ReVista Harvard, Wanderley 2011

8/4/2019 ReVista Harvard, Wanderley 2011

1/3

drcLas.HarVard.edu/pubLications/reVistaonLine ReVista 51

natural resources

PHOTO BY ANTONIO SUREz, [email protected]/BOLIVIANPHOTO.BLOGSPOT.COM

the Ecoom of he Exrcve idusresPoverty and Social Equality By FERnanDa WanDERlEy

iTS WoRTH A PoToSAN iDioM THAT USES THE

name of Bolivias famous colonial silver-

mining town as a way of saying its worth

a fortuneis closely identied with the

countrys past and its economic history.

We Bolivians have always depended on

some natural resource or other. The rst

was silver from the highlands of Potos,

then tin and now natural gas. Through-

out its history as a republic, Bolivia has

constantly faced the difculty of over-

coming the model of revenue based on

the extraction of non-renewable natu-

ral resources. This type of resource-de-

pendent economy known as an enclave

economy produces few jobs and is iso-

lated from job-intensive industries that

produce goods and services for the do-

mestic market.

To illustrate this strong dependence

on natural resources, its worth mention-

ing that 80% of 2010 exports were natu-

ral resources; half of all public incomecomes from taxes on natural resources.

Bolivia is a classic example of the limits of

a primarily export-dependent economic

model that has produced a mediocre av-

erage growth rate in the last six decades.

Between 1950 and 2010, the Bolivian

economy grew an average of 2.8% yearly,

which translated to an annual per capita

average of 0.5% growth, an extremely

low number through which to overcome

poverty and social inequality.

Thus at the end of 2009, more than

half (58%) of the Bolivian population

was experiencing moderate poverty and

an additional 32% lived in extreme pov-

erty. The inequality between urban and

rural areas continued to be signicant,

with 74% of the rural population in pov-

erty, compared to only half of the urban

population. To overcome these levels of

poverty and inequality, the growth rate of

the Bolivian economy would have to be

at least 6%. That means Bolivias current

model of economic growth is making the

country poorer in the long run.

The heavy dependence on the ex-

traction of just a few natural resources

with low aggregate value creates a socio-

economic structure of precarious em-

ployment. Moreover, poverty alleviation

strategies have been insufcient and

unsustainable because they depend on

funding from the export sector, which

suffers from the price volatility of the

price of raw export materials.

Most Bolivians survive by generat-

ing their own income in sectors of low

productivity and are thus excluded from

any social and laboral protection. Even

miners: resource-dependent econoy produces few jobs.


2/3

bolivia: revolutions and beyond

52 ReVista faLL 2011 PHOTO BY ANTONIO SUREz, [email protected]/BOLIVIANPHOTO.BLOGSPOT.COM

within the employed population, only

20% has access to health insurance; the

pension system covers only 27% of the

employed population. This means that

almost two-thirds of the Bolivian popu-lation is highly vulnerable, eking out its

existence in the informal sector.

Studies like Jean Imbs and Romain

Wacziargs Stages of Diversication as

Self-Discovery in American Economic

Review, March 2003, show that countries

that export a diversity of products have

higher rates of per capita growth. Simi-

larly, other works illustrate that countries

grow the most quickly when they export

products that are part of the export bas-

ket of the countries with the highest per

capita incomes. (Dani Rodrik, Indus-

trial Policy for the Twenty-First Century,

Kennedy School of Government work-

ing paper, 2004, and Ricardo Hausman,J. Hwang and Danu Rodrik, What You

Export Matters in Journal of Economic

Growth, no. 12, 2007).

This begs the question of why Bolivia

has not been able to transform its pro-

duction to stimulate an economic takeoff

and sustainable increase in social welfare,

while similar countries have managed to

advance toward this goal. We will explore

the principal limitations of the institu-

tional and political architecture behind

the development models implemented in

the past sixty years in Bolivia: state capi-

talism (1952-1985), neoliberalism (1985-

2005) and post-neoliberalism (2006-

2011). Until now, none of these models

have managed to sustain a transformation

of Bolivias productive model and accom-

panying improvement in social welfare.

State capitalism focuses on produc-

ing a diversity of goods and services while

consolidating a national industrial base in

two ways: through direct state participa-

tion in public enterprises and by channel-

ing external aid to subsidize the private

sector. However, this objective was not

reached in Bolivia. Growth continued to

be propelled by the export of three prod-uctstin, oil and natural gas, all of them

controlled by the public sector and strong-

ly dependent on world market conditions

and the availability of international loans.

Loans granted during this period

were destined to nance public sec-

tor spending and export diversication

projects, some with successful outcomes

such as the sale of natural gas to Argen-

tina and the soy agroindustry. However,

a great part of these resources were not

invested in the proposed targets nor were

they returned, meaning that the state as-

sumed the subsequent debt. As a result,

the majority of the production activities

were begun and executed with state sup-

port in uncompetitive and inefcient

circumstances (Juan Antonio Morales,

Bolivian Trade and Development 1952-

1987, working paper, 1988).

During this period, social welfarepolicies sought to cover the entire pop-

ulation, but in practice only reached a

reduced number of formally employed

workers. The majority of workers and

their families, surviving in the informal

sector, were protected only through their

family networks and their own capacity

to generate income. State social benets

were extended only to a select group of

workers, particularly public employees.

In 1985, the pendulum of the econo-

my swung back toward a liberal model.

Policy makers bet on the market and

minimizing the importance of industrial

policies to promote national production

and diversication. The hope was that

liberalization of the markets and privati-

zation of public enterprises would foster

conditions to make the economy more

dynamic and generate employment, thus

overcoming poverty and social inequality.

