Peru stands out as a country out of step with its Latin American neighbors during most of the post war period. This chapter reviews the evolution of economic policy and the underlying political and institutional dynamics from the late 1960s up until the brink of the crisis. As Peru moves into another inflation-recession cycle and the discussion turns from economic reactivation to ways of distributing the adjustment burden more equitably, it is difficult to avoid a rather bleak assessment of the American Popular Revolutionary Alliance’s first few years in office. Executive power was greatly limited by a majority opposition in the legislature, representing the more traditional authoritarian populist strains of the American Popular Revolutionary Alliance (APRA) in coalition with the exporter oligarchy. The APRA recognized that economic reactivation in the wake of the debt crisis would require greater cooperation with domestic business and financial groups and sought a social pact with private industry along the lines.