While the capitalization program was successful in vastly boosting foreign direct investment (FDI) in Bolivia (US$7billion in stock during 19962002), FDI later decreased as investors completed their capitalization contract obligations. [28] In terms of HDI, according to the UNDP World Human Development Report, Bolivia in 2018 for the first time became classified as a "high human development Country",[29] reaching an HDI indicator of 0.703 and rising to the 114th position of 189 countries and territories. [21] In 2004 export revenues for natural gas topped US$619 million. [21] The state dramatically reduced its control and presently operates only a small portion of mining activities. Depressed by a steep drop in fiscal health, Bolivia has recorded a 4.7-point overall loss of economic freedom since 2017 and remains among the worlds most economically Repressed countries. The cotton and wool industry declined at the expense of synthetic fibers. The boliviano replaced the Bolivian peso at a rate of one million to one in 1987 after many years of rampant inflation. This sector occupies a prominent place in the manufacturing industry that is continually growing, both in production and number of businesses and jobs. [21], Labor unions have a strong history in Bolivia, and many workers in the formal sector belong to unions. [57], Until 1994 the electricity sector was dominated by the vertically integrated public utility ENDE (Empresa Nacional de Electricidad). See more from the 2022 Index. [21] Foreign participation and investment in Bolivian banks are allowed. Other taxes include a value-added tax. Similarly, according to studies by the World Bank and ECLAC, during the period 20062019, Bolivia experienced a marked reduction in poverty and extreme poverty, resulting in a reduction of the population living in extreme poverty from 38.2% to 15.2%. In 1996, three units of the Bolivian state oil corporation (YPFB) involved in hydrocarbon exploration, production, and transportation were capitalized, facilitating the construction of a gas pipeline to Brazil. In fact, Bolivia has been listed in the 2014 U.S. Department of Labor's report[61] on child labor and forced labor among the 74 countries where instances of such practices have been observed. [69] The project is expected to create 6,000 jobs directly and another 15,000 indirectly. [21] The privatization of Bolivia's social security program has bolstered the stock market. [21] Mesa had increased taxation on foreign companies while still encouraging their investment in Bolivian energy development. In 2002, the United States exported $283 million of merchandise to Bolivia and imported $162 million. Like in other countries, Bolivia's electricity sector consists of a National Interconnected System (SIN) and off-grid systems (known as the Aislado).

The economy of Bolivia is the 95th-largest economy in the world in nominal terms and the 87th-largest economy in terms of purchasing power parity. [citation needed] The U.S. Andean Trade Preference and Drug Enforcement Act (ATPDEA) allows (allowed?) Tax Burden 86.0 Create a Graph using this measurement, Government Spending 58.8 Create a Graph using this measurement, Fiscal Health 10.9 Create a Graph using this measurement. Rescheduling agreements granted by the Paris Club have allowed the individual creditor countries to apply very soft terms to the rescheduled debt. Bolivia's top trading partners in 2011 in terms of exports were Brazil (33%), Argentina (11%), United States (10%), Japan (6%), Peru (5%), South Korea (5%), Belgium (4%), China (3%), and Venezuela (3%). [26], The Bolivian economy grew rapidly between 1960 and 1977. [18] With a Human Development Index of 0.703, it is ranked 114th (high human development). Bolivia's natural gas exports bring in millions of dollars per day, in royalties, rents and taxes. The largest factories producing soybeans, sunflower seeds, cotton and sugar from sugar cane, are mainly situated in Santa Cruz, although a large edible oil refineries operate in Cochabamba. IMPACT OF COVID-19: As of December 1, 2021, 19,188 deaths had been attributed to the pandemic in Bolivia, and the governments response to the crisis ranked 129th among the countries included in this Index in terms of its stringency. [21] Increased production of hydrocarbons, especially natural gas, led Bolivia's trade upturn in 2004. Natural gas exports to Argentina resumed in 2004 at four MMcmd. The judiciary is overburdened, vulnerable to undue influence from the executive and legislative branches of government, and plagued by corruption. Anticorruption laws are poorly enforced, and impunity among government officials and public servants is a problem. [27] According to one study, "persistent deficits and a fixed exchange rate policy during the 1970s led to a debt crisis that began in 1977. Bribery is widespread in almost all sectors of the