Economy of Bolivia

The economy of Bolivia is the 95th largest economy in the world in nominal terms and the 87th economy in terms of purchasing power parity. It is classified by the World Bank to be a lower middle income country.[10] With a Human Development Index of 0.675, it is ranked 119th (medium human development).[11]

The Bolivian economy has had a historic pattern of a single-commodity focus. From silver to tin to coca, Bolivia has enjoyed only occasional periods of economic diversification. Political instability and difficult topography have constrained efforts to modernize the agricultural sector. Similarly, relatively low population growth coupled with low life expectancy and high incidence of disease has kept the labor supply in flux and prevented industries from flourishing. Rampant inflation and corruption also have thwarted development, but in the early twenty-first century the fundamentals of its economy showed unexpected improvement, leading major credit rating agencies to upgrade Bolivia's economic rating in 2010.[12] The mining industry, especially the extraction of natural gas and zinc, currently dominates Bolivia's export economy.[13]

Between 2006 and 2014, GDP per capita doubled and the extreme poverty rate declined from 38 to 18%.[14] Moreover, the Gini coefficient declined from 0.60 to 0.47.[15]

Economy of Bolivia
Boliviancurrency
CurrencyBolivian Boliviano (BOB)
Calendar year
Statistics
GDPIncrease $41.833 billion
(Nominal, 2018)
Increase $89.352 billion
(PPP, 2018)[1]
GDP rank97th (nominal) / 91st (PPP)
GDP growth
4.9% (2015), 4.3% (2016),
4.2% (2017e), 4.44% (2018) [2]
GDP per capita
Increase$3,719 (Nominal, 2018)
Increase$7,943 (PPP, 2018)[1]
GDP by sector
agriculture: 13.6%; industry: 38.1%; services: 52.0% (2012 est.)
Positive decrease1.51% (2018)[3]
Population below poverty line
38.6% (2015 est.)[4]
note: based on percent of population living on less than the international standard of $2/day
47 (2016 est.)[4]
Labor force
5.719 million (2016 est.)[4]
Labor force by occupation
agriculture: 29.4%
industry: 22%
services: 48.6% (2015 est.)[4]
UnemploymentSteady 4% (2017 est.)[4] note: data are for urban areas; widespread underemployment
Main industries
mining, smelting, petroleum, food and beverages, tobacco, handicrafts, clothing, jewelry
149th (2017)[5]
External
ExportsIncrease$16.85 billion (2014 est.)
Export goods
natural gas, soybeans and soy products, crude petroleum, zinc ore, tin
Main export partners
 Brazil 33.5%
 Argentina 20.3%
 United States 10.1%
 Colombia 5.4% (2013 est.)[6]
ImportsIncrease$10.49 billion (2014 est.)
Import goods
petroleum products, plastics, paper, aircraft and aircraft parts, prepared foods, automobiles, insecticides
Main import partners
 Brazil 17.1%
 China 13.6%
 United States 12.6%
 Argentina 10.8%
 Peru 6.5%
 Chile 6.2% (2013 est.)
 Venezuela 5.0%
[7]
FDI stock
Increase$10.56 billion (31 December 2013)
Negative increase$$12.81 billion (31 December 2017 est.)[4]
Public finances
Negative increase49% of GDP (2017 est.)[4] note: data cover general government debt, and includes debt instruments issued by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities
-7.8% (of GDP) (2017 est.)[4]
Revenues$15.09 billion (2017 est.)
Expenses$18.02 billion (2017 est.)[4]
Economic aidrecipient: $726 million (2009 est.)[8]
B+ (Domestic)
B+ (Foreign)
B+ (T&C Assessment)
(Standard & Poor's)[9]
Foreign reserves
Increase$15.38 billion (31 December 2014 est.)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

History

The Bolivian economy grew rapidly between 1960 and 1977.[16] According to one study, "persistent deficits and a fixed exchange rate policy during the 1970s led to a debt crisis that began in 1977. From 1977 to 1986, Bolivia lost almost all the gains in GDP per capita that it had achieved since 1960."[16] After 1986, Bolivian economy began to grow again.[16] Between 1998-2002, Bolivia experienced a financial crisis.[16]

Inflation has plagued, and at times crippled, the Bolivian economy since the 1970s. At one time in 1985 Bolivia experienced an annual inflation rate of more than 20,000 percent. Fiscal and monetary reform reduced the inflation rate to single digits by the 1990s, and in 2004 Bolivia experienced a manageable 4.9 percent rate of inflation.[13]

Starting with the Supreme Decree 21060 in 1987, the Government of Bolivia implemented a far-reaching program of macroeconomic stabilization and structural reform aimed at maintaining price stability, creating conditions for sustained growth, and alleviating poverty. The most important structural changes in the Bolivian economy involved the capitalization of numerous public sector enterprises. (Capitalization in the Bolivian context is a form of privatization where investors acquire a 50% share and management control of public enterprises by agreeing to invest directly into the enterprise over several years, rather than paying cash to the government). A major reform of the customs service significantly improved transparency in this area.

Parallel legislative reforms have locked into place market-oriented policies, especially in the hydrocarbon and telecommunication sectors, that have encouraged private investment. Foreign investors are accorded national treatment, and foreign ownership of companies enjoys virtually no restrictions in Bolivia. While the capitalization program was successful in vastly boosting foreign direct investment (FDI) in Bolivia (US$7 billion in stock during 1996-2002), FDI later decreased as investors completed their capitalization contract obligations.

