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Good news from what used to be the second poorest nation in South America

Dittohead not!

Dittohead not!

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[h=2]What’s Driving Bolivia’s Booming Economy[/h]
To the surprise of many, Bolivia is now Latin America’s fastest growing economy. At a 5 percent growth rate it now outstrips once dominant but now stagnating regional competitors like Brazil and Peru. Furthermore Bolivia boasts some very impressive macrofundametals: its level of international reserves are the highest in all of Latin America, it has slashed its government debt, and its inflation rate stands at a respectable 5 percent. This accompanies a 307 percent increase in average income and a 25 percent reduction in the poverty rate since 2001.
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Political stability in a nation that once averaged more than one armed revolution per year has to be a large part. Under the guidance of wildly popular Aymara president Evo Morales, the country has finally begun to progress.

In fact, Evo’s tenure has undoubtedly been one of pragmatism. It is true that since 2005 he has expropriated just over twenty companies, but the level of expropriations in no way compares to that taking place in the culture of government impunity rife in Venezuela where 1,168 foreign and domestic companies were expropriated between 2002 and 2012. The infamous nationalization of foreign oil and gas fields is not one of complete state control, but is rather about gaining a controlling share of the profits made by foreign companies which can then be diverted into various social programs.
All this would suggest, as the mainstream business press gleefully point out, that Evo is no old-style Latin American socialist. Instead, they claim, what he’s doing in Bolivia is really run-of-the-mill Nordic-style social democracy in a Latin American setting.
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It works for the Nordic countries. Seems to be working in Latin America as well.
 
Dittohead not! said:
[h=2]What’s Driving Bolivia’s Booming Economy[/h]


Political stability in a nation that once averaged more than one armed revolution per year has to be a large part. Under the guidance of wildly popular Aymara president Evo Morales, the country has finally begun to progress.



It works for the Nordic countries. Seems to be working in Latin America as well.
Click to expand...


Yet, on the other side of the glowing coin:

Mr. Morales has benefited by being president during a time of high commodity prices, which have driven economic growth here and in many countries throughout the region. In a highly contentious move, he nationalized the energy sector by taking a greater stake in the companies that extract the nation’s gas and demanding a bigger share of the revenues. That has greatly increased government income, giving him the money to pay for social programs like cash payments to young mothers, improved pensions and infrastructure projects.​


Bolivia has less than half the rate of private investment of most other countries in South America.

There are also worries about what will happen if natural gas prices fall significantly, and whether Bolivia is simply in the midst of the typical boom-and-bust cycle that often bedevils poor countries.

Bolivia’s gas exports go entirely to Brazil and Argentina on long-term contracts, meaning that sustained economic problems in those countries could eventually spell problems for Bolivia. But a greater concern is over a low level of investment in gas exploration, which could endanger Bolivia’s ability to maintain production levels in the future.

“This is not sustainable in the long term,” said Jose L. Valera, a lawyer based in Houston who has represented energy companies doing business in Bolivia. “The model is not designed to generate substantial profits for an oil industry that is going to then be incentivized to reinvest in Bolivia.”​

The one reality that socialism has yet to fully address is the age old question of what to do when others peoples money runs out?
 
ocean515 said:
Yet, on the other side of the glowing coin:

Mr. Morales has benefited by being president during a time of high commodity prices, which have driven economic growth here and in many countries throughout the region. In a highly contentious move, he nationalized the energy sector by taking a greater stake in the companies that extract the nation’s gas and demanding a bigger share of the revenues. That has greatly increased government income, giving him the money to pay for social programs like cash payments to young mothers, improved pensions and infrastructure projects.​


Bolivia has less than half the rate of private investment of most other countries in South America.

There are also worries about what will happen if natural gas prices fall significantly, and whether Bolivia is simply in the midst of the typical boom-and-bust cycle that often bedevils poor countries.

Bolivia’s gas exports go entirely to Brazil and Argentina on long-term contracts, meaning that sustained economic problems in those countries could eventually spell problems for Bolivia. But a greater concern is over a low level of investment in gas exploration, which could endanger Bolivia’s ability to maintain production levels in the future.

“This is not sustainable in the long term,” said Jose L. Valera, a lawyer based in Houston who has represented energy companies doing business in Bolivia. “The model is not designed to generate substantial profits for an oil industry that is going to then be incentivized to reinvest in Bolivia.”​

The one reality that socialism has yet to fully address is the age old question of what to do when others peoples money runs out?
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I'm not so sure they're concerned with investment from abroad:

First among these is Morales’s rejection of the international financial system and its pillars, the IMF and World Bank. In left-wing lore, this position is consistent with the continent-wide popular struggle against neoliberalism and “free-market fundamentalism” that brought Evo to power. But in reality, the IMF and World Bank interventions are about building an infrastructure of financial control and corporate patronage that is the complete antithesis of the free market.
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Dittohead not! said:
I'm not so sure they're concerned with investment from abroad:
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Well, according to the NY Times article linked in your post, the majority of the revenue being generated by Bolivia to pay for their socialist programs comes from Brazil and Argentina. Also, that revenue depends on high natural gas prices. Should there be a change in pricing, or a change in demand from Brazil or Argentina, with little private investment, and little spent on exploration, investment from abroad may be the only choice.

