Edited by Josef Drexl and Vicente Bagnoli
Chapter 3: The principle of subsidiarity as the essential restriction on Peruvian state business activity under pro-competitive conditions
This chapter highlights the importance of the Peruvian experience in the area of the restriction of state business activity under the principle of subsidiarity explicitly recognized by the Constitution. In its main part it describes the requirements and the authorization for the state to engage in business activities. As a result of these requirements, under the principle of fair competition and economic pluralism, the state plays a facilitating, enabling and promoting role in the social market economy, which is the economic model of the country as established in the Peruvian Constitution. The role of the government in the economy has considerably evolved over the constitutional history of Peru, which is reflected in 13 constitutions since the first Constitution of 1823 to the current 1993 Constitution. Until the entry into force of the 1993 Constitution, the Peruvian state had gone through a history of military dictatorships, de facto governments and inefficient management of state resources. The state had developed a clear business function; it often showed a predominantly interventionist attitude, with utter disdain for the respect of the principle of fair competition, and promoted state monopolies and price fixing. Peru, like most Latin American countries, introduced economic neoliberal structural reforms in the 1990s after going through a severe economic and fiscal crisis accompanied by discredit in the international financial world. These reforms were motivated by the so-called Washington Consensus.
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