In 1996, three units of the Bolivian state oil corporation (YPFB) involved in hydrocarbon exploration, production, and transportation were capitalized, facilitating the construction of a gas pipeline to Brazil. The government has a long-term sales agreement to sell 30 million cubic metres a day (MMcmd) of natural gas to Brazil through 2019. The Brazil pipeline carried about 21 MMcmd in 2000. Bolivia has the second-largest natural gas reserves in South America, and its current domestic use and exports to Brazil account for just a small portion of its potential production. Natural gas exports to Argentina resumed in 2004 at four MMcmd.

In April 2000 violent protests over plans to privatize the water utility in the city of Cochabamba led to nationwide disturbances. The government eventually cancelled the contract without compensation to the investors, returning the utility to public control. The foreign investors in this project pursued an investment dispute case against Bolivia for its actions. A similar situation occurred in 2005 in the cities of El Alto and La Paz.

Protest and widespread opposition to exporting gas through Chile led to the resignation of President Sanchez de Lozada in October 2003. The government held a binding referendum in 2004 on plans to export natural gas and on hydrocarbons law reform. By May 2005, the carbons law draft was being considered by the Senate.

Macroeconomy

Main indicators

Bolivia's 2016 gross domestic product referred to PPP totaled $78.35 billion and in the official exchange $35.69 billion. Its standard of living, as measured in GDP in PPP per capita was US $7,191. Economic growth is about 5.2% a year and inflation was 4.5% in 2012. Bolivia experienced a budget surplus of about 1.5% of GDP in 2012. Expenditures were nearly US$12.2 billion while revenues amounted to about US$12.6 billion. The government runs surplus accounts since 2005.

The Bolivian currency is the boliviano (ISO 4217: BOB; symbol: Bs.) One boliviano is divided into 100 centavos. The boliviano replaced the Bolivian peso at a rate of one million to one in 1987 after many years of rampant inflation. At that time, 1 new boliviano was roughly equivalent to 1 U.S. dollar. At the end of 2011 the boliviano was only worth around 0.145 U.S. Dollar.[17] Annual interest rates in 2010 had decreased steadily to 9.9 percent[10] from more than 50 percent before 1997.

Bolivia's human development index was reported at 0.675, comprising a health index of 0.740, an education index of 0.743 and a GNI index of 0.530, ranking within the group of medium human development. "Between 1980 and 2012 Bolivia (Plurinational State of)'s HDI rose by 1.3% annually from 0.489 to 0.675 today, which gives the country a rank of 108 out of 187 countries with comparable data. The HDI of Latin America and the Caribbean as a region increased from 0.574 in 1980 to 0.741 today, placing Bolivia (Plurinational State of) below the regional average."[11]

The following table shows the main economic indicators in 1980–2017.[18]

Year 1980 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP in $
(PPP)
10.8 Bln. 12.6 Bln. 16.4 Bln. 22.6 Bln. 29.2 Bln. 38.1 Bln. 41.2 Bln. 44.23 Bln. 47.87 Bln. 49.86 Bln. 52.55 Bln. 56.42 Bln. 60.41 Bln. 65.55 Bln. 70.37 Bln. 74.59 Bln. 78.77 Bln. 83.55 Bln.
GDP per capita in $
(PPP)
2,090 2,080 2,442 2,994 3,497 4,180 4,439 4,685 4,987 5,109 5,298 5,599 5,900 6,303 6,663 6,955 7,229 7,547
GDP growth
(real)
0.6 % −1.7 % 4.6 % 4.7 % 2.5 % 4.4 % 4.8 % 4.6 % 6.1 % 3.4 % 4.1 % 5.2 % 5.1 % 6.8 % 5.5 % 4.9 % 4.3 % 4.2 %
Inflation
(in Percent)
47.1 % 11,749.6
%
17.1 % 10.2 % 4.6 % 5.4 % 4.3 % 6.6 % 14.0 % 3.3 % 2.5 % 9.9 % 4.5 % 5.7 % 5.8 % 4.1 % 3.6 % 2.8 %
Government debt
(Percentage of GDP)
... ... ... ... 67 % 82 % 54 % 40 % 37 % 39 % 38 % 35 % 35 % 36 % 37 % 41 % 46 % 51 %

Sectors

Primary sector

Agriculture and forestry

Agriculture and forestry gross domestic product (GDP) in 2003, down from 28 percent in 1986. Combined, these activities employ nearly 44 percent of Bolivia's workers. Most agricultural workers are engaged in subsistence farming—the dominant economic activity of the highlands region. Agricultural production in Bolivia is complicated by both the country's topography and climate. High elevations make farming difficult, as do the El Niño weather patterns and seasonal flooding. Bolivia's agricultural GDP continues to rise but has attained only a rather modest average growth rate of 2.8 percent annually since 1991.

Bolivia's most lucrative agricultural product continues to be coca, of which Bolivia is currently the world's third largest cultivator after Colombia and Peru, with an estimated 29,500 hectares under cultivation in 2007, slightly higher than the previous year. Bolivia is the third-largest producer of cocaine, a drug produced from coca, estimated at 120 metric tons potential pure cocaine in 2007 and a transit country for Peruvian and Colombian cocaine destined illegally for the U.S., Europe, Brazil, Argentina, Chile, and Paraguay. The Bolivian government, in response to international pressure, worked to restrict coca cultivation. However, eradication efforts have been hampered by the lack of a suitable replacement crop for rural communities that have cultivated coca for generations. The Morales government turned back some of the results obtained in previous years.

