Economy of Bolivia

Bolivia is rich with natural resources such as tin, tungsten, antimony, sulfur, copper, iron, oil, natural gas, silver and gold, yet it has the second smallest GDP per capita in South America. Bolivia has been described as ‘a donkey burdened with silver’ and ‘a beggar sitting on a gold chair.’

Important Cities

Sucre is the legal capital and judiciary seat of Bolivia. La Paz is where the government sits and is the largest metropolitan city with almost 8 million people. La Paz is also the most important business center of Bolivia. Other important cities include Santa Cruz and Trinidad in the eastern rainforest region and Oruro, Cochabamba, Potosi and Uyuni in the Andes highlands.

Economic Progress

Bolivia, long one of the poorest and least developed Latin American countries, made considerable progress toward the development of a market-oriented economy in the 1990s. Successes under President Sanchez de Lozada (1993-97) included the signing of a free trade agreement with Mexico and becoming an associate member of the Southern Cone Common Market (Mercosur), as well as the privatization of the previously state controlled airline, telephone company, railroad, electric power company, and oil company.

Growth slowed in 1999, in part due to tight government budget policies, which limited needed appropriations for anti-poverty programs, and the fallout from the Asian financial crisis. In 2000, major civil disturbances held down growth to 2.5%. Bolivia's GDP failed to grow in 2001 due to the global slowdown and lagging domestic activity.

Growth picked up slightly in 2002, but the first quarter of 2003 saw extensive civil protests and loss of confidence in the government. Bolivia will remain highly dependent on foreign aid unless and until it can develop its substantial natural resources.