1982–1985 Bolivian economic crisis

The 1982–1985 Bolivian economic crisis was a major economic debacle that impacted Bolivian society and finances. It included a 1984–1985 period of hyperinflation and culminated with the October 1985 collapse of international tin prices.[1][A] The inflation was in part caused by the monetary expansion to finance public sector deficit.[2]

The price of non-fuel commodity goods other than tin also declined prior to the crisis and as Bolivia's economy remained reliant on commodities these price declines (and the sharp drop in case of tin) destabilized the economy.[3] There was a 10% decline in real GDP from 1980 to 1985.[4] The tin price collapse came just as the government was moving to reassert its control of Corporación Minera de Bolivia (COMIBOL), an until then important public company in Bolivia and a major actor in tin mining in Bolivia, which had for long been mismanaged.[5]

Hyperinflation reached an annual rate of 24,000% during the crisis.[5] In mid-1985 inflation stood at 20,000%.[2] Social unrest, chronic strikes, and unchecked drug trafficking were widespread.[5]

The economic system of Bolivia prior to the crisis has been described as one of state capitalism and dirigism.[B]

Government response

Víctor Paz Estenssoro was elected president in 1985 and in 4 years his administration managed to achieve economic and social stability,[5] but had to crack-down on labour protests and jail union leaders.[2] Public sector wages were frozen, and in late 1988 tariffs on non-capital goods were lowered to a uniform 17%.[2]

COMIBOL was forced to lay off over 20,000 miners.[5][2] The company was left permanently diminished after the crisis.[6]

As a whole, in response to the crisis the economy of Bolivia was liberalized, drastically reducing state intervention in the economy.[7]

See also

Notes

  1. ^ Tin mining, while still an important part of the Bolivian economy, had been in a slow trend decline since its heydays in the 1920s.[1]
  2. ^ "Despite the great variation of governments after 1952, one aspect of the model of state capitalism remained fairly constant. Whether the government was of the populist left, as under the military leader General Torres in 1970 – or of the right, as under the military regime of General Hugo Banzer during 1971-78, the state was looked to as the guiding force of development."[1]

References

  1. ^ a b c Morales, Juan Antonio; Sachs, Jeffrey (1988-06-06). Bolivia's economic crisis (PDF) (Report). National Bureau of Economic Research.
  2. ^ a b c d e Mann, Arthur J.; Pastor, Manuel (1989). "Orthodox and Heterodox Stabilization Policies in Bolivia and Peru: 1985-1988". Journal of Interamerican Studies and World Affairs. 31 (4): 163–192. doi:10.2307/165997. JSTOR 165997.
  3. ^ Thiele, G (1988). Agric. Admin. & Extension: Bolivian Lowlands Farming: The Scramble for Income Shares under Hyperinflation. Elsevier Applied Science Publishers Ltd, England. p. 55.
  4. ^ "Press Release: IMF Approves Three-Year Arrangement Under the ESAF for Bolivia". IMF. Retrieved 2019-12-02.
  5. ^ a b c d e "Background Note: Bolivia". U.S. Department of State. November 2002. Archived from the original on 1 August 2003. This article incorporates text from this source, which is in the public domain.{{cite web}}: CS1 maint: postscript (link)
  6. ^ "Corporación Minera de Bolivia COMIBOL Desempeño y Desafíos Actuales". Fundación Jubileo (in Spanish). 2018.
  7. ^ Morales, Juan Antonio (2001). "Economic Vulnerability in Bolivia". In Crabtree, John; Whitehead, Laurence (eds.). Towards Democratic Viability: The Bolivian Experience. London: Palgrave Macmillan. pp. 41–60.
This article is issued from Wikipedia. The text is available under Creative Commons Attribution-Share Alike 4.0 unless otherwise noted. Additional terms may apply for the media files.