Peru has made notable strides to strengthen its regional development policy over the past decade. Strategic planning has become more focused, multi-level governance has been reinforced, and the capacity of national and subnational governments has improved. Progress also includes better collection, publication, and use of subnational data.
Between 2000 and 2023, Peru achieved one of the fastest economic growth rates in Latin America, averaging 4.1% annually. This performance was underpinned by sound macroeconomic institutions including fiscal rules, an independent Central Bank, and robust financial regulation. However, recent global headwinds and domestic challenges - including slower global growth, high inflation, declining productivity, and political uncertainty - have dampened growth and stalled convergence with OECD levels. With some of the largest regional disparities among OECD Members and accession candidate countries, strengthening regional development policy and multi-level governance is critical to Peru’s national competitiveness and growth.
Peru has advanced in the use of territorial data to tackle disparities and support development. Its statistical system offers a broad range of demographic, socio-economic, and environmental indicators at the regional level and ensures public access. Nonetheless, gaps persist – particularly at the level of provinces (TL3) – for key areas such as education, innovation, and labour indicators. Strengthening the use of data to inform policymaking and reinforcing regional and local capacity to collect and apply data, would further enhance impact. This is also an opportunity to build on efforts to adopt international methodologies and improve dissemination practices.
Peru's regional development framework has matured, as evidenced by improved strategic planning capacity. Yet, challenges remain in aligning national and regional objectives and ensuring effective coordination across levels of government. Urban development is held back by fragmented planning, housing shortages, and unchecked sprawl, undermining quality of life and accessibility. Meanwhile, rural development remains overly focused on agriculture and poverty reduction, limiting opportunities for diversification and innovation. Better urban-rural integration could unlock mutual gains and foster more balanced regional development. This calls for a coherent approach that responds to the specific needs and potential of each region.
The country has also made important progress in enhancing multi-level governance. The creation of the Vice-Ministry of Territorial Governance under the Presidency of the Council of Ministers in 2018 has been a turning point. It has helped establish 15 Regional Development Agencies thus far and promote vertical co-ordination through mechanisms such as the Inter-governmental Co-ordination Councils and Regional and Municipal Councils of State. National associations of subnational authorities - representing regions, provincial and district municipalities, and populated cores (centros poblados) - also play a crucial role in national platforms, fora, and policy dialogues. Their active participation in legislative and regulatory processes helps ensure that subnational interests are reflected in national decision-making.
Institutional and fiscal capacity at subnational level has improved significantly. Peru has pursued administrative reforms – such as the Civil Service Law, the Integrated Platform for Electronic Management of Human Resources, and targeted trainings through deconcentrated ministry offices. Subnational governments are now important public investors in education, health, and other key areas, with spending levels exceeding the OECD unitary countries average.
Recent years have also seen important steps to improve the effectiveness of public investment. However, further progress is possible. Linking multiannual investment planning process to a budget framework that enables multi-year spending commitments could enhance budget predictability, reduce fragmented investment, and encourage joint investment strategies. A medium- or long-term national infrastructure investment plan could better coordinate priorities across sectors and levels of government. Strengthening the public procurement framework, notably through a National Public Procurement Strategy, would also support more effective delivery.
Looking ahead, Peru can take further steps to enhance regional development performance across critical dimensions – including the production of territorial data, inter-ministerial coordination, fiscal decentralisation and budgetary practices. By pursuing targeted reforms and drawing on international best practices, Peru can strengthen its regional development policy to better address the specific needs of its diverse regions while delivering more inclusive, balanced and resilient growth.