Since 2001 Bolivia's leading legal agricultural export has been soybeans. Additionally, cotton, coffee, and sugarcane have been viable exports for Bolivia. For domestic consumption, corn, wheat, and potatoes are the crops of choice of Bolivian farmers. Despite its vast forests, Bolivia has only a minor timber industry. In 2003 timber accounted for only 3.5 percent of export earnings. The Forestry Law of 1996 imposed a tax on sawn lumber and consequently cut Bolivian lumber exports significantly. The tax was used to establish the Forestry Stewardship Council, which has been only minimally successful in forest restoration efforts and eliminating illegal logging. With increased efficiency, Bolivia could likely expand the profitability of its forest resources, while still protecting them from overexploitation. Bolivia has a small fishing industry that taps the country's freshwater lakes and streams. The annual catch averages about 6,000 tons.[13]

Agriculture and forestry is also the lifeline for multitudes of small villages which house a majority of the population. Small village economy stumbled and dwindled from the late twentieth century due to aggravating environmental problems including deforestation and consequent soil degradation,[19] water pollution, loss of biodiversity, and so on. Besides, political and social problems also greatly obstruct the growth of small village development: political turmoil, post-civil war predicament and burgeoning fiscal deficit have strangled most investment incentives;[20] corruption and manipulation of water supply by foreign companies have greatly undermined the availability and efficiency of local market, leaving little profits for village farmers and producers.[21] Furthermore, the global market poses a threat to the stability and sustainability of Bolivia's frail economy: "a drop in export prices, reduction of informal trade" and low-skilled over-homogenized local products have further worsened the bleak condition of Bolivia's microeconomic activities, making it almost impossible for village farms and factories to make a living from trading with the world.[22] Dwindling profits and surging cost of production have made small village economy in Bolivia extremely vulnerable and unstable; as a result, unemployment increases and small business is on the verge of bankruptcy, which in return made government intervention very inefficient and deferred many governmental initiatives and attempts to improve the condition.

Mining

Bolivia Resource Map
"Map of Bolivia, Showing Forest and Agriculture Areas, and Mineral Localities" from 1912

Mining continues to be vital to Bolivia's economy. The collapse of the world tin market in the 1980s led to a restructuring of the industry. The state dramatically reduced its control and presently operates only a small portion of mining activities. Small-scale operations, often with low productivity, employ many former state miners. Natural gas has supplanted tin and silver as the country's most valuable natural commodity. A discovery in 1997 confirmed a tenfold gain in Bolivia's known natural gas reserves. Finding markets to utilize this resource, both domestically and internationally, has been slowed by a lack of infrastructure and conflicts over the state's role in controlling natural resources. Although the world tin market has re-emerged, Bolivia now faces stiff competition from Southeast African countries producing lower-cost alluvial tin. Gold and silver production has increased dramatically over the past decade. Annually, as of 2002 Bolivia extracted and exported more than 11,000 kilograms of gold and 461 tons of silver. Additionally, Bolivia has increased zinc production, extracting more than 100,000 tons each year. Other metals excavated include antimony, iron, and tungsten.[13]

According to the United States Geological Survey, Bolivia has 5.4 million tons of lithium, which can be used to make lithium batteries, used in hybrid and electric vehicles in addition to huge numbers of smaller batteries.[23] This is the largest known concentration of lithium in any country; Chile has 3 million known tons of lithium and the United States has 410,000 tons.[23] These large deposits are located in desert regions farmed by indigenous groups, who claim their share of the profits made from their natural resources.[23] Bolivian President Evo Morales favours national, rather than foreign, ownership of natural resources, and nationalized the country's oil and natural gas reserves.[23]

Mining the mineral deposits would involve disturbing the country's salt flats (called Salar de Uyuni), an important natural feature which boosts tourism in the region. The government does not want to destroy this unique natural landscape to meet the rising world demand for lithium.[24]

In January 2013 Bolivia opened a lithium production plant in Uyuni, producing mainly potassium chloride.[25][26] Also, the Bolivian government signed intentions to develop not only lithium extraction but also lithium ion battery production with numerous countries, especially from the Asia Pacific region.

Industry and manufacturing

Annually, manufacturing has accounted for in between 14 and 15 percent of Bolivia's gross domestic product. The share of industry as a whole (including the mining industry) to the GDP increased from 30 percent in 2000 to 37,3 percent in 2010. Most industry is a small-scale, aimed at regional markets rather than national operations. Inadequate credit options and competition from the black market have kept Bolivia's manufacturing sector from developing fully. Leading manufactured goods in Bolivia include textiles, clothing, non-durable consumer goods, processed soya, refined metals, and refined petroleum.[13]

Processing of food, beverages and tobacco is the biggest sector within the manufacturing industry (39% in 2001[10]). This sector occupies a prominent place in the manufacturing industry that is continually growing, both in production and number of businesses and jobs. In 2010 its share in exports was about 14%. Especially the soybean and its derivatives reached very large export markets in recent years. The largest factories producing soybeans, sunflower seeds, cotton and sugar from cane, are mainly situated in Santa Cruz, although a large edible oil refineries operate in Cochabamba. All major cities have at least one brewery, one or more soft drink bottling plants, and one or more packaging plants for canned food.

The textiles industry was the second largest manufacturing sector after the food industry in the 1970s and was of decreasing importance afterwards, representing progressively diminishing value of total manufacturing. But since the 1990s the textile industry has increased its growth rate. The cotton and wool industry declined at the expense of synthetic fibers. The largest concentration of textile mills are to be found in La Paz, but also in Santa Cruz and Cochabamba and to a lesser extent in Oruro.

Another important industry is the oil refining industry.

