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Branding a Nation

March 31, 2008

As any first year marketing student or amateur political consultant knows, positioning is the art of building your brand in the public eye in the most fa­vorable light possible. The concept is to build a brand (or candidate), which provokes positive associations from consumers (or vot­ers) while comparing favorably to the competition, thus increasing product sales.

What works for soap and politicians can also work for nations. Think about it. Who wouldn’t want to vacation in “the Switzerland of Central America?” Or invest in a nation where “democratic stability” is the norm. For that matter, who wouldn’t prefer to pass a trade agreement with a nation perceived to be “America’s best regional friend” than with “the world’s larger producer of coca?”

Words matter, and impressions matter. Often, such impressions are developed over years of experi­ence. In fact, only rarely are nations given a moment in time when they have the opportunity to reposi­tion themselves favorably in the global community. Rarer still are those moments which are well-known in advance, in time for national leaders to take full advantage. But if they do, the benefits can be huge.

Peru now enjoys such an opportunity.

In 2006, when Alan Garcia was elected for the second time, concern among observers was palpable. Better than the defeated Ollanta Humala, people (correctly) said, though a reprise of the disastrous first term in the late 1980s would be a setback that Peru, after years of favorable economic growth, did not need. But President Garcia has confounded the skeptics. He has continued the process of economic reform begun by his predecessors; rather than walking away from the free trade agreement with the United States, as some had predicted, President Garcia redoubled his efforts to conclude and pass the agreement, seeing it as the best means both to continue Peru’s domestic reforms while hitching Peru’s economy more effectively to the global economy.

It’s true, of course, that historically high commodity prices have supercharged Peru’s economy, growing an average of almost 5 percent year-on-year since 2003 and making it one of the fastest growing economies in the hemisphere. And the new building and vibrancy of Lima and other Peruvian cities are the obvious result. But rather than sit back, relax, and enjoy the show, President Garcia and his government have made a strategic decision to use these good times, while they last, to build a broader Peruvian development agenda.

And here’s where the story gets even more interesting. According to senior Peruvian government officials, the US-Peru FTA, signed in Washington in early December 2007, is just the first step of a development strategy that also includes domestic reforms and Peruvian outreach to other geographic regions. In May, for example, Lima will host the next meeting of the leaders from the United States and Latin America, and in November Peru will host the next meeting of APEC, consisting of 21 nations from Asia, Australia, Latin America, and North America. In fact, at one point or another in 2008, the eyes of much of the world will be focused on Peru. And this is the opportunity that cannot be missed in order to position Peru as a rapidly developing, open market democracy that shares more with Chile and Singapore and Korea than it does with some of its South American neighbors. The success of the November APEC meetings, in particular, will be decisive.

Peru is playing in the big leagues now. Last year, APEC was held in Australia and the year before, Vietnam. Next year, APEC will be in Singapore, then Japan, and in 2011, the United States. It is a grouping of serious economies, seeking to make real progress on trade liberalization, investment provisions, customs, intellectual property protections, and a host of other topics relevant to global competitiveness. It encompasses many of the most dynamic economies in the world, and standards are high.

The APEC agenda this year, at the insistence of Peru, is also quite interesting and appropriate. For example, given President Garcia’s well-founded desire that the benefits of growth and development be broadly shared throughout Peru’s economy, one of the priority areas for November will be the SME agenda—finding ways to include small and medium sized enterprises in the global economy. As a growing exporter of natural gas, Peru will also play a positive role in the APEC energy and global climate change agenda. And by welcoming visiting leaders from around the Asia-Pacific region, Peru has a chance to show off its nation and people in a way that will change the storyline for those who only know Peru from the days of hyperinflation, debt repudiation, coca production, and the nihilistic campaigns of the Maoist Sendero Luminoso.

Which is not to say that everything is perfect in Peru. Indeed, the World Bank’s Doing Business 2008 report ranks Peru low in a number of areas, well behind its Asian peers. The judiciary remains in need of fundamental reforms, the tax process is complicated and opaque, education rates remain far too low, labor laws remain inflexible, and street protests have occurred due to concern in the agriculture sector over competition with the United States under the bilateral trade agreement.

These are but a few of the more prevalent concerns. And they are significant issues that will need to be addressed if Peru is to achieve long-term, sustainable economic take-off. But the overriding fact remains: Peru today is dramatically different than Peru yesterday. And the leadership of Peru has a vision to take the country even further down the path of globalization, ensuring that the benefits of globalization reach as many people as quickly as possible. Rather than dropping out of the global economy, as it tried to do in the late 1980s, Peru is now one of the most aggressive participants in seeking to develop domestically through full participation in the global economy.

This is the storyline that a successful APEC meeting will promote. And it is an image that, once accepted as conventional wisdom, will have done more to reposition Peru for success in the global economy than any number of other individual steps, locking the country on a path to success no matter who takes over in 2011 from President Garcia. With only a short time until November, the time to begin that process is now.