Bolivia

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Bolivia

• Institutions Pro-Poor Growth
• Exploratory Country Study

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Bolivia Geography

• Landlocked country, relatively remote
• One third mountainous, high plateaux
  (altiplano) and valleys,
• rest lowland plains in the heart of the
  continent
• 75 of the population of 7M live in the highlands
• 65 urban population

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Bolivia history

• Subjugation of the majority
• Inca empire,
• Spanish invasion,
• Independence (c 1825) rule by criollo elites
• Extraction of minerals silver (Potosi), then tin
• Latifundia farming by urban caballeros, with
  bonded peasants

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1952 Revolution

• Uprisings by unionised miners, agitation by urban
  middle classes radicalised by the Chaco War, land
  invasions by peasants
• MNR government
• Nationalisation of tin mines
• Land to the tiller break-up of the latifundia
• State capitalism, with cheap credit
• Resettlement plans for the lowlands

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1960s, 1970s the revolution ebbs

• Military dictators
• Banzer 197178 relatively rapid growth fuelled
  by high commodity prices farming in the east,
  oil and gas, and foreign borrowing ? debt at
  US2.2G by end 1970s ? and expansion of coca
  production.
• Favour in land and mining concessions and state
  credit, to cliques
• everyone else to informal sector
• Rise of Santa Cruz large farms, old oligarchs,
  new oil

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1980s reforms

• 1982 restoration of civilian rule with elections
• 1985 economic crisis profound adjustment
• Market deregulation
• Capital market deregulation
• Fiscal reforms
• Expenditure more to health and education, less
  on state-owned companies
• Trade liberalization
• Liberalization of the FDI regime
• Restructuring, closing, and capitalization of
  the large state-owned companies
• Economic growth resumes

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1990s deeper reforms

• Attempts to reform public service
• 1992 Popular Participation Law
• 1994 Decentralisation to Munis
• education, privatisation of PSOEs, pensions,
  customs, streamlining of social programmes a
  source of patronage.
• Economy grows at 4, poverty down by 10

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2000s crisis

• The economy slows, structural weaknesses
  apparent
• Exports primaries, once mining, now hydrocarbons
  and cash crops ..
• with few poverty links
• High initial inequality in land, capital and
  earnings ethnic and linguistic division
• Failure to develop manufactured exports, partly
  owing to
• weak property rights,
• high corruption,
• contraband economy,
• high regulatory burden for start-ups,
• highly informal economy.
• Domestic savings at 10 or less, depend on
  external finances

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A discredited polity

• Minority parties compete vigorously for votes,
  form coalition governments
• State the locus of patronage to supporters high
  corruption, low public service performance
• Ministers last one year or so
• Public well aware, disillusioned, hence
• Rise of two indigenous parties may even gain
  presidency
• Movimientos protest groups, capable of
  paralysing the country but without programmes

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Current economic dilemma

• Gas exports the main hope, plus crops from
  commercial farms (soya, etc.), but both
• in hands of big batalions oil companies, large
  farmers
• in East
• Few links to rest of economy and society
• Can state tax, use revenues for investment in
  social programmes, highland agriculture?

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Political dilemma reform agenda

• Honesty in political office
• Merit-based public service
• Labour laws
• Judiciary
• Property rights (land)
• Redressing extreme inequality how?