Services

The services industry in Bolivia remains undeveloped. Inhabiting one of the poorest countries in South America, Bolivians have weak purchasing power. The retail sector suffers from weak demand and competition with a large black market of contraband goods. U.S. companies such as McDonald's and Domino's have pulled out of Bolivia in recent years.[13]

Banking and finance

Banking in Bolivia has long suffered from corruption and weak regulation. However, a series of reforms initiated by the 1993 Banking Law and subsequent acts are gradually improving Bolivia's banking sector. Bolivia has a central bank and nine private banks. Consolidation occurred following reforms, lowering the number of private banks in Bolivia from 14 in 1995 to nine in 2003. Foreign participation and investment in Bolivian banks are allowed. About 90 percent of Bolivian bank deposits are held in U.S. dollars. The Bolivian government is trying to change this situation by taxing dollarized accounts while exempting boliviano accounts from the tax. As recently as 2002, 27 percent of all loans were non-performing, leading most foreign investors to focus their resources in the somewhat-safer venue of corporate lending. Most bank lending in 2003 went to manufacturing (24 percent), followed by property services (18 percent) and trade and retail (16 percent). Bad debt remains at a historically high level. Further reforms are necessary, including the pending act to introduce a deposit guarantee system. Bolivia's stock market expanded in 1998 to include corporate bonds, along with the money market and government bond options that had existed previously. The privatization of Bolivia's social security program has bolstered the stock market.[13]

Tourism

Bolivia's spectacular vistas and natural attractions have not been enough to transform the country into a major tourist destination because of its political instability and lack of first-class accommodations. Still, Bolivia's tourist industry has grown gradually over the past 15 years. In 2000 Bolivia attracted 306,000 tourists, compared with 254,000 in 1990. Tourist revenue peaked at US$179 million in 1999. Tourism in Bolivia declined following the September 11, 2001 attack on the United States, as was the case across North and South America. Since from 2001 the tourism sector, however, is strongly increasing, in fact in 2014 the number of tourists reached 871,000 arrivals.[27]

Infrastructure

Energy

Bolivia's energy needs are relatively small but growing consistently. Bolivia uses oil for the majority of its power needs, followed by natural gas and hydroelectric power.

Oil

Bolivia has estimated oil reserves of 441 million barrels (70,100,000 m3), the fifth largest in South America. The fields are located in the east and south. The main activities in the refineries is crude oil fractioning, catalytic conversion for high octane gasoline, and refining of heavy fractions to produce lubricants. The final products are vehicle gasoline, liquid propane and butane, jet fuel, diesel oil and lubricants for use in industrial machinery. As domestic oil production is insufficient to meet domestic demand Bolivia is a net importer of oil.[28]

Until recently the country's oil industry was fully controlled by the state company YPFB, established in 1936 with the mission to develop, refine and distribute oil resources. After privatization efforts in the 1990s the transport of natural gas and oil was in private hands during the 1990s while the production and refining of materials was part of risk-sharing contracts between the government and private investors. In 1999 the refinaries were also completely privatized. In May 2006 president Evo Morales re-nationalized reserves, while its exploitation remained in private hands.

Natural Gas

The country's natural gas reserves total 27.6 trillion cubic feet (780 km3) according to Bolivian government figures, ranking Bolivia behind only Venezuela in terms of proven natural gas reserves in South America. Additionally, Bolivia is self-sufficient in its electricity production.[13] The sector changed significantly when the government allowed privatization in the mid-1990s. International companies quickly invested in Bolivian energy sources, particularly in natural gas, and made Bolivia into a player in the world energy market. The exportation of Bolivian energy resources, while potentially lucrative economically, has been politically hazardous. President Gonzalo Sánchez de Lozada ultimately resigned over his plan to export natural gas to the United States and Mexico in 2003.

On June 6, 2005, former president Carlos Mesa offered his resignation to the Bolivian Congress after months of demonstrations by Bolivia's indigenous population calling for renationalizing the natural gas and oil sectors. Mesa had increased taxation on foreign companies while still encouraging their investment in Bolivian energy development. On May 1, 2006, his successor, current president Morales, signed a decree stating that all natural gas reserves were to be nationalized, recovering ownership, possession and control of hydrocarbons. US Exxon Mobil Corporation, Petrobras, Spain's Repsol YPF, UK gas and oil producer BG Group Plc, and France's Total are the main gas companies present in the country.

Electricity

Until 1994 the electricity sector was dominated by the vertically integrated public utility ENDE (Empresa Nacional de Electricidad). In 1994 the electricity sector was privatized and was unbundled into generation, transmission and distribution. The law aimed to increase efficiency in the sector, promote competition and encourage investment.[29]

The supply is dominated by thermal generation (60%), while hydropower (40%) has a smaller share in its generation mix compared to other South American countries (Latin America and the Caribbean, or LAC, average hydropower capacity is 51%).[30] The electricity coverage in rural areas is with 30%[31] among the lowest in Latin America and improving it represents a major challenge in the future and requires the joint efforts from both the public and private sectors. Like in other countries, Bolivia's electricity sector consists of a National Interconnected System (SIN) and off-grid systems (known as the Aislado).

Water supply and sanitation

Labor and welfare

The economic downturn of the late 1990s, coupled with privatization and austerity efforts led by President Mesa, resulted in significant unemployment. Although the Bolivian government does not keep unemployment statistics, outside experts estimate unemployment to be between 8 and 10 percent of the population. Underemployment of Bolivia's workforce of nearly 4 million is also widespread. As a result of the lack of formal employment opportunities, nearly 65 percent of the urban workforce was self-employed in 2002.

