Friday, December 04, 2009

CEPR Report: Bolivia - Strongest Economy in Hemisphere

Adapted from Bolivia: The Economy During the Morales Administration by Mark Weisbrot, Rebecca Ray, and Jake Johnston

Bolivia’s economic growth in the last four years has been higher than at any time in the last 30 years, averaging 4.9 percent annually since the current administration took office in 2006. The government has increased its control over natural resources and vastly increased its revenues, and effectively used expansionary fiscal policy to counter-act some of the negative impacts from the world economic downturn.

Projected GDP growth for 2009 is the highest in the hemisphere. Bolivia’s 2009 growth is all the more remarkable in view of the size and number of negative shocks to the economy. These included falling remittances, declining foreign investment, the United States’ revocation of trade preferences, declining export prices and markets for part of the year and other impacts of the global recession.

Since 2004, government revenue has risen by almost 20 percentage points of GDP. Most of this increase came as a result of an increase in the government’s revenue from hydrocarbons, due to increased royalty payments, the Morales’ government’s re-nationalization of the industry, and price increases.

In the last three years the government has begun several programs targeted at the poorest Bolivians. These include payments to poor families to increase school enrollment; an expansion of public pensions to relive extreme poverty among the elderly; and most recently, payments for uninsured mothers to expand prenatal and post-natal care, to reduce infant and child mortality.

"The Bolivian economy has done very well under President Evo Morales, and government policy has been key. These economic gains are a big part of the reason he is favored to win re-election by a wide margin," said Mark Weisbrot, Co-Director of the Center for Economic and Policy Research in Washington, D.C. and lead author of the report.

"None of this would have been possible without the government's regaining control of the country's natural resources," he added.

Click here to read the entire report from the Center for Economic and Policy Research



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