Rebuilding the State in Areas Affected by Political Violence: The Case of Rural Communities in Ayacucho, Peru

During the 1980s, the Peruvian society was deeply affected by two significant events: a) the economic crisis that ended in recession and hyperinflation and, b) the spread of political violence, in particular in Ayacucho, in the central Andean highlands. Taking this into account, the conditions for the reconstruction and rehabilitation of those areas affected by political violence were reviewed from an economic approach. Therefore, this paper aims to analyze the role of the State in the rehabilitation process of the rural communities in Ayacucho, with special attention on the advantages and limitations of a decentralization program. The analysis was made at the micro and macro levels. For the micro level, asset and vulnerability approach was used, and at the macro level, decentralization was considered to be the main link for the new relationship between the State and the rural communities. As a result of this two-fold analysis, it could be concluded that the simple creation and provision of social infrastructure, does not ensure a sustainable improvement in population well being. It is necessary, therefore, to have at the same time an effective policy for productive investments focused on an increase in the quantity and quality of productive assets and of the human and social capital that will enhance agriculture and livestock, the two main activities in Ayacucho. This should be given together with the required institutional strengthening. It is expected that public expenditure create the conditions required for an efficient allocation of resources needed for a reconstruction based on a development strategy. The advantages of this proposal are: i) to identify easily the local problems and potentialities, ii) to encourage local participation in municipal management, and iii) to reduce information costs by promoting effective coordination among the public and private actors thus avoiding the role duplication.