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Bolivia Essay Example
One should start by saying that Bolivia was named after Simon Bolivar, a freedom fighter who broke up from Spain and basically created Bolivia in 1825. The country over the period of its history had over 200 different coups and gained democratic status only in 1982. AT present, Bolivia still faces issues like poverty, drug trafficking and social unrest.
Bolivia despite large natural resources faces poverty probably for the following reasons:
1. Corruption. Just like any poor country, Bolivia has corrupted officials who do everything possible to fill their own pockets. These people typically create artificial barriers to trade and freedom with hopes of receiving bribes.
2. Drug trafficking. Although drug trafficking does provide good revenues for the locals it is a very risky business. Let alone the fact that the foreign powers fight drug barons and the fact that these drug barons sometimes have to kill to let their business survive, drug dealing also contributes to the negative image of the country, which in turn scares off potential foreign investors.
3. Absence or lack of market economy. Bolivia is never said to be a free market oriented economy, therefore, it is hard to assume that without it, the country would grow.
4. Geographic location. Bolivia is situated away from the ocean and thus has no access to the main trade routes. It has to use Brazilian or Chilean ports to conduct trade.
5. Lack of proper monetary/fiscal policy. One cannot just print the money to make everyone rich. The country has to think of the ways to stimulate investment, spending, and production.
6. Absence of clear foreign policy. Bolivia although joined Mercosur and free trade agreement with Mexico does not seem to somehow benefit from it. The country after failing to provide gas to the USA does not try to search for new markets.
7. Power division. Bolivia seems to be governed by both, the legitimate government and the powerful drug syndicates who are strong enough to survive the government’s frequent attempts to eradicate drug dealing from the country.
8. Lack of investment capital in the country. The poor country like Bolivia needs foreign investment capital to upstart the economy. Without foreign direct investments, the country is unlikely to become rich in the near future.
Paraguay on the other hand is a country with a market economy. Still, the country relies heavily on street vendors and re-export of imported goods to the neighboring countries which comprise the major part of the GDP. Paraguay does not have a division of power as it is in Bolivia and thus has much greater economy.
If I were to propose three ingenious things to improve the economic situation in Bolivia they would probably be the following:
1. Engage in decentralization of economy. The government should initiate a major privatization of economy and invite foreigners to participate. If the country is afraid that the foreigners will come and buy Bolivia, then one should think about concession agreements, where after building and operating a plant for say 20 years, a foreign investor agrees to sell or give it to the government of Bolivia. Such initiative is likely to bring new investments into the country.
2. Search for global partners. Although, Bolivia is poor financially, it is rich in natural resource which it can sell. After the USA chose to buy gas from Brazil, Bolivia should not abandon the idea of selling gas and other resources. On the contrary it should think of other markets like Europe, or Asia which apparently need gas and these resources. Europe for instance relies heavily on Russian oil and gas, and the European parliament does not cherish the prospects of being dependent on one of the ‘rogue states’ on these critically important commodities. Bolivia could provide an important hedge in gas and other resources. With proper analysis, one would be able to find many consumers of Bolivian gas.
3. Attempt to reduce social tensions. There should be a meeting with the heads of the drug business in Bolivia and these people should understand the risks and other negative sides of their business. The government should inform them that they will possibly have to invite foreign troops (UN troops) to clear the situation when needed. Perchance one would have to provide amnesty of capital, or let the drug dealers legally invest their money in Bolivia rather than keep them in offshore banks in the Caribbean. After the amnesty of capital, the drug dealers should be expected to engage in legal business. Perhaps, one could create a policy of political assassinations, in order to kill the main drug dealers who also appear to accumulate strong political power that interferes with the legal power.