This and other  islands of modernity  are touted as models to be replicated throughout the public sector.
In reality, the process of applying the models has been slow. That they are considered  islands  suggests
they represent exceptions to the rule in a public sector still in need of institutional and above all
democratic reform.
Cara Buena: Social Investment, Infrastructure Development
In the early 1990s, the government created a set of agencies designed to foster development, build
infrastructure, and provide food and other assistance to needy citizens. The more prominent of these
agencies include FONCODES (National Development and Social Compensation Fund), PRONAA
(National Nutritional Assistance Program), INFES (National Institute of Education and Health
Infrastructure), FONAVI (National Housing Fund), and COFOPRI (Formalizing Comission of Informal
Property). Funds for these programs are all channeled through the central Ministry of the Presidency
(MIPRE) and the Presidency of the Council of Ministers.
Staffed by technocrats and initially supported by international donors and creditors, these agencies
produced dramatic results, from new road construction on an unparalleled scale, to construction of
schools and medical clinics in the most neglected areas, to short term job creation in economically hard 
hit areas. In some areas of Peru, the scale and quantity of the works in progress and the number of
persons employed to carry them out are staggering.  These agencies are seen as effective but also highly
politicized. Many are viewed as mechanisms to maintain electoral support for Fujimori and are infused
with huge increases in funding during campaigns. At the provincial level, they are viewed with
 need assistance and hesitate to  bite the hand that feeds them.  Yet, there is a
clear recognition that central government spending usurps the power and initiative of regional actors.
Fondo de Compensacion y Desarrollo Social
) was created in 1991 to finance projects in
employment, health, nutrition, basic education, and other areas benefiting the population in poverty.
Foncodes was to have been an autonomous agency reporting directly to the President, with funds
allocated in response to proposals from community organizations, local governments and NGOs. Funds
were to be used to build infrastructure with a social purpose   schools, roads, hospitals or clinics   using
labor intensive techniques to maximize employment generation. By 1994, Foncodes had become the
government's main instrument of social policy, managing thousands of local support projects and
generating tens of thousands of short term jobs. Its beneficiaries were residents of the poverty stricken
highland departments, areas also afflicted by political violence. Once bastions of opposition (voting
against the 1993 Constitution that permitted Fujimori's re election), these areas were converted into
votes for Fujimori, prompting criticism that Foncodes was being used to bankroll his re election.
The same criticism was directed at Foncodes (as well as Fonavi and Pronaa) in the 2000 campaign.
Piura, the coastal epicenter of El Nino, was devastated economically and in its physical infrastructure,
requiring a reconstruction of bridges destroyed by flooding and the restoration of potable water sources
and sewage lines. Over the last year, Fujimori paid dozens of visits to Piura to inaugurate public works.
 Gustavo Guerra Garcia, 
Reforma del Estado en el Per : Pautas para reestructurar el Poder Ejecutivo
. Lima:
Agenda Per , 1999.
 Regarding the 1995 elections and campaign spending, see Kenneth Roberts and Moises Arce,  Neoliberalism and
Lower Class Voting Behavior in Peru,  in 
Comparative Political Studies
 (1998), 31(2), April. See also Norbert
Schady,  Seeking Votes; The Political Economy of Expenditures by the Peruvian Social Fund  (FONCODES),
1991 1995. Washington: World Bank Group. Unpublished Manuscript, 1998.
H:\INCOMING\July24\MSI Submission\Fn Email.doc

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