Although some macroeconomic and

nancial reforms did take place, the state

prioritized reforms in capital-intensive

sectors such as hydrocarbons, telecom-

None of Bolivias development modelspast

or presenthave paved the road to economictransformation and diversification.

a worker processes nturl resources, n iportnt prt of Bolivis econoy.


3/3

drcLas.HarVard.edu/pubLications/reVistaonLine ReVista 53

natural resources

munications, and electricity, with aggres-

sive policies designed to attract foreign

investment. No consistent industrial

policies were articulated for other labor-

intensive sectors such as the agricultureand livestock industry, food processing

and the nascent Bolivian textile industry.

These structural reforms inaugurated

Bolivias gas era, a period characterized

by greater economic dependence on this

natural resource and insufcient poli-

cies for the development of private sector

production that generates employment.

The result was that more people worked

in the informal sector in activities such

as contraband, coca leaf production,

commerce and retail activities with low

productivity.

At the same time and without co-

ordination with economic policies, the

state promoted social policies to give the

population access to public services in

education, health, and other programs

aimed at the poorest sectors through

social investment funds. Although pov-

erty measured by the satisfaction of basic

needs decreased, poverty measured by

income actually increased and social in-

equality remained the same.

The third period, post-neoliberalism,began in 2006 with President Evo Mo-

rales government when soaring prices

of raw materials had created a promis-

ing international context for exporters.

There was much expectation at the be-

ginning of his term that he would use

the increased revenue to promote pro-

duction in non-traditional sectors that

employ most Bolivian workers, and thus

overcome the export model of exclusive

dependence on hydrocarbon income.

The model was based on concepts

opposed to neoliberalism. Among these

were the return to a more active state

role in the economy and the recognition

of juridical, political, and economic plu-

rality. Although these ideas constituted a

new and promising conceptional frame of

reference, in practice rigid and opposing

visions about the role of the state and the

market prevailed. The excess of ideology-

driven thinkingnow from the left

about alternatives to the capitalist system

did not contribute to the development of

a strategic vision of productive transfor-

mation and diversication of exports.

One of the main fallacies of the prin-

cipled bases for President Morales newmodel is the conviction that state plan-

ning should and can act unilaterally as a

guiding force in economic development.

There was no attempt to forge a public-

private coordination; no integration of

policies of technological development and

innovation; no strengthening of the man-

agement of economic units; no informa-

tion dissemination and training; and lack

of support for forming associations to

overcome the weakness of private coordi-

nation in the Bolivian economic structure.

Moreover, the macroeconomic policies

of the post-neoliberal period maintained

the scal orientation of the neoliberal

period, to the detriment of a productive

vision. The concept of stability restricted

to ination control and the compartmen-

talized view of the microeconomy and the

macroeconomy still persist. Actions to

promote the relationship between both

dimensions of the economy never got off

the ground, nor was there promotion of a

macroeconomic environment favorable to

private investment.During this period, the Morales gov-

ernment concentrated its efforts on

reforming the management of hydro-

carbons under the model of nationaliza-

tion. Although the levels of tax collection

have been unprecedented in the past few

years, the ambiguities and inconsisten-

cies of this model have led to a slowdown

in private investment, as well as a signi-

cant decrease in the proven reserves of

natural gas and, consequently, of produc-

tion. Thus, the sustainability of hydrocar-

bon production is not secure and might

not ensure an adequate supply of energy

for the country and an important ow of

income for the state in the long run.

At the same time, in spite of its goals

of overcoming an assistance-oriented vi-

sion of social policies, the government has

continued with programs and projects

focused on populations with the greatest

degree of social exclusion and has broad-

ened policies of direct money transfers

through different types of vouchers and

temporary employment programs.

The exaggerated emphasis on natural

resources has deepened the social strug-

gle over income distribution, once moreturning attention away from the policies

that would lead to transform Bolivias

productive model and economythe

same policies that would establish a -

nancial mechanism for domestic income

distribution, thus softening the depen-

dence on an inherently volatile surplus

and the risks of relying on a rentier and

corporatist culture, historically marked

by clientelistic and corporatist relations

between the state and society.

We can only conclude that none of

the development models implemented in

Bolivia have managed to integrate a vi-

sion of a complementary relationship be-

tween market and state that would pave

the road to economic transformation

and diversication. The result is the ab-

sence of intrinsic and sustained policies

for improved continuation of produc-

tion chains, and an increase in produc-

tivity and technological development. If

we Bolivians do not widen our economic

base and stimulate coordination between

economic and social policies, we willnever reach our goal of overcoming pov-

erty and social inequality. We will remain

subject to our dependence on natural re-

sources. The label of Its worth a Potos,

will stay with us.

Fernanda Wanderley is the Associate

Director of Graduate Research in De-

velopment Sciences at the Universidad

Mayor de San Andrs (CIDES-UMSA),

La Paz, Bolivia. She holds a doctorate

in sociology from Columbia University.

She has written many articles, including

Beyond Gas: Between the Narrow-Based

and Broad-Based Economy in Unre-

solved Tensions Bolivia Past and Pres-

ent (eds. John Crabtree and Laurence

Whitehead, University of Pittsburgh

Press, 2008) and Between Reform and

Inertia: Bolivias Employment and So-

cial Protection Policies over the Past 20

Years in International Labor Review,

vol. 148, 3, 2009.

Documents

ReVista Harvard, Wanderley 2011