Labor unions have a strong history in Bolivia, and many workers in the formal sector belong to unions. The larger unions, such as the Bolivian Labor Federation and the Trade Union Federation of Bolivian Mine Workers, have been successful in rallying workers to countless strikes and work stoppages. Nevertheless, working conditions for most Bolivian workers are difficult.[13]

These conditions are even more critical as far as the informal sector is concerned. In fact, Bolivia has been listed in the 2014 U.S. Department of Labor's report[32] on child labor and forced labor among the 74 countries where instances of such practices have been observed. According to the List of Goods Produced by Child Labor or Forced Labor issued under this report, Bolivia resorts to these practices in the agricultural sector as well as in the mining industry until this day. The DOL has also reported that "The [Bolivian] Government's National Plan to Eradicate Child Labor expired in 2010 and has not been updated."[33]

Foreign economic relations

Trade Agreements

Bolivia's trade with neighboring countries is growing, in part because of several regional preferential trade agreements it has negotiated. Bolivia was a founding member of the Andean Group, a South American organization designed to promote trade among Brazil, Colombia, Ecuador, Peru, Argentina, the United States, and Venezuela. Subsequently renamed the Andean Community of Nations, the organization has succeeded in increasing intra-South American trade. Trade among member countries rose from US$3.6 billion in 1991 to US$10.3 billion in 2003. Bolivia also belongs to the Common Market of the South (Mercado Común del Sur—Mercosur). Bolivia became an associate member in March 1997 in order to open investment opportunities with the founding Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay), as well as other Mercosur associate members (Chile, Colombia, Ecuador, Peru, and Venezuela). The agreement provides for the gradual creation of a free trade area covering at least 80% of the trade between the parties over a 10-year period, though economic crises in the region have derailed progress at integration. The U.S. Andean Trade Preference and Drug Enforcement Act (ATPDEA) allows (allowed?) numerous Bolivian products to enter the United States free of duty on a unilateral basis, including alpaca and llama products and, subject to a quota, cotton textiles. Bolivia conducted more than US$1 billion in trade with Mercosur countries in 2003. As a result of negotiations initiated in 1999 on a possible South American Free Trade Area (SAFTA), Mercosur and the Andean Community of Nations announced in December 2004 that they would merge, creating a Union of South American Nations modeled after the European Union.[13]

Imports and Exports

Exports rose by more than 30% between 2010 and 2011 to $9.1 billion, due mostly to increased commodity prices, not increased volume. In 2011, Bolivia's top export products were: crude and refined hydrocarbons (44.9% of total exports), minerals and metals (26.7%), manufactured and semi-manufactured goods (24.7%), and agricultural products (3.7%). Bolivia's trade with neighboring countries is growing, in part because of several regional preferential trade agreements. Bolivia's top trading partners in 2011 in terms of exports were Brazil (33%), Argentina (11%), United States (10%), Japan (6%), Peru (5%), South Korea (5%), Belgium (4%), China (3%), and Venezuela (3%).

Bolivian tariffs are low; however, manufacturers complain that the tax-rebate program that allows some companies to claim refunds of import taxes on capital equipment is inefficient, with many companies now owed millions of dollars by the Bolivian Government, which can take years to recover.

From 2010 to 2011, Bolivian imports rose by 41% to a total of $7.6 billion. Bolivia imports many industrial supplies and inputs such as replacement parts, chemicals, software, and other production items (31% of total imports), capital goods (21%), fuel (13%), and consumer goods (10%). Top import products within these categories were machinery and mechanical appliances (17% of total imports), chemical products (14%), fuels and oils (14%), vehicles (13%), minerals (8%), and food (7%). Bolivia also imports significant quantities of steel, electrical machinery equipment and parts, and plastics and plastic products.

Bolivian imports of goods and services were valued at about US$5.3 billion in 2010. Bolivia enjoyed an estimated $1.6 billion trade surplus in 2010. By sector, Bolivia imported mostly intermediate goods, followed by industrial, capital, and consumer goods. Leading sources of Bolivian imports include Brazil, Argentina, the United States, and Chile.[13]

Bolivian exports of goods and services in 2010 stood at around US$7 billion compared with US$1.9 billion in 2003. Increased production of hydrocarbons, especially natural gas, led Bolivia's trade upturn in 2010. A 20-year supply contract with Brazil for natural gas, ending in 2019, the necessary capital to increase production. In 2004 export revenues for natural gas topped US$619 million. Bolivia also exported significant quantities of petroleum. Beyond hydrocarbons, other significant exports included zinc, soya, iron ore, and tin. In 2001 Brazil overtook the United States as Bolivia's primary export outlet. Switzerland, Venezuela, and Colombia are also important export partners. Bolivia has actively sought to foster economic connections in South America after long relying on the United States as its primary trade partner.[13]

The United States remains one of Bolivia's largest trading partners; however, it faded greatly on Brazil benefit in 2012. In 2002, the United States exported $283 million of merchandise to Bolivia and imported $162 million. Bolivia's major exports to the United States are tin, gold, jewelry, and wood products. Its major imports from the United States are computers, vehicles, wheat, and machinery. A Bilateral Investment Treaty between the United States and Bolivia came into effect in 2001.[13]

By 2004 Bolivia had become the market leader in the export of brazil nuts,[34] with thousands of local people involved in collecting the pods in Bolivian Amazonia.[35]

Balance of trade

Bolivia had an estimated trade surplus of more than US$1.6 billion in 2011. This figure represents a marked change in Bolivia's economic balance sheet. Bolivia reached a peak trade deficit of US$888 million in 1998 before increased hydrocarbon exports radically altered the situation.[13]

Bolivia had a large negative balance of payments for 2002⎯US$317 million. However, this situation has been remedied by the vast increase in export revenue. Estimates for the balance of payments for 2004 show a record surplus of US$126 million. Bolivia's external debt totaled an estimated US$5.7 billion in 2004. The International Monetary Fund has assisted Bolivia in paying down this debt. In 1995 the United States, among other countries, reduced Bolivia's debt by two-thirds.[13]

Foreign investment

Foreign investment in Bolivia was buoyed in 1995 by privatization. Investment in mining and natural gas extraction increased, as did investment in the banking sector. However, the economic decline of the late 1990s, along with political unrest, caused foreign investors to pull out of Bolivia once again. In 2000 foreign investors contributed US$736 million to the Bolivian economy. In 2002 this total fell to US$676 million.