Boom bust cycle which is the hallmark of Latin American countries? History says yes.
 
ocean515 said:
Well, according to the NY Times article linked in your post, the majority of the revenue being generated by Bolivia to pay for their socialist programs comes from Brazil and Argentina. Also, that revenue depends on high natural gas prices. Should there be a change in pricing, or a change in demand from Brazil or Argentina, with little private investment, and little spent on exploration, investment from abroad may be the only choice.

Boom bust cycle which is the hallmark of Latin American countries? History says yes.
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It could happen that way, of course, should their main exports suffer a steep price decline. They do have other things to fall back on, however. Plus, there's the reliance on free market ideals as well:

Morales’s Benign Neglect of the Informal Economy

Without the IMF, Bolivia now has the chance to develop on its own terms instead of under the rule of technocrats. Of course, government control of the commanding heights of the economy is hardly conducive to organic growth. However, we should keep in perspective the fact that there is a division between this higher productivity part of the Bolivian economy and an informal and semi-informal sector that provides the vast majority of economic activity and employment. These latter sectors are also made up of mostly indigenous Indians, and it is in these areas where the true significance of Evo’s presidency can be felt.
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This is quite different from what has happened in Venezuela and Cuba, where the government has tried to control the economy. It's more of a strategy of keeping the large multi national corporations from controlling everything.
 
Dittohead not! said:
It could happen that way, of course, should their main exports suffer a steep price decline. They do have other things to fall back on, however. Plus, there's the reliance on free market ideals as well:



This is quite different from what has happened in Venezuela and Cuba, where the government has tried to control the economy. It's more of a strategy of keeping the large multi national corporations from controlling everything.
Click to expand...

Well, I wish Bolivia well. If they succeed in the long run, they will be the first Socialist Latin American country in perhaps history, to pull off what has proven to be an impossible feat in every other country in the region.
 
Dittohead not! said:
It could happen that way, of course, should their main exports suffer a steep price decline. They do have other things to fall back on, however. Plus, there's the reliance on free market ideals as well: This is quite different from what has happened in Venezuela and Cuba, where the government has tried to control the economy. It's more of a strategy of keeping the large multi national corporations from controlling everything.
Click to expand...
While we may hope that Bolivia is on the right track the truth usually comes out when asked if we are actually prepared to invest in Bolivia. The response, as in so many other Latin American countries, is 'probably not'.
 
Dittohead not! said:
[h=2]What’s Driving Bolivia’s Booming Economy[/h] Political stability in a nation that once averaged more than one armed revolution per year has to be a large part. Under the guidance of wildly popular Aymara president Evo Morales, the country has finally begun to progress. It works for the Nordic countries. Seems to be working in Latin America as well.
Click to expand...
The Nordic people are highly educated and sophisticated in international business. Being of a single culture where citizens were morally obliged to do their share also helped, but all of that is changing rapidly.
 
ocean515 said:
Well, I wish Bolivia well. If they succeed in the long run, they will be the first Socialist Latin American country in perhaps history, to pull off what has proven to be an impossible feat in every other country in the region.
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I wish them well also. If the same sort of "socialism" that has worked in Scandinavia can work in Bolivia, then more power to them. So far, it does seem to be working.

I was particularly interested in this story because I spent two years in Bolivia back in the 1960s. At that time, it was a nation with enormous natural resources, but was the second poorest nation in South America, after Paraguay. The reason was obvious: It was a de facto anarchistic nation, no law and order or any control of anything. Moreover, the infrastructure was practically non existent, few roads, only one paved road in the entire nation, no way for farmers to get products to market. Then, there was the exploitation of natural resources by foreign interests. One of the most productive silver mines in the world, for example, Potosi, was pretty much played out with the Bolivians reaping the reward of jobs paying less than a dollar (1964 dollar, about $10 today) a day and not much else. Now, it looks like there is opportunity for the people of Bolivia, but not so much for the mega corporations who had the capital to come in and develop the oil and gas reserves the same way Potosi had been developed in times past.
 
Dittohead not! said:
I wish them well also. If the same sort of "socialism" that has worked in Scandinavia can work in Bolivia, then more power to them. So far, it does seem to be working.

I was particularly interested in this story because I spent two years in Bolivia back in the 1960s. At that time, it was a nation with enormous natural resources, but was the second poorest nation in South America, after Paraguay. The reason was obvious: It was a de facto anarchistic nation, no law and order or any control of anything. Moreover, the infrastructure was practically non existent, few roads, only one paved road in the entire nation, no way for farmers to get products to market. Then, there was the exploitation of natural resources by foreign interests. One of the most productive silver mines in the world, for example, Potosi, was pretty much played out with the Bolivians reaping the reward of jobs paying less than a dollar (1964 dollar, about $10 today) a day and not much else. Now, it looks like there is opportunity for the people of Bolivia, but not so much for the mega corporations who had the capital to come in and develop the oil and gas reserves the same way Potosi had been developed in times past.
Click to expand...

