Bolivia's Economic Backbone: Exploring The Country's Key Dependencies

Bolivia is a landlocked country in west-central South America, with a diverse geography that includes some of the world's highest cities, the largest salt flat, and parts of the Amazon rainforest. Bolivia's economy is growing, with a GDP increase of 6.8% in 2014, and it has one of the fastest-growing economies on the continent. The country's economy relies heavily on the export of gas and minerals, which has left it vulnerable to international shocks and drops in commodity prices. Bolivia's main economic resources include agriculture, forestry, fishing, mining, and goods such as textiles, clothing, refined metals, and refined petroleum. The country is also a significant producer of coca plants and cocaine. Bolivia's diverse geography and economic dependence on natural resources present both challenges and opportunities for its development and growth.

Bolivia's economy

The country's main economic resources include agriculture, forestry, fishing, mining, and goods such as textiles, clothing, refined metals, and refined petroleum. Bolivia is very geologically rich, with mines producing tin, silver, lithium, copper, and gold. Bolivia has the world's largest lithium reserves, the second-largest antimony reserves, and the third-largest iron ore reserves. The country also has considerable gold production, which varies close to 25 tons per year.

The government has recognised the need to address important structural challenges to consolidate stability, promote private sector development, and protect the most vulnerable population. Bolivia could benefit from a strategy to address macroeconomic imbalances, promote the more active role of the private sector, and boost resilience to changes in the international environment and adverse climate events.

Bolivia's healthcare system is currently undergoing reform, with a focus on decentralisation and insurance for children and mothers. The number of doctors in Bolivia has doubled in recent years to 130 per 100,000, making it similar to other South American countries.

The country's healthcare system

Bolivia's healthcare system is currently undergoing reform, with a focus on decentralisation and insurance for children and mothers. The number of doctors in Bolivia has doubled in recent years to 130 per 100,000, making it similar to other South American countries. However, private clinics are preferred as they offer better services.

The reform is being funded in part by international organisations such as the World Bank. The World Bank's current financing portfolio in Bolivia includes six projects worth almost $1.1 billion, focusing on transport, rural development and agriculture, urban resilience, energy, and water sectors. One of these projects, the Improving Sustainable Access to Electricity Project, will support more than 141,000 people in gaining new or improved access to electric power for domestic and productive use through grid extension, construction of mini-grids, and installation of individual solar energy systems.

Bolivia's healthcare system is part of a broader set of social reforms aimed at improving the lives of its citizens. For example, the government has introduced the Renta Dignidad (old-age minimum) for people over 60 years old and the Juana Azurduy voucher, which covers the complete cost of medical expenses for pregnant women and their children.

Safety and security

Bolivia is a relatively safe country, boasting one of the lowest crime rates in South America. Most of its major cities have a medium threat level for crime, comparable to larger cities in the United States. Santa Cruz is the only city with a high threat level for crime.

Most crime affecting expats is opportunistic street crime, such as pickpocketing and purse snatching, and it is possible to live a crime-free lifestyle in Bolivia. Violent crimes, such as assault and robbery against foreigners, are very rare. Fraud is also a crime to be aware of, although it is also relatively rare.

Bolivia is vulnerable to climate-related disasters such as the drought currently affecting several regions and the ongoing El Niño event, which is expected to last until at least April 2024.

The country is exposed to different risks associated with the international context, such as the volatility of commodity prices, the global economic slowdown, and rising international interest rates.

Bolivia's mountainous western region, which is one of the highest inhabited areas in the world, constitutes an important economic and political centre. The Andes reach their greatest breadth and complexity in this region. The system is dominated by two great parallel ranges: the Cordillera Occidental, which contains numerous active volcanoes and the Uyuni Salt Flat, and the Cordillera Oriental, whose spectacular northern section near La Paz is called the Cordillera Real.

The country's transportation system

Bolivia's transportation system is largely based on road travel, with only 6% of roads paved. The country has three main airports in the cities of La Paz, Cochabamba, and Santa Cruz, which are well-connected to other major cities. However, during the rainy season, some remote villages are difficult to reach. Bolivia has 27 km of expressways connecting major cities, and driving is done on the left side of the road. The country also has a minimum amount of road signage and a lack of attention to road safety, making travel hazardous.

The World Bank is currently investing in the Santa Cruz Road Corridor Connection Project, which will complete a 208-km highway connecting Bolivia and Brazil, close the Chiquitanía tourist circuit, and form part of the East-West Bioceanic Corridor. Additionally, the Road Sector Capacity Development Project supports the rehabilitation and maintenance of the 546-km Santa Cruz-Trinidad road, benefiting around three million inhabitants of the Santa Cruz and Beni departments.

Bolivia is also investing in its urban resilience, with projects in La Paz and Santa Cruz de la Sierra aimed at reducing vulnerabilities to climate risks and improving living conditions for over 167,000 residents.

Bolivia's political situation

Bolivia's politics have been marked by the rise and fall of various political groups and the influence of the military. The Revolutionary Nationalist Movement, the Nationalist Democratic Action, and the Revolutionary Left Movement were the predominant parties from 1985 to 2005. In 2006, Evo Morales became the first Indigenous president of Bolivia and facilitated structural reforms to achieve racial equality, including a new constitution recognizing the country's diversity and 36 Indigenous peoples. However, some Indigenous groups remain marginalized, particularly in regions with natural resource exploitation.

Bolivia's economy relies heavily on the export of gas and minerals, making it vulnerable to international shocks and commodity price fluctuations. The country has also faced challenges in recent years due to declining gas exports and the COVID-19 pandemic, which exacerbated existing issues. Additionally, Bolivia is susceptible to climate-related disasters and is currently facing a severe drought.

In 2019, Morales resigned amid allegations of electoral fraud and left the country, sparking a period of political crisis marked by protests and leaving dozens killed and hundreds wounded. Luis Arce was elected in 2020 and continues to serve as the country's president. However, divisions within the ruling Movimiento al Socialismo (MAS) party and confrontations between branches of the government have dominated Bolivian politics in recent years. An apparent coup attempt in June 2024 by former army chief Juan José Zúñiga further highlights the country's political instability.

Bolivia has made notable progress in women's participation, with the 2009 Constitution establishing equality and one of the highest rates of female representation in parliament globally. However, issues such as unequal resource distribution, economic participation, and gender-based violence persist.

Frequently asked questions