Socio-Political Conflict and Economic Performance in Bolivia

48 Pages Posted: 11 Mar 2008  

Jose Luis Evia

Catholic University of Bolivia

Roberto Laserna

CERES, Bolivia

Stergios Skaperdas

University of California - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 2008

Abstract

We examine how socio-political conflict in Bolivia has affected its economic performance since the 1970s. Such conflict includes strikes, demonstrations, road blockades, and conventional rent-seeking. Since conflict has costs, it diverts resources away from production, tends to reduce investment and could therefore reduce economic growth. We first review the characteristics of conflict in Bolivia using a unique data set. We then provide estimates of the direct costs of conflict and examine the relationship with economic performance using hypotheses derived from a simple model. In particular, we make a distinction between economic growth that is due to external factors - like changes in income due to movements in the terms of trade - and economic growth that is due to productive investment. Growth due to external factors tends to be positively related to conflict, whereas growth due to productive investment should be negatively related to conflict. Finally, we discuss how levels of conflict, economic performance, and governance might be related in Bolivia's recent history.

Keywords: economic growth, property rights, governance

JEL Classification: D70, H10, O11, O54

Suggested Citation

Evia, Jose Luis and Laserna, Roberto and Skaperdas, Stergios, Socio-Political Conflict and Economic Performance in Bolivia (March 2008). CESifo Working Paper Series No. 2249. Available at SSRN: https://ssrn.com/abstract=1104954

Jose Luis Evia

Catholic University of Bolivia ( email )

La Paz
Bolivia

Roberto Laserna

CERES, Bolivia ( email )

Bolivia

Stergios Skaperdas (Contact Author)

University of California - Department of Economics ( email )

3123 Social Science Plaza A
Irvine, CA 92697-5100
United States
714-824-4167 (Phone)
714-824-2182 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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