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11. Reforms and Counter-Reforms in Bolivia

Author:
Luis Carlos Jemio, Fernando Candia, and José Luis Evia
Publication Date:
06-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
Towards the end of the 1970s and beginning of the 1980s, Bolivia experienced a period of deep economic and political crisis, resulting from the international economic shocks that hit the country at the time and from the large levels of foreign indebtedness the country had acquired during the 1970s. The crisis was characterized by hyperinflation, continuous drops in GDP, economic uncertainty and political volatility. Starting in 1985, after a change in government, Bolivia embarked in a comprehensive program of structural reforms aimed at stabilizing the economy and at removing the structural constraints which precluded faster economic growth and increases in productivity. The reform package was implemented over a period of time which began in 1985 and lasted for approximately 20 years. The reform policies comprised measures such as the opening of the economy to foreign trade; price, exchange rate and interest rate liberalizations; fiscal adjustments; central bank independence; instauration of a financial regulation and supervision system; capitalization and privatization of public enterprises; pension reforms; decentralization of the public administration; strengthening of key public institutions, (e.g. the internal revenue and customs offices, and the national road administration), among the most noticeable.
Topic:
Economics, Reform, Trade, and Liberalization
Political Geography:
South America and Bolivia

12. Analysis of Poverty and Inequality in Bolivia, 1999-2005: A Microsimulation Approach

Author:
Claudia Gutierrez
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper studies the changes in inequality and poverty in the period 1999-2005 in Bolivia through the analysis of the changes in the labour market. A decomposition method based on micro-simulation techniques was applied. The decomposition works with an income generation model at the household level, which is a set of equations for the individual earnings and for the labour supply and occupational choices for each member of the household. We decomposed the observed change in inequality into four components: i) a shift in the income distribution related to a change in employment rates and the shares of wage and non-wage labour among the employed population (participation effect); ii) a shift related to changes in the remuneration of observed characteristics of the employed population (price effect); iii) a shift related to a change in the distribution of error terms of estimated earnings functions (error term effect); and iv) a residual change in inequality not captured by the first three simulated changes in the income distribution. According to our results the increase in inequality of 3 points of the Gini coefficient, was explained by approximately 1 point for the participation, price and error term effects and 2 points for the residual change. The increase in the unemployment rate, the shift in the participation of the non wage earners, the rise in wages and the more unequal distribution of unobserved productive talents deteriorated the income distribution in this period in Bolivia. Regarding the poverty incidence, the observed variation was a reduction by 3 points explained mainly by the residual change. The low magnitude of the simulated effects as determinants of the decline in poverty in those years can be explained by the rising participation of the non labour incomes in the total household income.
Topic:
Development, Economics, Poverty, Inequality, and Simulation
Political Geography:
South America and Bolivia

13. The Impact of Community-Based EcoTourism Projects in Amboró National Park

Author:
Fabián Soria
Publication Date:
03-2008
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This research examines selected Community Ecotourism projects in the Amboró National Park in Bolivia, which have been established by local environmental NGOs. The objective is to investigate the impact of these projects on the livelihoods and social relations in the communities. The main question that concerns us is if the projects have been effective in reducing or alleviating poverty and vulnerability, whilst providing environmental sustainability. The research also provides insight into the impact of the projects on social, cultural and economic structures of the communities. Furthermore, it will show whether the beneficiaries see Community Ecotourism projects as an important income and activity diversification option, and if they see the projects as environmentally sustainable. These issues can determine the final outcome of the project, and thus become decisive to evaluate if such projects can be used as a strategy to improve living conditions and reduce poverty. The research relies on interviews and data collected during fieldwork in Bolivia in July-August 2007. Four different Community Ecotourism projects in the Amboró National Park were visited, as well as key informants and stakeholders.
Topic:
Economics, Environment, Poverty, Sustainability, and Ecotourism
Political Geography:
South America and Bolivia

14. The Chilean agricultural transformation during the second half of the twentieth century: A story of institutional change

Author:
Antonio Saravia
Publication Date:
10-2008
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The second half of the twentieth century witnessed a dramatic transformation of the Chilean agricultural sector. From accounting for only five percent of the value of Chile’s total exports in the late 1960s, agricultural exports grew to account for more than 30 percent of this value in the mid 1990s. Using a modified neoclassical growth formulation, we show that the transformation of the Chilean agricultural sector can be associated with institutional changes or modifications to the sector’s basic functioning structure. In particular, our historical review shows that changes in the definition of property rights over land, caused by the Chilean agrarian reform first and the general economic reform later, seem to have greatly caused the changes in the sector’s levels of investment and production.
Topic:
Agriculture, Economics, Institutions, Land Rights, and Property
Political Geography:
South America and Chile

