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Bolivia: The Economy During the Morales Administration

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December 2009, Mark Weisbrot, Rebecca Ray and Jake Johnston

This paper examines the Bolivian economy since President Evo Morales took office in 2006. It finds that 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. Projected GDP growth for 2009 is the highest in the hemisphere and follows its peak growth rate in 2008.

The paper looks at how Bolivia’s economy has been able to progress despite a number of significant shocks, including falling remittances, declining foreign investment, the United States’ revocation of trade preferences, serious bouts of political instability as a result of separatist political opposition movements, and recent declines in export prices and markets, along with other impacts of the global recession.

Key to the Bolivian economy’s relative success has been expansionary fiscal policy and control over national resources, especially the hydrocarbons sector – a relatively recent development.

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. Although the last two years of new programs will probably show some improvement when data is available, Bolivia still has some of the highest extreme poverty rates and infant and child mortality rates in the hemisphere.

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