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1. The Impact of the 21st Century Commodity Supercycle on Natural-Resource Dependent Economies: The Case of Bolivia and Peru

Author:
Daniel Agramont-Lechín
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Postgraduate Program on Sustainable Development and Social Inequalities in the Andean Region (trAndeS)
Abstract:
In the early 21st century, Bolivia and Peru experienced remarkable economic growth, coupled with notable reductions in poverty and inequality. However, the subsequent economic slowdown triggered by declining international commodity prices raised concerns about the sustainability of their progress. Historically, both nations have been vulnerable to fluctuations in global commodity prices, often resulting in social unrest and political instability. This study examines whether the significant influx of resources to Bolivia and Peru from 2003 to 2013, attributed to the commodity boom, fostered structural transformation or, on the contrary, reinforced their dependence on the global economy. Analyzing macroeconomic and productivity data, the research indicates a strong correlation between their economic performance and the commodity supercycle trend. A primary finding suggests that rather than fostering a more self-reliant economic integration, the 21st-century economic boom exacerbated the reliance of both nations on natural resource extraction. However, a more nuanced examination reveals divergent medium-term impacts driven by each nation’s development model. Peru, through diversification of international revenue streams and prudent macroeconomic policies, managed to mitigate the effects of declining commodity prices. In contrast, Bolivia’s economy bore the brunt of diminishing income, not only due to the end of the commodity boom but also due to insufficient investments in productive sectors.
Topic:
Natural Resources, Economy, Neoliberalism, Commodities, Extractivism, Economic Dependence, and Post-Neoliberalism
Political Geography:
South America, Peru, and Bolivia

2. Hydrocarbon Prices and Subsidies in Bolivia 1986-2025

Author:
S. Mauricio Medinaceli Monrroy and Marcelo G. Velázquez La Vieja
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The following study identifies five periods with different price regimes (for main hydrocarbons): 1) 1986-1996, where these prices are part of the Government’s fiscal policy to finance part of the structural adjustment policies after the inflationary period; 2) 19971999, when a new methodology for price determination based on three central components is implemented, international reference prices, transport, refining and sale margins and direct, indirect and consumption-specific taxes; 3) 2000-2003, period of privatization of refineries, transport and storage, where policies of stabilization of fuel prices took on greater relevance within the regulatory framework, an aspect that allowed to keep almost unchanged the final prices of gasoline and diesel, but with a considerable fiscal cost due to adjustment of the Special Tax on Hydrocarbons and their Derivatives (IEHD); 4) 2004-2005, where in 2004 a price band was determined for international reference price behavior; in this sense, international prices above USD/barrel 27.11 are not transferred to end consumers; and 5) 2005-2022, because in 2005 the last price adjustment was made (with the 2010 temporary increase exception) for gasoline, diesel oil and liquefied petroleum gas (LPG), which remained in force until 2022. Regarding the quantification of subsidies for production and consumption of hydrocarbons in Bolivia, five broad categories were considered in this document: an opportunity cost of selling production to the domestic market instead of its export; a direct import of petrol, diesel and LPG at higher prices for subsequent sale at lower prices; a non-updating of margins from the value chain of petroleum products; a fiscal sacrifice for non-collected VAT (Value Added Tax 13%) and; an incentive given to field operators in Bolivia. In total, it is estimated that by 2022 these five categories will represent 11.6% of gross domestic product (GDP), with the following disaggregation: opportunity cost (5.8%), direct import (3.1%), margin update (1.2%), tax sacrifice – VAT (1.1%), and incentive (0.4%).
Topic:
Economy, Tax Systems, Fiscal Policy, and Hydrocarbons
Political Geography:
South America and Bolivia

3. Amérique latine - L’année politique 2018

Author:
David Díaz Arias, Luisa Cajamarca, Maya Collombon, Olivier Dabène, Gaspard Estrada, Manuel Gárate, Marie-Laure Geoffray, Damien Larrouqué, Frédéric Louault, Maria Teresa Martínez, Anaís Medeiros Passos, Kevin Parthenay, Gustavo Pastor, Carlos A. Romero, Pierre Salama, and Sebastián Urioste
Publication Date:
01-2019
Content Type:
Special Report
Institution:
Centre d'Etudes et de Recherches Internationales (CERI)
Abstract:
Amérique latine - L’Année politique is a publication by CERI-Sciences Po’s Political Observatory of Latin America and the Caribbean (OPALC). The study extends the work presented on the Observatory’s website (www.sciencespo.fr/opalc) by offering tools for understanding a continent that is in the grip of deep transformations.
Topic:
Conflict Resolution, Security, Civil Society, Corruption, Crime, Democratization, Nationalism, Political Economy, Religion, Governance, Peacekeeping, Economy, Political Science, Regional Integration, Memory, and Transnational Actors
Political Geography:
Brazil, Argentina, Colombia, Cuba, Latin America, Nicaragua, Caribbean, Venezuela, Mexico, Costa Rica, Chile, Peru, Paraguay, and Bolivia

