Bolivia

Following its independence from Spanish control in 1825, Bolivia has experienced roughly 200 coups and countercoups. While a democratic civilian regime was created in 1982, leaders have had to confront problems of social unrest, illegal drug production and poverty. In 2005, pledging to give power to the poor in the country, who compose the majority, Evo MORALES of Movement Toward Socialism became president. But, policies pursued by MORALES have instead aggravated racial and economic conflict between the Amerindians of the Andean west and the non-indigenous of the eastern lowlands.

Main Airports

La Paz (LPB), Santa Cruz (VVI)

U.S. Embassy

Avenida Arce #2780 La Paz, Bolivia
tel. 591-2-2168000

Statistics

GDP: purchasing power parity:

$25.95 billion (2005 est.)

GDP - real growth rate:

4% (2005 est.)

GDP - per capita: purchasing power parity:

2,900 (2005 est.)

Inflation rate (consumer prices):

5.4% (2005 est.)

Labor force:

4.22 million (2005 est.)

Exports:

$2.371 billion f.o.b. (2005 est.)

Exports - partners:

Brazil 41.6%, US 14.3%, Argentina 7.7%, Colombia 7%, Peru 5.5% (2005)

Imports:

$1.845 billion f.o.b. (2005 est.)

Imports - partners:

Brazil 21.9%, Argentina 16.7%, US 13.8%, Chile 6.9%, Peru 6.5%, Japan 6.1%, China 5.8% (2005)

Population:

8,989,046 (July 2006 est.)

Population growth rate:

1.45% (2006 est.)

Population Below Poverty Line:

64% (2004 est.)

Major Industries:

mining, smelting, petroleum, food and beverages, tobacco, handicrafts, clothing

Employing Workers: 174*

Registering Property: 115*

Enforcing Contracts: 98*

Closing a Business: 53*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Bolivia	Region
Procedures (number)	15	10.2
Time (days)	50	73.3

Bolivia Risk Assessment

Country Rating

Rating: D

A high-risk political and economic situation and an often very difficult business environment can have a very significant impact on corporate payment behaviour. Corporate default probability is very high.

Risk Assessment

After an economic slowdown in 2007 attributable to bad weather conditions for farm production and bottlenecks in the hydrocarbon and mining sectors, the economy should only manage weak growth in 2008. Domestic demand will be the main economic engine, underpinned by household consumption, an investment recovery, and expansionary fiscal policy. The strong inflation of 2007, stoked by the disruptive effects of the floods and by high world grain prices, should ease only slightly this year.

After the gas sector nationalisation late 2006, the government is now planning to nationalise the mines and telecommunications. Without foreign assistance, however, Bolivia could experience difficulties with management. In the export market, strong demand from its main trading partner Brazil will offset the United States slowdown. Imports will grow, meanwhile, with increased public spending on infrastructure and the revival of private investment in hydrocarbons and mining spurring capital goods purchases abroad. Although running very large external account surpluses and thus building up large foreign exchange reserves, Bolivia has remained financially weak even after cancellation of part of its foreign debt. Relations with international financial institutions have been strained, affected by the policy options taken by the government. Further extension beyond February 2008 of the preferential access of Bolivian products to the US market under the Andean Trade Promotion and Drug Eradication Act, will depend on compromises on coca cultivation and investment protection.

At the initiative of the indigenist president Evo Morales, the Constituent Assembly adopted, end 2007, a new constitution that notably stipulates autonomy for the Indians and the possibility of a second presidential term. The constitutional charter is subject to approval by referendum in 2008, but in the absence of a consensus, the political and social unrest could intensify. In this context, there remains a risk of scission by eastern provinces led by the opposition.

 

STRENGTHS

• Bolivia is endowed with abundant hydrocarbon resources, notably the continent's largest gas reserves after Venezuela's, and substantial mineral and agricultural wealth.
• The country belongs to the Andean Community (CAN), its association with Mercosur has facilitated exports to two large neighbouring countries, Brazil and Argentina, and it has sought to normalise relations with another neighbour, Chile.
• Bolivia benefited from concessional treatment of its foreign debt granted by public creditors and relief extended by multilateral financial institutions, under the HIPC and MDRI programmes.

• Bolivia has suffered from its landlocked position, ethnic and regional cleavages, and social indicators among the lowest in Latin America.
• Exports rest on a limited number of commodities (natural gas, oil, zinc, silver, soybeans), with coca cultivation remaining a major problem.
• The banking sector's extensive dollarisation continues to be a source of weakness.
• The political, social, and business climates have been very poor.
• Implementation of President Morales' radical programme will be unlikely to ease either the tensions in the country or the risks of separatism in the eastern plains of Santa Cruz, Tarija, Beni, and Pando, rich in gas reserves and agricultural resources.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation