Bolivian Economic Crisis
Bolivia, as we know it today, is one of the poorest nations of the world, but it is not located in Africa or Indonesia, it is in the middle of South America. Bolivia was, in Colonial times, one of the richest nations in the World. So how can this wealthy nation have fallen so hard in such a short period of time? It might be hard to explain and even harder to understand. Many factors influenced the roller coaster ride that this nation took and some of those factors are still pushing the economy down. However, if we pay more attention to the process of decadence that this nation lived, we may even come to the conclusion that this country was destined to be poor (Bolivian Gov. pg 1). Colonial exploitation, wars, and revolutions were just the beginning of the problems that were followed by adverse atmospheric conditions, geographical disadvantages, and the crumbling of the silver and tin market prices, which led to uncontrollable migration and international debt. Among the possible solutions to restore the nation's economy, we find some macro economic reforms that require the capitalization of the state-owned enterprises, the stabilization of the economy by remonitisation, and the international help of entities like the World
In contrast 81 out of 100 city residents have potable water and 62 of every 100 have basic sewage" (Rocha, pg 1). Even though, the capitalization provided some collateral in shares to Bolivian citizens, it is still not enough collateral to access credit for housing. The formal sectors, industry related, were also improved by providing access to international loans destined to developed health and basic services. Considering a country like Bolivia in which the poor are highly vulnerable to natural disasters and economic changes, social welfare programs are non-existent, and poverty is linked to unemployment, which at the same time is linked to geographical and atmospheric disadvantages. At the same time, the fact that land was unequally distributed became an issue because 92 percent of the cultivable land was own by powerful landholders with states of 1,000 hectares or more (Onwar. Immediately the government of Paraguay declared war on the East, and a debilitated nation succumbed again in a short time and lost great part of the East territories that gave Bolivia access to the Atlantic Ocean. In 1949 a disagreement with the United States over tin prices halted exports and the economy took a deadly drop. After the loss of 600 lives the so-called Agrarian Revolution was born and new reforms took place. "On the demand side, it should be analyzed whether Bolivia's labor regulations that raise costs by as much as 40 to 60 percent above the basic wage, can be made more flexible in order to reduce the barriers between the formal and informal labor market On the supply side, only better education can make the poor more attractive for formal employers" (Wiebelt, pg 9). The Kiel Institute for World Economics published a study in September 2002 and described the goals and assumptions that the World Bank made to reduce the poverty in Bolivia with macroeconomic reforms. However, the availability of loanable funds remained restricted to large projects, few regions, and few sectors. "the lower demand of upper-income households is just compensated by higher demand of poor rural and urban households. According to Juan Carlos Rocha, "Only 10 out every 100 inhabitants in the countryside has access to potable water, and 17 out of 100 have basic sewage services. To facilitate access of the poor to formal employment, the study suggests a two-sided strategy. Wiebelt suggests that a labor market reform seems necessary to "improve flexibility and reduce urban poverty in the short to medium-run.
Common topics in this essay:
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