4. Latin America at a Crossroads

Author:
Antonella Mori and Loris Zanatta
Publication Date:
02-2017
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Latin America is at a crossroads. The “golden age” inaugurated with the turn of the new millennium seems a faint memory. Economies that had grown at a steady pace are now slowing down, while some are in freefall. Politically, the “pink tide” of populist movements is now ebbing. From Brazil to Venezuela, from Argentina to Bolivia, left-leaning leaders across the region seem to have lost their bond with the people. Their promises of an equitable society through an apparently never-ending redistribution of wealth crashed against the reality of shortsighted and unsustainable policies. Political and social turmoil are heralding an era of changes and – maybe – of new opportunities for Latin America. And this ‘great transformation’ is precisely what this volume is all about. Where is it leading to? Does it mark the beginning of a new age? Which lessons can be learnt from the past? Leading international scholars and experts scratch beneath the surface of Latin America’s current crisis to have a clearer glimpse of what the future holds and draw policy recommendations, especially for the EU.
Topic:
European Union, Economy, Populism, and Regional Politics
Political Geography:
Brazil, Argentina, Latin America, Venezuela, and Bolivia

5. Decentralization and Poverty Reduction in Bolivia: Challenges and Opportunities

Author:
Lykke E. Andersen and Luis Carlos Jemio
Publication Date:
01-2016
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper presents an analysis of the decentralization process that has been taking place in Bolivia over the last couple of decades. It starts with a review of the legal framework that determines the distribution of responsibilities and financial resources to the sub-national governments (9 departments and 339 municipalities), and continues with an analysis of the evolution and distribution of financing to these entities between 2001 and 2013. It then proceeds to describe the resulting progress in social indicators between 2001 and 2012 at the municipal level, and identifies the main remaining gaps in basic services by 2012. Finally, the paper offers an analysis of the factors that are most closely associated with progress in the main social indicator used by the Bolivian government – the Unsatisfied Basic Needs index. This provides the basis for a final section on recommendations for public investment in Bolivia.
Topic:
Poverty, Economy, Decentralization, and Public Investment
Political Geography:
South America and Bolivia

6. The changing role of the international community in the MDG achievement in Bolivia

Author:
Massimiliano Calì and Luis Carlos Jemio
Publication Date:
05-2010
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
Millennium Development Goal number 8 (MDG8) concerns those external flows (Official Development Assistance, trade and debt relief) that ought to help developing countries achieve the MDGs by 2015. This paper reviews the role of these MDG8- related external flows in the case of Bolivia. Riding on high international prices for its major exports, and on fiscal expansion, remittances and debt forgiveness, Bolivia has experienced solid economic performance in the past few years. This economic performance coupled with the recent increase in social public expenditures by the government has increased the likelihood that the country will achieve all of the MDGs by 2015, except probably for MDG 2. These advances have been achieved in a period of radical change in Bolivia’s dependence on MDG8-related external flows. The composition of external finance in public expenditure has shifted from domination by ODA and debt forgiveness in the first half of the decade to domination by trade, mainly through revenues from hydrocarbon exports. Our findings support the idea that the provision of additional financial resources may not be the priority with regard to organising support to MDG achievements. Spending efficiently and effectively seems to be a more important area for support in Bolivia. As far as trade is concerned, Bolivia already enjoys good market access in its main markets, thus better access through lower non-tariff barriers may be more relevant than improving access in terms of tariffs. Moreover access to markets would be easier if Bolivia were better integrated with world markets, with its regional neighbours in particular. This calls for the support of the international community through aid for trade (AfT), which has instead been worryingly dwindling in recent years. Finally, we argue that MDG8 could be pursued in Bolivia through support for improving access to technology and access to affordable drugs.
Topic:
Debt, Millennium Development Goals, Economy, Trade, and Development Aid
Political Geography:
South America and Bolivia

