves room for international trade in other products with comparative advantages, such as jewelry, gemstones or semi-precious, seeds, handmade paintings and drawings, styrene polymer waste and other identified products, showing the positive trade balancing index and bilateral balance index.