Bolivia's development: long view

Juan Antonio Morales

Chapter 12 in The Elgar Companion to the Economies of Latin America and the Caribbean, 2025, pp 270-285 from Edward Elgar Publishing

Abstract: The paper takes a long view of Bolivia's economic development. Given its endowment of natural wealth, the country started well after independence in 1825. In the following two centuries, Bolivia has had a dismal performance, with a very low rate of long-term growth and several episodes of very high inflation and political instability. The paper focuses on the economic, social, and political determinants of this regression. The dependency of exports on a handful of non-renewable commodities, subjected moreover to wide fluctuations of international prices, made the country very vulnerable. Only during periods of very favorable terms of trade, did the Bolivian economy thrive. Bolivia had a per capita GDP only slightly below the regional one in 1950. However, wealth and income were very badly distributed, with very profound racial and social cleavages. The dissatisfaction with the extractive economic and political institutions, combined with the Marxist and anarchist rhetoric of influential intellectuals, led to the national revolution of 1952. Since then, except for a 1985–2005 interlude, Bolivia has followed a state-led model of development. We attempt to pin down the major policy mistakes that began with the aforementioned revolution and that are repeated still.

Keywords: Economic development, Economic institutions, Resource-based development, Globalization waves; Macroeconomic instability (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035317196
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