The purpose of this research is to analyze the effects caused to the state and society by Law 27143 'Ley de Promoción Temporal del Desarrollo Productivo Nacional' with regard to public procurement of medicines. To this end, a database was constructed to calculate the amount of money overpaid by the state due to the 20% bonus given to domestic medicine producers. This was expressed as the difference between the price paid to the domestic producer who won the contract and the price otherwise payable to an importer. These numbers show the quantum of treatments that could have been offered to patients if the cheapest product had been bought. Finally a model was built to help understand the price-setting behavior of domestic firms awarded in this way.Using this methodology, we ascertained that the state paid an excess of S/.37,57 million due to this law. With this amount of money, it would have been possible to offer 1.571.471 treatments to adults and 81.175 to children in the period 2002–2006. Finally we show that the domestic pharmaceutical laboratories use the 20% bonus as a price setting mechanism that enables them to keep charging high prices compared to the competition and still win the procurement process.

This paper sheds light on the performance of Latin American governments in attracting foreign direct investment (FDI) through trade policies, specifically by signing free trade agreements with other countries. The relationship between FDI and trade for Latin America has previously been analyzed, but the relationship between the degree of «openness» (imports plus exports divided by the domestic product) and FDI has not been conclusive. At the same time, the effect of specific trade policies on FDI flows has not been extensively studied. Some state trade policies could produce a significant impact in attracting FDI. Specifically, through the implementation of a number of free trade agreements, several Latin American countries have been able to attract greater flows of foreign direct investment. The implementation of such free trade agreements formed part of a more general scheme of economic reforms launched by Latin American countries since the mid-1980s. The goals of these reforms were to adjust the region’s economies and improve their competitiveness by liberalizing trade, privatizing, and deregulating their markets. Those countries that signed more free trade agreements – or signed them with the largest economies in the world – increased their ability to attract FDI. I test the impact of this policy on the behavior of FDI flows through a panel data model for 17 Latin American countries for the period between 1985 and 2003.

Strategic Environmental Assessment (SEA) is a tool applied ever more frequently in developed countries to take on board environmental impacts in a timely way so asto impact on decision making. lt is applied mainly to megaprojects, plans, programs and policies, even though there is as yet no consensus agreement as to its definition, its methodologies or the steps required to implement it. SEA is not just an Environmental lmpact Assessment (EIA) of plans, programs and policies, since this is an instrument for which there is considerable experience and consensus as to its use, with steps such as screening and scoping of projects performed by specialists worldwide. In Peru, the EIA is normally considered to be a document that is evaluated by the environmental authority where a project is to be undertaken to ensure that it does no significant harm to the environment. In developed countries, by contrast, the EIA it is understood more as a process than a document, with public participation. Likewise, the SEA is envisaged as a process not just endingin a report. lndeed, there may be many reports, taking account critical factors, within terms of reference that are wider than those of the EIA. What is important is that it forms part of the planning process in which the implicitval use of the environment and of natural resources is not zero. The paper studies the Strategic Environmental Assessment as a way of strengthening planning procedures. lts characteristics and information needs are described in general terms, and its administrative and budgetary requirements. We conclude by looking at the real possibilities of it being applied in Peru in a variety of sectors as a voluntary process that helps generate acceptance among those involved in projects, plans, programs and policies in both the private and public sectors. lts hould be viewed more as an opportunity than an inconvenience.

In the capability approach, there is a consideration about initial distribution ofwealth for assessing well-being, that permits to include individual’s own previousexperience in his income trajectories. Therefore, analysis of social costs or benefitsof different policies can be measured different from utilitarian way. In this paper, is analyzed the application of Amartya Sen and Martha Nussbaum proposalsabout adaptive preferences and the capabilities approach.After six years of crisis in the international coffee market, real income of theproducers decreased drastically. Many proposals exist to made good policies forimprove the welfare of peruvian coffee producers in this context, like it is madein other producing countries. The contribution of this paper is the identificationof adaptive preferences for coffee producers from Peru and Colombia, andanalyzing the basis of information that will be need for make such a goodpolicies.Finally, in this paper, are analyzed some subjective indicators of evaluation ofthe well-being for coffee producers in Perú and Colombia, like decrease in thesowed area, and other indicators of social impact that try to measure changes inwell-being. This paper will conclude that there are evidences of the process ofthe adaptive preferences in the cases of coffee producers from Peru and Colombia.

This article analyzes the effects of trade policy on the patterns of location of foreign direct investment (FDI) by country and sector. Particular attention is paid to FDI in manufactures, for which the market size is a very important locational factor, and therefore, so too is the preferential access to enlarged markets provided by trade agreements. Hence this article compares the performance of Peru in this field with those of its partners in the Andean Community of Nations (CAN), especially Colombia, which was the CAN's leading recipient of manufacturing FDI in the last decade. The analysis shows that Peruvian trade policy in the 1990s raised the cost of producing within the country, failed to give industrial activity levels of effective protection comparable to those prevailing in Peru's neighboring competitors, and made the country less attractive as a location for industrial firms interested in the Andean Community subregional markets. For those reasons, trade policy discouraged private investment in Peru, particularly FDI in manufactures with greater value added and technological level, diverted industrial investment to neighboring countries and facilitated an increase in imports of manufactures from those countries, thereby causing substantial harm to the industrialization and competitiveness of the Peruvian economy.

The traditional approaches to measuring poverty use arbitrary assumptions and do not include the relative nature of this phenomenon. The main finding of subjective approaches in this field is that more people tend to consider themselves "poorer" than what is suggested by objective measures. This paper argues that these limitations could be overcome by means of the introduction of subjective considerations in poverty measurement. Since measuring poverty through agents' reports is not totally reliable -because of the lack of appropriate mechanisms to reveal the correct information and the conditionality of these reports on psychological factors-, this paper uses an intermediate approach: contrasting poor people's poverty perception with socio-economic and demographic objective characteristics. This paper uses information from the HOPE (Hogares de Pobreza Extrema, Severely Poor Households) survey to evaluate poverty self-perception through objective conditionals, and to calculate a Subjective Poverty Line. Finally, the paper discusses policy implications.