Bolivia: the largest commercial hub?

A $120 million-dollar credit to boost transportation for the next 40 years

Bolivia: the largest commercial hub? 

Leer en Español: Bolivia: El próximo epicentro del comercio y el transporte

Things are fast changing in Bolivia. Through a $120 million-dollar loan from the Inter-American Development Bank, Bolivia will be able to optimize its institutional capacity for transportation which will improve infrastructure and operations for the South American country over the next 40 years. The transport sector generated 7.83% of the national GDP in 2015 and created workspaces for 5.8% of the population.

Bolivia has made a breakthrough decision to embrace its geographic position as a regional hub for transportation and resource distribution between Brazil, Peru, Chile, Argentina, and Paraguay, all which are only geographically connected to the country. Colombia is also considered a stakeholder as 5% of Bolivian exports reach the northern republic.

The decision to apply for the international loan is part of the Bolivian 2016-2020 government agenda, one that challenges national development and job creation as a second step of the 2004-2014 plan to tackle poverty, which saw an average economic growth of 4.9%, but most importantly reduced national GINI index by 0.13 as it sits in 0.47

The Bolivian perspective for national improvement required a first stage where tacking poverty became the main priority for the government. As a result, poverty was reduced by 20% in the 2004 – 2014 timespan, then, a second stage would involve building up greater fiscal savings to a responsible 15% in order to gain leverage for credit; a third stage would involve deeper expenditure in order to provide work for the new society.

Nevertheless, not every plan comes out as expected. The year 2013 was a turning point for Bolivia as its economy topped 6.8% growth driven by the primary sector and fell 4% in 2016 all due to the fall of international market prices worldwide. Facing a cut on the mainstream of income stagnated the nation’s efforts towards poverty and opened the door for international cooperation.

Both Inter-American Development Bank and World Bank finance operations will boost Bolivia’s overall capacity in transportation (53%), rural and agricultural development (24%), and urban development (5%), environment (4%) and employment (2%). In the end, Bolivia seeks to maintain a 5% annual growth and hit 10% on extreme poverty from its current 17% by 2020.

The Latin American nation is progress-oriented as it has opened further negotiations with the private sector, has decided to boost governance across all sectors, and is betting heavily on the creation of a strong private sector to drive the ways of progress in Bolivia

Bolivia is breaking its stereotype of a socialist nation that isn’t involved in global trends. Aside from being the coca plant nation, the South American nation could soon turn into the largest commercial hub in the continent.

 

Latin American Post | David Eduardo Rodríguez

Copy edited by Susana Cicchetto

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