If the oil and gas reserves are the key to the revenue they need to fund the social programs they are developing, it's going to be a challenge to maintain the flow, given the minimal exploration that is reported to be going on.

Time will tell. Because of the significant cultural differences between Bolivia and Scandinavian countries, the odds are not good. However, it would be great to see some country in the region break out of the endless cycle of boom and bust.
 
Dittohead not! said:
[h=2]What’s Driving Bolivia’s Booming Economy[/h]


Political stability in a nation that once averaged more than one armed revolution per year has to be a large part. Under the guidance of wildly popular Aymara president Evo Morales, the country has finally begun to progress.



It works for the Nordic countries. Seems to be working in Latin America as well.
Click to expand...
Great content upthread, but I'd like to add:

I see what Evo's's doing as being cognizant that he's sitting on desirable resources, but he wants to deal on his terms rather than fully plugging-in (to the global financial system).

And I think that's fine if he can pull-it-off, and if the proceeds dribble down to the populace.

And if he can do it with what around here we call the 'Polish Payment Plan' (everything down & nothing a month), thereby avoiding IMF loans and interest - more power to him!
 
DEAR GOD, LOOK AT WHAT THE SOCIALISTS HAVE DONE THIS TIME! :lol:
 
ocean515 said:
Yet, on the other side of the glowing coin:

Mr. Morales has benefited by being president during a time of high commodity prices, which have driven economic growth here and in many countries throughout the region. In a highly contentious move, he nationalized the energy sector by taking a greater stake in the companies that extract the nation’s gas and demanding a bigger share of the revenues. That has greatly increased government income, giving him the money to pay for social programs like cash payments to young mothers, improved pensions and infrastructure projects.​


Bolivia has less than half the rate of private investment of most other countries in South America.

There are also worries about what will happen if natural gas prices fall significantly, and whether Bolivia is simply in the midst of the typical boom-and-bust cycle that often bedevils poor countries.

Bolivia’s gas exports go entirely to Brazil and Argentina on long-term contracts, meaning that sustained economic problems in those countries could eventually spell problems for Bolivia. But a greater concern is over a low level of investment in gas exploration, which could endanger Bolivia’s ability to maintain production levels in the future.

“This is not sustainable in the long term,” said Jose L. Valera, a lawyer based in Houston who has represented energy companies doing business in Bolivia. “The model is not designed to generate substantial profits for an oil industry that is going to then be incentivized to reinvest in Bolivia.”​

The one reality that socialism has yet to fully address is the age old question of what to do when others peoples money runs out?
Click to expand...

Don't kid yourself ocean, do you honestly believe Bolivia would be any better under a system without assistance to the people? Of course not.
 
David_N said:
Don't kid yourself ocean, do you honestly believe Bolivia would be any better under a system without assistance to the people? Of course not.
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It definitely wasn't better off before it had any assistance to the people, and when there was little or no opportunity for ordinary Bolivians to succeed. Whether Morales can keep this going or not remains to be seen, but it has been positive thus far.
 
David_N said:
DEAR GOD, LOOK AT WHAT THE SOCIALISTS HAVE DONE THIS TIME! :lol:
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They have done what they always do: stolen the property of others to use as their own. It will work about as well as it did for Venezuela. Liberals here will clap and cheer for their new socialist stooge, then pretend he never existed and move on to the next savior after what he does collapses in ruin.

Bolivia has put all its eggs into the nationalized energy basket. It wont work for long at these prices. Enjoy it while you can Bolivians, but I would put some money aside if I were them.
 
David_N said:
Don't kid yourself ocean, do you honestly believe Bolivia would be any better under a system without assistance to the people? Of course not.
Click to expand...

I wish Bolivia well, as I stated. If they succeed over the long term, they will be the first country in the region to do so. Unfortunately, the culture of the people in the region makes it highly unlikely they will achieve the long term success I'm sure the people want, but quite likely will never be able to achieve. Let's hope for the sake of the people, they break the mold.
 
Fletch said:
They have done what they always do: stolen the property of others to use as their own. It will work about as well as it did for Venezuela. Liberals here will clap and cheer for their new socialist stooge, then pretend he never existed and move on to the next savior after what he does collapses in ruin.

Bolivia has put all its eggs into the nationalized energy basket. It wont work for long at these prices. Enjoy it while you can Bolivians, but I would put some money aside if I were them.
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Yes, we've seen that drama replayed many times throughout Latin America, beginning with Fidel Castro and, a little later, Daniel Ortega. These guys are hailed in the west, the less sophisticated fall for their promises, but the results remain consistent.
 
Dittohead not! said:
It definitely wasn't better off before it had any assistance to the people, and when there was little or no opportunity for ordinary Bolivians to succeed. Whether Morales can keep this going or not remains to be seen, but it has been positive thus far.
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Unless they revise the justice system in these countries, make remarkable gains in education, and have a Constitution limiting the powers of government, chances are any positive changes will be temporary. Their cultures also work against them.
 
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