The Economy of Bolivia

Usually, the economy ofBoliviadepended on a single-commodity focus, like silver to tin to cocoa. Of course, mining, particularly that of zinc and extraction of natural gas is now a major part of Bolivia’n export economy. In 1985, the Government of Bolivia introduced a very effective program of macroeconomic stabilization and structural reform to maintain stable prices, to create conditions for sustained growth, and to alleviate poverty. A most important structural change in the Bolivian economy is the capitalization of numerous public sector enterprises, which 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


Simultaneous legislative reforms have brought into place market-oriented policies, mostly in the hydrocarbon and telecom segments encouraging private investment. Foreign investors are accorded national treatment, and foreign ownership of companies enjoys virtually no restrictions inBolivia.

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

In April 2000, violent protests over plans to privatize the water utility in the city ofCochabambaled 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 continue to pursue an investment dispute case againstBoliviafor its actions. A similar situation occurred in 2005 in the cities of El Alto andLa Paz.

Source: Wikipedia

About chepeyja

chartered engineer(India), B.Sc., risk management consultant, blogger and layabout!
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