AS FORMER PERUVIAN President Alejandro Toledo sees it, the conventional wisdom that economic growth and increases in income will reduce poverty and inequality is flawed. While growth is important, he said, it alone will not eliminate poverty in Latin America.
“Economic growth is indispensable, but insufficient to deal with poverty,” said Toledo, a 1970 graduate of the University of San Francisco and noted economist, during a Jan. 31 talk presented by the USF Center for the Pacific Rim.
Toledo discussed the intricate links between democracy, economic growth, and poverty, saying research shows that even as a nation experiences economic growth, the number of people living in poverty does not necessarily decrease. For its part, he said, a democratically elected government does not instantly translate to a lessening of poverty.
Yet for both economic growth and democracy to be sustained in places such as Latin America, Toledo said, poverty must be dealt with. To accomplish this, Toledo suggests an approach he calls social democracy—ensuring the poor have access to quality education and healthcare. Without that access, democracy will remain unstable and economic growth unsustainable.
“I’ve always believed that healthcare and education are the most powerful weapons to fight poverty,” Toledo said.
Toledo was elected president of Peru in 2001 and served until 2006. He is currently a Hoover Institution Distinguished Visiting Fellow at Stanford University and credits USF as being the first educational institution to give him the chance to pursue his dreams.
Throughout his speech, Toledo mentioned that his success and subsequent rise to the presidency were statistical flukes given the conditions of his native country. In Peru, 48 percent of the population live below the poverty line. Eighteen percent live below the extreme poverty line.
Born into a poor Andean Indian family of 16 children, Toledo shined shoes as a boy to help support his family. A chance encounter with two Peace Corps volunteers led him to USF where he earned a partial soccer scholarship and also worked part-time pumping gas to pay for his schooling. He went on to earn two master’s degrees and a doctorate from Stanford University.
As USF President Stephen A. Privett, S.J. said in introducing Toledo: “He is the Andean version of the mythical American dream.”
During the five years of Toledo’s presidency, the Peruvian economy grew at an average of 6 percent, one of the fastest growing economies in the Americas. Inflation fell to an average of 1.5 percent and the deficit went as low as 1.5 percent. Markets in China and Thailand opened and Toledo started free trade agreements with Chile, Mexico, and the United States.