7. Effects of the Global Financial and Economic Crisis on the Bolivian Economy: A CGE Approach

Author:
Martin Cicowiez and Carlos Gustavo Machicado
Publication Date:
08-2010
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper analyses the impact of the Global Financial Crisis on the Bolivian economy. The PEP 1-1 Standard Model has been employed to analyze the effects of a reduction in (i) the world export prices of mining and agriculture, (ii) the world demand of textiles, and (iii) transfers to households (i.e., remittances) from abroad. The model has been calibrated to a new 2006 SAM for Bolivia. The households have been disaggregated according to their location (urban and rural) and ethnicity (indigenous and non-indigenous). The factors of production have been disaggregated into skilled and unskilled labor, capital, and natural resources. Not surprisingly, our results highlight the relevance of the decrease in the export price of natural gas in explaining the negative effects of the Global Financial Crisis.
Topic:
Financial Crisis, Gas, Economy, Forecast, and Simulation
Political Geography:
South America and Bolivia

8. Inflationary memory as restrictive factor of the impact of the public expense in the economic growth: lessons from high inflation Latin American countries using an innovative inflationary memory indicator

Author:
Ernesto Sheriff
Publication Date:
08-2010
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
A new inflationary memory indicator was developed and applied here. A panel was built with the selected countries considering the economic growth as dependent variable in function of the convergence hypothesis, the inflation rate, the public expense and, the recursive variance of the inflation (VARINF) as inflationary memory indicator. The expected results of the panel were that the inflation and their variability affect the growth negatively neutralizing the possible effects that it could have the public expense on the same one. Five Latin American countries with experiences of high inflation were included (Argentina, Brazil, Bolivia, Peru and Nicaragua).
Topic:
Economy, Economic Growth, Inflation, and Public Spending
Political Geography:
Brazil, Argentina, Latin America, Nicaragua, Peru, and Bolivia

9. Insights from Bolivia’s Green National Accounts

Author:
Luis Carlos Jemio and Lykke E. Andersen
Publication Date:
12-2010
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The purpose of the present paper is to demonstrate the usefulness of Green National Accounting by drawing out some interesting insights from the Integrated Environmental and Economic Accounts recently elaborated by the Institute for Advanced Development Studies for the case of Bolivia. The paper uses the Green National Accounts to show the importance of environmental inputs in 7 different productive sectors and compares the corresponding natural resource rents to the level of producer taxes in each sector. The paper also analyses the evolution of total productive capital, in order to judge whether Bolivia’s current development model can be considered sustainable. The paper finished with recommendations about interesting extensions that can be made to the Green National Accounts.
Topic:
Development, Environment, Natural Resources, and Economy
Political Geography:
South America and Bolivia

10. The Global Financial Crisis: Effects on Bolivia

Author:
Luis Carlos Jemio and Osvaldo Nina
Publication Date:
05-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The global financial crisis is expected to have a negative impact on the Bolivian economy. Effects will transmit into the economy through lower export prices and quantities, reduced amount of remittances and depressed foreign direct investment (FDI) flows. These shocks will bring about deficits in the current account and fiscal balances, foreign exchange reserves losses, sluggish economic growth and higher unemployment rates. The latest data available show that the economy is already experiencing the effects of the economic downturn, in the form of decreased exports revenues, sharp reductions in the rates of growth of foreign of exchange reserves and bank lending and a tendency towards a redollarisation of financial assets and liabilities. The Bolivian economy, however, is better prepared, at least in the short run, to cope with the negative effects of the crisis. The commodity export boom experienced between 2005 and 2008 has permitted the country to run sizable external and fiscal surpluses and accumulate foreign exchange reserves. The financial system has exhibited more prudent behaviour in recent years, by not expanding credit too much and increasing investments in highly liquid public bonds. Therefore, although banks are expected to be affected by the global financial crisis, they have high liquidity ratios and are not extremely exposed to risk. The capacity of the Bolivian economy to offset the negative effects of the global crisis will depend on several factors, such as the severity and duration of the crisis and, above all, the quality of the policies that policymakers will implement to cope with the crisis. The government faces several trade-offs in implementing policies in order to cope with the effects of the crisis. The central bank, for instance, is committed to maintaining a fixed exchange rate, in order to reduce inflationary pressures and to avoid a re-dollarisation of the financial system. However, a fixed exchange rate policy has already brought about an exchange rate appreciation, which is hurting competitiveness of tradable activities. Furthermore, the government has room to implement countercyclical fiscal policies, by resorting to the deposits accumulated in the central bank during the export boom years. During 2009, the government is planning to expand public investment and to increase direct transfers to the population. However, these policies are not likely to offset the negative effects that the crisis will have on growth and employment. More efforts should be made to improve the quality of public spending, in order to maximise its impact on economic growth, employment creation and poverty reduction.
Topic:
Development, Financial Crisis, Economy, and Exports
Political Geography:
South America and Bolivia