economy. [56] From 2007 to 2017, what is referred to as the "government take" on gas totaled approximately $22 billion. [50] Bolivia's state lithium YLB also created a joint venture together with the Chinese Xinjiang TBEA Group to explore extraction of lithium and other materials from the Coipasa and Pastos Grandes salt flats. [21] Consolidation occurred following reforms, lowering the number of private banks in Bolivia from 14 in 1995 to nine in 2003. [21] However, a series of reforms initiated by the 1993 Banking Law and subsequent acts are gradually improving Bolivia's banking sector. Top import products within these categories were machinery and mechanical appliances (17% of total imports), chemical products (14%), fuels and oils (14%), vehicles (13%), minerals (8%), and food (7%). [21] The International Monetary Fund has assisted Bolivia in paying down this debt. Economic growth was about 5.2% a year and inflation was 4.5% in 2012. But since the 1990s the textile industry has increased its growth rate. [21] Bolivia reached a peak trade deficit of US$888million in 1998 before increased hydrocarbon exports radically altered the situation. The complex labor code is difficult to understand and contains many percentage-based quotas. 2022 by The Heritage Foundation. [21] Beyond hydrocarbons, other significant exports included zinc, soya, iron ore, and tin. Business Freedom 54.7 Create a Graph using this measurement, Labor Freedom 46.2 Create a Graph using this measurement, Monetary Freedom 72.8 Create a Graph using this measurement. In 1999 the refineries were also completely privatized. According to the contract, Jindal would invest US$1.5billion initially and an additional US$2.5billion over the next eight years. [21] Nevertheless, working conditions for most Bolivian workers are difficult. . [21] Bolivia also exported significant quantities of petroleum. [21] Combined, these activities employ nearly 44 percent of Bolivia's workers. [21] Tourism in Bolivia declined following the 11 September 2001 attack on the United States, as was the case across North and South America. ", "Bolivia Launches Two State-Owned Manufacturing Plants", "International tourism, number of arrivals Data", "International U.S. Energy Information Administration (EIA)", "List of Goods Produced by Child Labor or Forced Labor", "Findings on the Worst Forms of Child Labor Bolivia", "Federal Register Vol. [21] International companies quickly invested in Bolivian energy sources, particularly in natural gas, and made Bolivia into a player in the world energy market. [21], Bolivia's spectacular vistas and natural attractions have not been enough to transform the country into a major tourist destination because of its political instability and lack of first-class accommodations. Parallel legislative reforms have locked into place market-oriented policies, especially in the hydrocarbon and telecommunication sectors, that have encouraged private investment. [21] As a result of negotiations initiated in 1999 on a possible South American Free Trade Area (SAFTA), Mercosur and the Andean Community of Nations announced in December 2004 that they would merge, creating a Union of South American Nations modeled after the European Union.[21]. Bolivia enjoys some financial assistance programs run by the World Bank[66] and Microenterprise Development programs provided by Five Talents International[67], In 2007, India's third-largest steel manufacturer, Jindal Steel and Power Limited, signed a contract with the Bolivian government to exploit the Mutun iron ore deposit, considered to be one of the largest in the world. [32], Agriculture, forestry, and fishing accounted for 14 percent of Bolivia's gross domestic product (GDP) in 2003, down from 28 percent in 1986. [21] In 2000 Bolivia attracted 306,000 tourists, compared with 254,000 in 1990. [21] For domestic consumption, corn, wheat, and potatoes are the crops of choice of Bolivian farmers. At the end of 2002, the government owed $4.5billion to its foreign creditors, with $1.6billion of this amount owed to other governments and most of the balance owed to multilateral development banks. [37] Dwindling profits and surging cost of production have made small village economy in Bolivia extremely vulnerable and unstable; as a result, unemployment increases and small business is on the verge of bankruptcy, which in return made government intervention very inefficient and deferred many governmental initiatives and attempts to improve the condition. [21] On 1 May 2006, his successor, former president Morales, signed a decree stating that all natural gas reserves were to be nationalized, recovering ownership, possession and control of hydrocarbons. The Bolivian currency is the boliviano (ISO 4217: BOB; symbol: Bs.) A five-year trend of stagnating economic freedom has continued. [21] The annual catch averages about 6,000 tons.

