In the small towns of Peru’s Andean highlands, every spare surface has been commandeered for a poster or a mural proclaiming: “Keiko Presidente!” or “Ollanta”. The Peruvian presidential election, which will see either Keiko Fujimori or Ollanta Humala elected on June 5, will be the most closely watched poll in Latin America this year. It has become a test of whether the continent’s dramatic economic and political progress is irreversible; or whether the bad old days of authoritarianism, populism and economic chaos could still return to haunt Latin America.

In 1980, there were just three democracies in the whole of Latin America; now it is the autocracies that can be counted on the fingers of one hand. A continent that was once synonymous with the words “economic crisis” has become the toast of emerging market investors. Countries that lived in dread of capital flight now complain that there is too much “hot money” flowing in from abroad.

The rise of Brazil as a global power has overshadowed much of the rest of the continent. But the transformation of Peru, Brazil’s smaller neighbour, is in some ways even more remarkable. Once famous for a vicious Maoist insurgency, the country grew by almost 9 per cent last year – and has commitments for more than $40bn of new foreign investment in mining alone. (Peru also has the unique status of being the world’s leading exporter of both cocaine and asparagus.)