Jeanette Bonifaz

Lessons from Bolivia: Re-Nationalizing the Hydrocarbon Industry

President Evo Morales came to power in Bolivia in 2006 amid widespread discontent. The country had been experiencing a long-term economic growth failure, with income per capita in 2005 lower than it was 27 years prior, and privatization efforts had been widely unpopular, including with the indigenous majority. Conflicts over natural resources, most notably the water and gas wars of 2000 and 2003, respectively, led to the resignations of Presidents Gonzalo Sánchez de Lozada in 2003 and Carlos Mesa in 2005. The Morales administration marked a dramatic turn-around for the country. The economy began to grow, experiencing its fastest growth in decades. Bolivia increased its sovereignty over economic policy; social spending increased by 45 percent from 2005-2012 and poverty was reduced by 25 percent from 2005-2011. In order to achieve these results, President Morales nationalized the hydrocarbons sector by decree early during his first year in office, allowing his government to engage in effective redistribution and macroeconomic policies that benefited the poorest segments of society.

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