The Government of Bolivia remains heavily dependent on foreign assistance to finance development projects. At the end of 2002, the government owed $4.5 billion to its foreign creditors, with $1.6 billion of this amount owed to other governments and most of the balance owed to multilateral development banks. Most payments to other governments have been rescheduled on several occasions since 1987 through the Paris Club mechanism. External creditors have been willing to do this because the Bolivian Government has generally achieved the monetary targets set by International Monetary Fund programs since 1987, though economic problems in recent years have undercut Bolivia's normally good track record. Rescheduling agreements granted by the Paris Club have allowed the individual creditor countries to apply very soft terms to the rescheduled debt. As a result, some countries have forgiven substantial amounts of Bolivia's bilateral debt. The U.S. Government reached an agreement at the Paris Club meeting in December 1995 that reduced by 67% Bolivia's existing debt stock. The Bolivian Government continues to pay its debts to the multilateral development banks on time. Bolivia is a beneficiary of the Heavily Indebted Poor Countries (HIPC) and Enhanced HIPC debt relief programs, which by agreement restricts Bolivia's access to new soft loans. Bolivia was one of three countries in the Western hemisphere selected for eligibility for the Millennium Challenge Account and is participating as an observer in free trade agreement negotiations. Bolivia enjoys some financial assistance programs run by the World Bank[36] and Microenterprise Development programs provided by Five Talents International[37]

Mutun iron ore project

In 2007, India's third largest steel manufacturer, Jindal Steel and Power Limited, signed a contract with the Bolivian government to exploit the Mutun iron ore deposit, considered to be one of the largest in the world. According to the contract, Jindal would invest US$1.5 billion initially and an additional US$2.5 billion over the next eight years. This is the single largest investment by an Indian firm in Latin America.[38] Jindal Steel will set up an integrated 1.7 MTPA steel plant, a 6 MTPA sponge iron plant, a 10 MTPA iron ore pellet plant and a 450 MW power plant.[39] By September 2011, Jindal had obtained clearance for the project from the EIA and had hired an engineering consultant for FEED work.[39] The project is expected to create 6,000 jobs directly and another 15,000 indirectly.[40]

As of June 2011, Jindal has invested only US$20 million on the project due to considerable delay by Bolivian authorities in issuing land for the project and due to inability of the Bolivian government to commit 8 million cubic meters of natural gas per day for the power plant and ore smelting process.[41]

See also

References

  1. ^ a b "Report for Selected Countries and Subjects". IMF.org. International Monetary Fund. Retrieved 5 January 2019.
  2. ^ "DE ENERO A JUNIO DE 2018: EL PRODUCTO INTERNO BRUTO TRIMESTRAL DE BOLIVIA, REGISTRÓ UNA TASA DE CRECIMIENTO DE 4,44%". Instituto Nacional de estadística de Bolivia. Retrieved 15 January 2019.
  3. ^ "Indicadores de inflacion Bolivia". https://www.bcb.gob.bo. Banco Central de Bolivia. Retrieved 15 January 2019. External link in |website= (help)
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External links

Alfonso Gumucio Reyes

Alfonso Gumucio Reyes (Bolivia, 1914) was a political leader of the Movimiento Nacionalista Revolucionario (MNR) and one of its founding members in 1940. After the triumph of the Revolution of April 9, 1952, Gumucio Reyes became the President of the Corporación Boliviana de Fomento (CBF), the State institution in charge of economic development and infrastructure. As such he was responsible for several development projects, such as the Planta Industralizadora de Leche (PIL) in Cochabamba; the Ingenio Guabirá, a sugar mill in Santa Cruz; and the main roads from the highlands to the eastern part of the country, the lower lands.

From 1957 to 1960 he was appointed Ambassador to Uruguay, by President of Bolivia Hernán Siles Zuazo. From 1960 to 1964 he became Minister of Economy under the government of President Víctor Paz Estenssoro, and was responsible for the economic development of the country.

In 1964, when he had recently travelled to Spain as Bolivian Ambassador, a military coup took place in Bolivia, led by General René Barrientos. Gumucio Reyes stayed in exile in Madrid until 1967. When he came back to Bolivia, he was imprisoned by the military regime for three months.

Andean Community

The Andean Community (Spanish: Comunidad Andina, CAN) is a free trade area with the objective of creating a customs union comprising the South American countries of Bolivia, Colombia, Ecuador, and Peru. The trade bloc was called the Andean Pact until 1996 and came into existence when the Cartagena Agreement was signed in 1969. Its headquarters are in Lima, Peru.

The Andean Community has 98 million inhabitants living in an area of 4,700,000 square kilometers, whose Gross Domestic Product amounted to US$745.3 billion in 2005, including Venezuela, who was a member at that time. Its estimated GDP PPP for 2011 amounts to US$902.86 billion, excluding Venezuela.

Andean Trade Promotion and Drug Eradication Act

The Andean Trade Promotion and Drug Eradication Act (ATPDEA) is a trade preference system by which the United States grants duty-free access to a wide range of exports from four Andean countries: Bolivia, Colombia, Ecuador and Peru. It was enacted on October 31, 2002 as a replacement for the similar Andean Trade Preference Act (ATPA). The purpose of this preference system is to foster economic development in the Andean countries to provide alternatives to coca production. Bolivia has installed capacity to industrialize coca production and its derivatives, since coca has no narcotic effects, but the United States does not make any difference between coca and cocaine. Thus, the U.S. government eliminated this "preference".

