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ECONOMY (notes (The country is
landlocked and one of the most sparsely…
ECONOMY
notes
The country is
landlocked and one of the most sparsely populated in the world. As a result, long distances to the
nearest seaports and markets and a challenging topography pose important natural constraints to
economic expansion, and hamper broad-based and inclusive growth
wealthy in
natural resources, not only in hydrocarbon and in mining but in forestry and arable land, with high
potential for growth, which make it vulnerable to commodity price shocks
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CHALLENGES AND SOLUTIONS
CHALLENGES
A lack of foreign investment in the key sectors of mining and hydrocarbons, along with conflict among social groups, pose challenges for the Bolivian economy.
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SOLUTIONS IN PROCESS
In 2015, President Evo MORALES expanded efforts to court international investment and boost Bolivia’s energy production capacity. MORALES passed an investment law and promised not to nationalize additional industries in an effort to improve the investment climate.
SOLUTIONS
The long-term structural constraints that Bolivia faces in its quest for growth and
poverty reduction – such as low productivity, low private sector investment and lack of economic
diversification – can be addressed by safeguarding macroeconomic and fiscal sustainability,
developing non-extractive sectors with higher productivity and reducing the disparities in access
to services and economic opportunities.
INCOME
EXPORT OF GAS
. In 2005, the government passed a controversial hydrocarbons law that imposed significantly higher royalties and required foreign firms then operating under risk-sharing contracts to surrender all production to the state energy company in exchange for a predetermined service fee.
GROWTH
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Bolivia’s economic performance over the past decade has been strong and managed
to make a significant dent in poverty and inequality levels. On average, Bolivia’s GDP grew
by 4.7 percent annually between 2002 and 2014 following decades of highly variable growth with
little impact on the poor
contrasts with the one achieved during the second half of the 20th
century, which saw only a 2.8 percent average growth and significant volatility
Between 2002 and 2013, Bolivia’s Gini
coefficient (income inequality) fell from 60 to 49, and the average per capita income of the poorest two quintiles of the
population (equivalent to the bottom 40 percent, or B40) rose at a much faster pace than for the
population as a whole, and faster than the B40 in any other country in the Latin American and
Caribbean (LAC) region.
favorable external environment and the prudent
macroeconomic management caused the incidence of poverty to fall from 63 to 39 percent between 2002
and 2014. During the same period, extreme poverty decreased from 39.5 to 17 percent
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