dominant is the Executive in Peru that observers say that the regime can best be characterized as a  soft 
authoritarianism that permits civil society to thrive but prevents interest aggregation, and limits citizen
participation and political competition.
In the 1990s, Peru overhauled a public sector which was insolvent and in crisis. Beleaguered by money 
losing firms and a corrupt and dysfunctional bureaucracy, in the 1980s, Peru was incapable of economic
management, ineffective in providing services, and unable to maintain order in the face of the 
Sendero
Luminoso
 insurgency. Reform became imperative by the time Fujimori took office in 1990. In this
precarious context, the government launched a sweeping economic program that included privatization
as well as other reforms intended to strengthen state capacity.
State reform was a central component of economic restructuring. The creation of a market economy
required shrinking the public sector and establishing a legal and institutional framework to regulate
market activities. This included restructuring several prominent agencies, including the Central Reserve
Bank (Banco Central de la Reserva or BCR), the National Tax Authority (Superintendencia National de
Administracion Tributaria or SUNAT), and the Office of Customs (Superintendencia Nacional de
Aduanas, SUNAD). In addition, regulatory agencies were established, including Indecopi (market
competition, consumer protection, and intellectual property rights), Osiptel (telecommunications),
Osinerg (energy), Conasev (National Supervisory Commission of Business), the Superintendency of
Banks and Insurance Companies, and Ositran (private investment in infrastructure and public
transportation).
These institutions are considered  islands of modernity  in a sea of bureaucracy.  They have resources
that enable them to recruit qualified people. Also, they have a stable legal framework that affords them a
reasonable degree of autonomy. Finally, they employ incentive policies to develop specialized technical
staff.  As a result, many of these entities have a reputation for independence, efficiency and positive
public relations, in contrast with other state entities. The following example illustrates this:
INDECOPI
 (The National Institute for the Defense of Competition and Protection of Intellectual
Property) is an independent agency that fulfills a promotional role (
rol promotor)
 with respect to the
market.  It monitors market competition, ensures that firms follow norms and meet technical standards,
provides consumer protection services, and works to prevent marketplace discrimination.
25
 Indecopi
enjoys a good reputation, and although it has been criticized for administrative delays it has never been
charged with corruption or political bias. Analysts attribute this in large part to the talent and prestige of
Dr. Beatriz Boza, its founding director.
Although a market regulator, Indecopi provides mechanisms for market conflict resolution and has the
power to sanction companies found to violate laws. It also serves as a first instance administrative
decision maker and an appeals tribunal in intellectual property conflicts. In enforcing market fairness,
Indecopi performs a quasi judicial role, protecting rights of  economic citizenship  (as Dr. Boza
describes them), but is by no means sufficient to compensate for the deficiencies of the judicial branch.
In addition, Indecopi is committed to market decentralization, working with municipal chambers of
commerce and regional universities to strengthen the dialogue with local businessmen and the central
government. These efforts to promote decentralization are not enough to stem the centralizing thrust of
the government.
                                                    
25
 See Beatriz Boza, ed., 
Peru's Experience in Market Regulatory Reform
 (1998).
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