Bolivia

Bolivia ( (listen), Spanish: [boˈliβja]; Guarani: Mborivia [ᵐboˈɾiʋja]; Quechua: Puliwya [pʊlɪwja]; Aymara: Wuliwya [wʊlɪwja]), officially the Plurinational State of Bolivia (Spanish: Estado Plurinacional de Bolivia [esˈtaðo pluɾinasjoˈnal de βoˈliβja]) is a landlocked country located in western-central South America. The capital is Sucre while the seat of government and financial center is located in La Paz. The largest city and principal industrial center is Santa Cruz de la Sierra, located on the Llanos Orientales (tropical lowlands), a mostly flat region in the east of the country.

The sovereign state of Bolivia is a constitutionally unitary state, divided into nine departments. Its geography varies from the peaks of the Andes in the West, to the Eastern Lowlands, situated within the Amazon Basin. It is bordered to the north and east by Brazil, to the southeast by Paraguay, to the south by Argentina, to the southwest by Chile, and to the northwest by Peru. One-third of the country is within the Andean mountain range. With 1,098,581 km2 (424,164 sq mi) of area, Bolivia is the fifth largest country in South America, after Brazil, Argentina, Peru and Colombia (and alongside Paraguay, one of the only two landlocked countries in the Americas), the 27th largest in the world, the largest landlocked country in the Southern Hemisphere and the world's sixth largest landlocked country, after Kazakhstan, Mongolia, Chad, Niger and Mali.

The country's population, estimated at 11 million, is multiethnic, including Amerindians, Mestizos, Europeans, Asians and Africans. The racial and social segregation that arose from Spanish colonialism has continued to the modern era. Spanish is the official and predominant language, although 36 indigenous languages also have official status, of which the most commonly spoken are Guarani, Aymara and Quechua languages.

Before Spanish colonization, the Andean region of Bolivia was part of the Inca Empire, while the northern and eastern lowlands were inhabited by independent tribes. Spanish conquistadors arriving from Cuzco and Asunción took control of the region in the 16th century. During the Spanish colonial period Bolivia was administered by the Royal Audiencia of Charcas. Spain built its empire in large part upon the silver that was extracted from Bolivia's mines.

After the first call for independence in 1809, 16 years of war followed before the establishment of the Republic, named for Simón Bolívar. Over the course of the 19th and early 20th century Bolivia lost control of several peripheral territories to neighboring countries including the seizure of its coastline by Chile in 1879. Bolivia remained relatively politically stable until 1971, when Hugo Banzer led a coup d'état which replaced the socialist government of Juan José Torres with a military dictatorship headed by Banzer; Torres was murdered in Buenos Aires, Argentina by a right-wing death squad in 1976. Banzer's regime cracked down on leftist and socialist opposition and other forms of dissent, resulting in the torture and deaths of a number of Bolivian citizens. Banzer was ousted in 1978 and later returned as the democratically elected president of Bolivia from 1997 to 2001.

Modern Bolivia is a charter member of the UN, IMF, NAM, OAS, ACTO, Bank of the South, ALBA and USAN. For over a decade Bolivia has had one of the highest economic growth rates in Latin America; however, it remains the second poorest country in South America. It is a developing country, with a medium ranking in the Human Development Index, a poverty level of 38.6%, and one of the lowest crime rates in Latin America. Its main economic activities include agriculture, forestry, fishing, mining, and manufacturing goods such as textiles, clothing, refined metals, and refined petroleum. Bolivia is very rich in minerals, including tin, silver, and lithium.

Bolivian boliviano

The boliviano (sign: Bs ISO 4217 code: BOB) is the currency of Bolivia. It is divided into 100 cents or centavos in Spanish. Boliviano was also the name of the currency of Bolivia between 1864 and 1963.

Central Bank of Bolivia

The Central Bank of Bolivia (Spanish: Banco Central de Bolivia) is the central bank of Bolivia, responsible for monetary policy and the issuance of banknotes. The current president of the BCB is Pablo Ramos Sánchez.

Corruption in Bolivia

Corruption in Bolivia is a major problem that has been called an accepted part of life in the country. It can be found at all levels of Bolivian society. Citizens of the country perceive the judiciary, police and public administration generally as the country's most corrupt. Corruption is also widespread among officials who are supposed to control the illegal drug trade and among those working in and with extractive industries.Many Bolivians are uneducated and thus unaware of their rights as citizens or of laws against corruption.

Cvs.

Cvs. is the currency sign for the Bolivian centavo.

Foreign aid to Bolivia

In 1998 the World Bank and International Monetary Fund awarded Bolivia a debt relief package worth US$760 million. Bolivia has also received relief under the World Bank’s Heavily Indebted Poor Countries program, which, if Bolivia meets all checkpoints, will total US$1.2 billion by 2011. In 2004, the United States designated more than US$150 million for assistance to Bolivia.Under President Evo Morales, Spain has agreed to forgive $120 million (99 million Euro) in Bolivian debt on the condition that the money go towards developing educational programs.

Huanuni tin mine

The Huanuni tin mine, Huanuni is a large Bolivian mine situated about 60 km south of Oruro, Bolivia on the way to the famous Villa Imperial de Potosí, as the city was and is known since colonial times. The mine is situated in Bolivia's tin mining heartland. It was originally owned at the turn of the 20th century by Don Vicko Orlandini (Don Vincenzo Orlandini), who was a member of one of Bolivia's famous tin mining families, and also owner of El Porvenir-Cataricahua, in Huanuni, Oruro, Bolivia. The Huanuni mine was later sold to Simón Iturri Patiño, the well-known tin baron.

