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Bolivia's Economy



Bolivia is one of the poorest countries of Latin America with 60% of the population living below the poverty line. Private investment is the lowest across the continent, corruption and inflation are unrestrained and a historic reliance on single trading commodities resulting in a lack of economic diversification has meant that the country remains weak and underdeveloped. Low life expectancy together with a falling birth rate has restricted the growth of industries. Political instability and the uncharitable terrain have hindered improvements in the agricultural sector. The exports are dictated by the mining industry, previously tin and silver, nowadays increasingly gold, zinc and predominantly natural gas.



Economic production grew steadily at a rate of around 5% during the 60s and 70s but the after oil shock of the 80s inflation ran out of control. Despite the 'caplitalization' reforms of the 90s which spurred private investment, stimulated economic growth and cut poverty rates, by 2001 unemployment was rising everyday and economic growth was down to - 0.16%. Protests were held over the planned privatization of the Cochabamba water utility in 2000, and again in 2004 in opposition to exporting gas though Chile. In 2005, debt relief from the G8 significantly reduced Bolivia's public sector debt burden.



Bolivia is now energy self-sufficient and produces more electricity than it can consume. Unfortunately, the service and tourist industries remains largely undeveloped and the country is plagued by continued instability. In August 2008, violent clashes erupted between supporters of President Evo Morales, typically indigenous Bolivians from the western provinces and the eastern 'richer, paler' opposition supporters, over increased state control of the economy, plans to redistribute land and divert gas revenues from the eastern provinces into a state pension. Analysts suggested Bolivia was edging closer to becoming a failed state. A referendum was held in January 2009 approving a new constitution, prompting Morales to declare he had competed his mission of 're-founding a new united Bolivia'.

Here are some related tips to help plan your trip to Bolivia: Timeline on Political Dates and Today's Politics and Government.

By Joanne Sykes

Born and raised in Yorkshire, England, Jo is currently working as a freelance travel writer in Latin America. With degrees in...

24 Jun 2009

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