Bolivia: The Hydrocarbons Boom and the Risk of Dutch Disease

22 Pages Posted: 1 Jul 2008

See all articles by Eugenio Cerutti

Eugenio Cerutti

International Monetary Fund (IMF); Johns Hopkins University

Mario Mansilla

International Monetary Fund (IMF)

Date Written: June 2008

Abstract

The hydrocarbons sector has become one of the most dynamic economic activities in the Bolivian economy and the main driver of improved export performance and international reserve accumulation. The central role of the hydrocarbons sector in the economy is attributable to the high levels of investment made in the late 1990s, which permitted much higher production levels, particularly of natural gas. However those positive developments in the hydrocarbons sector have given rise to the possibility of a new case of Dutch disease. While Bolivia's economy has already seen many benefits from its higher gas exports, especially in terms of lower external vulnerability and improved fiscal stance, the new resources could also limit the development of other economic sectors in terms of output and factor income. This paper explores the transmission channels of Dutch disease, as well as its main symptom, the appreciation of the real exchange rate.

Suggested Citation

Cerutti, Eugenio and Mansilla, Mario, Bolivia: The Hydrocarbons Boom and the Risk of Dutch Disease (June 2008). IMF Working Papers, Vol. , pp. 1-20, 2008. Available at SSRN: https://ssrn.com/abstract=1154330

Eugenio Cerutti (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Johns Hopkins University ( email )

Baltimore, MD 21218
United States

Mario Mansilla

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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