The Catavi mine was, at one point, the largest underground tin mine in the world, especially from 1930 to the late 1940s. At about that time the Huanuni mine took Catavi`s place through the end of the 20th century. Thousands of Bolivian mine workers still go underground every day. The mine was discovered by chance in the 19th century, and was mined for a long time simply with the aid of simple tools; the means of transport were burros (donkeys).

In traditional mining methods, the average lifespan of a mine worker from the local community was traditionally 46 years. That has now changed dramatically. Lifespan and pay have increased dramatically. Mine workers in Bolivia earn good wages today and average lifespan has increased to over 60 years. At present the Huanuni Mine is still Bolivia's largest underground tin mine.

International Development Collaborative

The International Development Collaborative (IDC) is a non-profit group located in Columbus, Ohio that is committed to assisting in the creation of sustainable entrepreneurial micro-enterprises in rural villages of developing countries. Its primary focus is to give villagers the opportunity to sell their textiles at a fair value on an international scale and to afford them the opportunity to raise their standard of living. IDC is based upon the principles of social entrepreneurship.

Irrigation in Bolivia

Bolivia’s government considers irrigated agriculture as a major contributor to "better quality of life, rural and national development." After a period of social unrest caused by the privatization of water supply in Cochabamba and La Paz, the government of Evo Morales is undertaking a major institutional reform in the water resources management and particularly in the irrigation sector, aimed at: (i) including indigenous and rural communities in decision making, (ii) integrating technical and traditional knowledge on water resources management and irrigation, (iii) granting and registering water rights, (iv) increasing efficiency of irrigation infrastructure, (v) enhancing water quality, and (v) promoting necessary investment and financial sustainability in the sector. Bolivia is the first country in Latin America with a ministry dedicated exclusively to integrated water resources management: the Water Ministry.

List of Bolivia-related topics

The following is an outline of topics related to the Republic of Bolivia.

List of Bolivian departments by Human Development Index

This is a list of Bolivian departments by Human Development Index as of 2018 with data for the year 2017.

Mining in Bolivia

Mining in Bolivia has been a dominant feature of the Bolivian economy as well as Bolivian politics since 1557. Colonial era silver mining in Bolivia, particularly in Potosí, played a critical role in the Spanish Empire and the global economy. Tin mining supplanted silver by the twentieth century and the central element of Bolivian mining, and wealthy tin barons played an important role in national politics until they were marginalized by the industry's nationalization into the Bolivian Mining Corporation that followed the 1952 revolution. Bolivian miners played a critical part to the country's organized labor movement from the 1940s to the 1980s.

By 1985, however, the production of every significant mineral in the country had failed to exceed the output registered in 1975. Moreover, the international tin market crashed in 1985. The mining sector in 1987 accounted for only 4 percent of GDP, 36 percent of exports, 2.5 percent of government revenues, and 2 percent of the labor force, compared with 8 percent of GDP, 65 percent of exports, 27 percent of government revenues, and about 6 percent of the labor force in 1977. Spurred by a massive increase in gold production, however, the mining sector rebounded in 1988, returning to the top of the nation's list of foreign exchange earners.

The crisis of 1985 prompted emergency economic measures by the government, including massive layoffs of miners. The twenty-first century has seen a recovery and expansion of the mining sector, and the government of Evo Morales has re-nationalized several facilities. However, as of 2010 mining in Bolivia is primarily in private hands, while the vast majority of miners work in cooperatives. Large, foreign owned mines such as Sumitomo's San Cristóbal mine also produce relatively large quantities of minerals. In 2010, 79,043 miners worked in the sector, producing $2.642 billion of mineral products. As of 2011, Bolivia is the world's sixth largest producer of tin.

Outline of Bolivia

The following outline is provided as an overview of and topical guide to Bolivia:

Bolivia – landlocked sovereign country located in central South America. Bolivia is bordered on the north and the east by Brazil, on the southeast by Paraguay, on the south by Argentina, and on the west by Chile and Peru. Its geography varies from the peaks of the Andes mountains to the tropical forests of the Amazon Basin. It is a developing country, and its main economic activities include agriculture, mining, and manufacturing of products such as textiles.

Revenue stamps of Bolivia

Bolivia has issued revenue stamps since 1867.

Supreme Decree 21060

Supreme Decree 21060 (Spanish: Decreto Supremo 21060, DS 21060, or DS Nº 21060), promulgated by Bolivian President Víctor Paz Estenssoro on 29 August 1985, was a legal instrument that imposed neoliberal economic policies in order to end Bolivia's twin crises of international debt and hyperinflation.In 1985, under the fourth (and final) term of President Paz Estenssoro, the economic situation in Bolivia was undermined with a galloping hyperinflation (inherited from Hernán Siles Zuazo) and the country was unable to pay its debt to the International Monetary Fund (IMF). A plan was drawn by Jeffrey Sachs, Professor at Harvard University, and at that time active as economic adviser to the Bolivian government. Bolivia was the first country where Jeffrey Sachs could test his theories.The IMF approved of the decree's adoption and gave the Bolivian government $57 million in credit. Additionally, the World Bank began lending money to the country again.

Water privatization in Bolivia

The privatization of water supply and sanitation in Bolivia took place during the second mandate of Bolivian President Hugo Banzer (1997-2001) in the form of two major private concessions: One in La Paz/El Alto to Aguas del Illimani S.A. (AISA), a subsidiary of the French Suez (formerly Lyonnaise des Eaux) in 1997; and a second one in Cochabamba to Aguas del Tunari, a subsidiary of the multinationals Biwater and Bechtel in 1999.

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