15. Booms and Collapses of the Hydro Carbons Industry in Bolivia

Author:
Luis Carlos Jemio
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper analyses the performance of the hydrocarbons sector in Bolivia over the last 46 years. The analysis focuses on the factors that have determined the sector’s behavior overtime. First, there is the institutional framework that regulates the sector’s activities, which can play an important role in promoting investment flows, and thus endorse a much faster sector development. The institutional framework comprises several factors, being the most important the existing tax system and the nature of the contractual relationship between the state and the oil company. The stability of the institutional framework is also of paramount importance.
Topic:
Economics, Markets, Oil, Gas, and Investment
Political Geography:
South America and Bolivia

16. Welfare Gains from Optimal Policies in a Partially Dollarized Economy

Author:
Carlos Gustavo Machicado
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper evaluates welfare under optimal monetary and fiscal policy in a dynamic stochastic model of currency substitution and capital. It shows that in a partially dollarized economy, the main optimal policy results, i.e. the Friedman Rule and the zero capital tax, hold. Welfare implications of these optimal policies are computed for the Bolivian economy using a second-order approximation technique. The primary conclusions are that the welfare gains under optimal monetary policy are negligible. The welfare gains when optimal fiscal policy is considered alone or in conjunction with optimal monetary policy are sizable and come from the increase in real variables and also by the increase in real balances in local currency. Thus, welfare gains are negatively related to dollarization.
Topic:
Economics, Monetary Policy, Fiscal Policy, Welfare, and Dollarization
Political Geography:
Global Focus

17. Inequality and Suicide Rates: A Cross-Country Study

Author:
Antonio Rodríguez Andrés
Publication Date:
10-2006
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper tests whether economic inequality is related to suicide mortality. Using an unbalanced panel of 40 countries for the period 1947-2001 allows us to control for the effect of unobserved factors that may have an impact on suicide rates. Our results indicate that there is a statistically insignificant positive effect of inequality on the incidence of suicide. The latter result seems to be robust to a number of specification issues explored in a sensitivity analysis. Our results also suggest that female labour participation has a significant positive effect on the total (males and female) suicide rates, supporting the sociological argument that the role conflict dominates more than the role expansion. Contrary to the total and male suicide rates findings, the fertility rate matters in explaining female suicide rates. Finally, in contrast to previous studies, suicide rates were not sensitive to income levels, divorce rates and alcohol consumption.
Topic:
Economics, Inequality, Public Health, Data, and Suicide
Political Geography:
Global Focus

18. How Best to Use the Extraordinary Natural Gas Revenues in Bolivia? Results from a Computable General Equilibrium Model

Author:
Lykke E. Andersen
Publication Date:
12-2006
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The high oil prices and the sharp increases in royalties mean that the natural gas boom in Bolivia has become very important for the economy, and particularly important as a source of government revenues. Using a CGE model, Andersen et al (2006) show that the natural gas boom is likely to boost GDP growth by about 1 percentage point per year. However, if the government continues with past spending and investment patterns, the boom is also likely to have a very adverse effect on the income distribution, so much so that the poorest half of the population is likely to experience absolute reductions in their real income levels compared to a scenario without gas boom. The present paper explores alternative uses of natural gas revenues in the CGE model to see if a better outcome can be engineered.
Topic:
Economics, Gas, Inequality, and Revenue Management
Political Geography:
South America and Bolivia

19. What Makes a Difference in Achieving Higher Labor Productivity? The Case of Low-Income Countries in Latin America

Author:
Osvaldo Nina
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper uses firm level surveys from Ecuador, Guatemala, Honduras and Nicaragua to estimate the determinants of labor productivity. This study started out with the hypothesis that the adverse external business conditions that firms in poor Latin American countries face, may be an important explication of the generally low levels of productivity. However, the empirical results, based on the survey of more than 1300 businesses, do not confirm this hypothesis. Compared to all the variables that are under the firms control, such as capital intensity, energy use, and worker skills, the external business environment (macroeconomic instability and labor regulations) has very little impact on productivity.
Topic:
Development, Economics, Labor Issues, Productivity, and Income
Political Geography:
Latin America, Nicaragua, Honduras, Guatemala, and Ecuador

20. Pension Reform in Bolivia: A Review of Approach and Experience

Author:
Federico Escobar and Osvaldo Nina
Publication Date:
06-2004
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The Bolivian pension reform eliminated the old publicly managed pay-as-you-go system and introduced a fully-funded system. The pension reform was highly influenced by the Chilean reform, adopting a second pension component pillar, based on contributions to individual accounts in pension funds, which are managed by decentralized pension-fund management companies and regulated and supervised by the government. Moreover, the new system has followed the substitutive model, where all contributors to the old system, with no exceptions, were automatically transferred to the new one, while those already retired under the old system continued to receive their pensions from the government. The unique feature of the Bolivian pension reform program was its link to the Capitalization. Under this process the six principal state-owned enterprises were capitalized by foreign companies, and the Bolivian government retained 50% of the shares in the capitalized companies. These shares went into a Collective Capitalization Fund, which is managed by the new pension funds, and the dividends are used to finance the BONOSOL program, which is a universal old age income support to all Bolivians 65 and older.
Topic:
Economics, Reform, Public Policy, and Pension
Political Geography:
South America and Bolivia