Bolivia

BEFORE THE SPANISH came to the area now known as the Republic of Bolivia, the land was part of the ancient Incan empire. During harsh Spanish rule, many natives were enslaved. Since freeing itself from Spanish rule in 1825, Bolivia, which received its name from freedom fighter Simón Bolivár, has experienced close to 200 coups and countercoups. Constant internal strife has made Bolivia vulnerable to attacks by neighboring countries, and territory has been lost to Chile, Brazil, [Page 83]and Paraguay in various conflicts. Although democracy was ostensibly established under civilian rule in 1982, ongoing social unrest and widespread corruption have hampered the ability of governments to deal with deep-rooted poverty and illegal drug production.

It has been argued that Bolivia has been in a war against globalization over the last few years because the indigenous population has forced international businesses to close their doors, blocked an income tax proposed by the International Monetary Fund, and ousted presidents who supported globalization. Some experts argue that any future economic progress for Bolivia is dependent on solving these problems and on improving the educational system, because a well-educated population is necessary to attract and maintain foreign investment and to improve the quality of life in this central South American nation of 8,857,870 people.

Historically the Bolivian economy was dependent on cocoa. When the cocoa fields were eradicated to make way for illegal drug crops, farmers were plunged into abject poverty. Slash-and-burn tactics in modern-day Bolivia have stripped the country of essential forests. Overgrazing and poor cultivation have weakened the soil, making agricultural productivity difficult. Approximately 13 percent of Bolivia's Gross Domestic Product (GDP) is generated from agriculture. Services account for 59 percent of the GDP, and industry furnishes the remaining 28 percent.

Businesses owned by foreigners generate 65 percent of the GDP, while employing only 10 percent of the workforce. The small businesses that employ 80 percent of the labor force account for only one-fourth of total GDP. In urban areas of Bolivia, the unemployment rate is 9.2 percent and rates of underemployment have been estimated as high as 59 percent. Bolivia has no unemployment insurance benefits, so the unemployed are likely to become poor fairly quickly.

Bolivia is one of the least developed countries in Latin America. Although it has the second largest natural gas reserves in South America, Bolivia has been unable to use this resource to grow the economy, in part because of the violent protests against import policies. Exports of natural gas to Brazil have been more successful, but have not been productive enough to turn the sluggish economy around. Other Bolivian resources include tin, zinc, tungsten, antimony, silver, iron, lead, gold, timber, and hydropower.

With a per capita income of $2,600, Bolivia is one of the poorest countries in South America. Some 64 percent of the population live in poverty. Over a fifth of the population is malnourished. More than 34 percent of Bolivians live on less than $2 a day, and 14.4 percent subsist on less than $1 a day. Women are more likely than men to be poor, and this is particularly true of women in rural areas where close to one in four households is headed by a female. Among those families, 24.8 percent are moderately poor, 24.3 are extremely poor, and 22.9 percent are totally excluded from the mainstream economy. Without foreign aid, the rate of poverty would be even higher.

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