The government runs surplus accounts since 2005. [21], Foreign investment in Bolivia was buoyed in 1995 by privatization. Property Rights 14.1 Create a Graph using this measurement, Judicial Effectiveness 28.4 Create a Graph using this measurement, Government Integrity 28.7 Create a Graph using this measurement. [21] Bolivia became an associate member in March 1997 to open investment opportunities with the founding Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay), as well as other Mercosur associate members (Chile, Colombia, Ecuador, Peru, and Venezuela). "[27] After 1986, Bolivian economy began to grow again. [46] At 14.5%, this is the second-largest known concentration of lithium in any country; Argentina has 14.8million known tons of lithium, Chile has 8.5million tons, Australia has 7.7million tons, and the United States has 6.8million tons. [21], Bolivia had a large negative balance of payments for 2002US$317million. At that time, 1 new boliviano was roughly equivalent to 1 U.S. dollar. "[31], The following table shows the main economic indicators in 19802019 (with IMF staff estimates in 2020-2026). The government eventually cancelled the contract without compensation to the investors, returning the utility to public control. In 2019, the country was the 8th largest world producer of silver;[38] 4th largest world producer of boron;[39] 5th largest world producer of antimony;[40] 5th largest world producer of tin;[41] 6th largest world producer of tungsten;[42] 7th largest producer of zinc,[43] and the 8th largest producer of lead. [22] The mining industry, especially the extraction of natural gas and zinc, currently dominates Bolivia's export economy. This is the single largest investment by an Indian firm in Latin America. In April 2000 violent protests over plans to privatize the water utility in the city of Cochabamba led to nationwide disturbances. Tax burden and monetary freedom scores are relatively positive, but rule of law, fiscal health, and investment freedom are very weak. [21] Further reforms are necessary, including the pending act to introduce a deposit guarantee system. Bolivian imports of goods and services were valued at about US$5.3 billion in 2010. The U.S. Government reached an agreement at the Paris Club meeting in December 1995 that reduced by 67% Bolivia's existing debt stock. Ministerio de Economa y Finanzas Pblicas, Initiative for Infrastructure Integration of South America, Trade-Related Aspects of Intellectual Property Rights, Special administrative regions of the People's Republic of China, Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, https://en.wikipedia.org/w/index.php?title=Economy_of_Bolivia&oldid=1095937815, World Trade Organization member economies, Articles with dead external links from April 2018, Articles with permanently dead external links, Short description is different from Wikidata, All Wikipedia articles written in American English, Articles with unsourced statements from October 2015, Articles with unsourced statements from November 2020, Wikipedia articles incorporating text from the World Factbook, Wikipedia articles incorporating text from the United States Department of State Background Notes, Articles with Spanish-language sources (es), Articles with dead external links from August 2019, Creative Commons Attribution-ShareAlike License 3.0, natural gas, silver, zinc, lead, tin, gold, quinoa, soybeans and soy products, machinery, petroleum products, vehicles, iron and steel, plastics, note: data are for urban areas; widespread underemployment, Tariffs applied by Bolivia as provided by ITC's, Officially the Republic of China, participates as ", This page was last edited on 1 July 2022, at 09:10. [21] Natural gas has supplanted tin and silver as the country's most valuable natural commodity. [21], The Government of Bolivia remains heavily dependent on foreign assistance to finance development projects. The deal was later cancelled after long-running protests by locals over the perceived lack of local benefits and royalties of the project. [21] With increased efficiency, Bolivia could likely expand the profitability of its forest resources, while still protecting them from overexploitation.

[21] Bad debt remains at a historically high level. The most important structural changes in the Bolivian economy involved the capitalization of numerous public sector enterprises. [21] Other metals excavated include antimony, iron, and tungsten. Bolivia's major exports to the United States are tin, gold, jewelry, and wood products. The foreign investors in this project pursued an investment dispute case against Bolivia for its actions. Bolivia's 2016 gross domestic product referred to PPP totaled $78.35billion and in the official exchange $35.69billion. The law aimed to increase efficiency in the sector, promote competition and encourage investment.[58]. [21] In 2001 Brazil overtook the United States as Bolivia's primary export outlet. [21] Although the Bolivian government does not keep unemployment statistics, outside experts estimated unemployment to be between 8 and 10 percent of the population, as of 2006. [21] However, eradication efforts have been hampered by the lack of a suitable replacement crop for rural communities that have cultivated coca for generations.