1 pres.harvard university (05 09 14) ultimo
DESCRIPTION
La exposición del Ministro de Economía y Finanzas Públicas Luis Arce Catacora en la Universidad de Harvard, Estados Unidos.TRANSCRIPT
1
THE MODEL THAT CHANGED BOLIVIA’S
ECONOMYHarvard University
Luis A. Arce CatacoraMinister of Economy and Public Finance of
the Plurinational State of BoliviaSeptember 5th, 2014
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 2014 2
CONTENT
I. General facts of Bolivia
II. Economic Social Comunitarian Productive Model
III. Empirical evidence on the Economic Social Comunitarian Productive Model’s foundations
IV. Macroeconomic Results
VI. New Bolivia’s international image
V. Social Results
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 2014 3
CONTENT
I. General facts of Bolivia
II. Economic Social Comunitarian Productive Model
III. Empirical evidence on the Economic Social Comunitarian Productive Model’s foundations
IV. Macroeconomic Results
VI. New Bolivia’s international image
V. Social Results
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 2014 4
Plurinational State of Bolivia: Geographical location
I. General facts of Bolivia
Location and area
Neighboring countries
Bolivia is located in the center of South America. It’s area extent is 1,098,581 square kilometers.
It is bounded on the North and East by Brazil, on the South by Argentina, on the West by Peru, on the Southeast by the Paraguay and on the Southwest by Chile.
Phisiography
Andean: 28% Subandean: 13% Plains: 59%
Population 201210,027,254 people 5,028,265 women 4,998,989 men
Average annual population growth rate (Census 2012)2001 – 2012: 1.71%
Population density (Census 2012)
2012: 9.13 inhabitants per Km2
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 2014 5
CONTENT
I. General facts of Bolivia
II. Economic Social Comunitarian Productive Model
III. Empirical evidence on the Economic Social Comunitarian Productive Model’s foundations
IV. Macroeconomic Results
VI. New Bolivia’s international image
V. Social Results
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 2014 6
1. Free market economy
2. Watching State
3. Model of Privatization
4. Primary-exporter model “export or die”
5. External demand’s dependence
6. Income concentration
7. Economy focused on private initiatives
8. Investment funding by external debt
9. Poverty and inequality
10. Objetive: The Control of Inflation
11. Dependence on multilatral institutuions for economic policy.
12. Non-existent fiscal and monetary policy (recurrent fiscal deficits and dollarization)
1. The State intervenes actively in the economy
2. Planner, entrepreneur, investor, regulator, benefactor, promoter and banker State
3. Model of Nationalization
4. Model of Industrialization
5. Growth based on external and domestic demand
6. Income redistribution by the State
7. The State promotes the plural economy (State, Private sector, Cooperative and Comunitarian)
8. Investment funding by domestic savings
9. Further development, oportunities and social movility.
10. Objective: Growth with income redistribution. Stability is a social patrimony.
11. Soverign economic policy.
12. Fiscal surplus, social policy and de-dollarization.
Neoliberal Economic Model
Differences between the neoliberalism and new Economic Model
Economic Social Comunitarian Productive Model
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 2014 7
3. INCOME REDISTRIBUTIVE MODEL: The economic surplus must be redistributed mainly to the most needed people: conditional transfers (Bono Juancito Pinto, Bono Juana Azurduy and Renta Dignidad), public investment, inversely proportional wage increase, minimum wage increase, cross subsidies and others.
2. APPROPRIATION OF THE ECONOMIC SURPLUS BY THE STATE OF BOLIVIA: Bolivia now receives the economic surplus from its strategic sectors and natural resources.
1. DEVELOPMENT AND GROWTH BASED ON THE USE OF NATURAL RESOURCES AIMING TO BENEFIT ALL BOLIVIANS: Generation of larger economic surplus. Antithesis of the «Resource Curse theory».
4. INEQUITY AND POVERTY REDUCTION: The model has a social visión, builds a more equal society with no poverty. More opportunities and social mobility.
THE NEW MODEL FOUNDATIONS
II. Economic Social Comunitarian Productive Model
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 2014 8
STRATEGIC SECTORS SURPLUS’
GENERATORS
INCOME AND EMPLOYMENT GENERATING
SECTOR
• Hidrocarbons
• Mining
• Electricity
• Environmental resources
• Industry, manufacturing and craftsmanship
• Turism
• Farming development
• Housing
• Trade, transport and other services
Surplus
•Conditional transfers:
• Bono Juancito Pinto
• Renta Dignidad
• Bono Juana Azurduy
•Cross Subsidies
•Social Policies
INCOME’s REDISTRIBUTION AND POVERTY REDUCTION
REDISTRIBUTIVE STATE
INDUSTRIALIZATION
ECONOMIC SOCIAL COMUNITARIAN PRODUCTIVE MODEL
II. Economic Social Comunitarian Productive Model
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 2014 9
Paper: “Structuring the New Economic Social Communitarian Productive Model”
Luis Alberto Arce Catacora and David Quiroz Sillo
II. Economic Social Communitarian Productive Model
Abstract• This paper presents a theoretical model, supported by empirical
evidence, aiming to structure the main characteristics of the Bolivia’s new Economic Social Communitarian Productive Model that this country has been applying since 2006.
• The work is based on the super-predator model and arrives to a solution by applying Lokta-Volterra’s equations. In the model, the economy is structured by two sectors, the strategic sector which main activity is the exploitation of non-renewable resources and the income and labor generating sector. The main conclusion of the model is that by transferring resources from the strategic sector (the surplus’ generator) towards the income and labor generating sector, it is possible to achieve sustained economic growth.
• The empirical evidence obtained by running simulations and by estimating vector autoregressive models supports the conclusions of the theoretical model.
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201410
Paper: “Structuring the New Economic Social Communitarian Productive Model”By
Luis Alberto Arce Catacora David Quiroz Sillo
II. Economic Social Communitarian Productive Model
• Policy recommendations from the model suggest that the State must assign the strategic sector’s surplus to the following: (i) aiming to expand the country's productive base and to support industrialization, (ii) aiming to support private sector through improvements in domestic demand, which will inject dynamism to the economy. With these policies the income and labor generating sector can be developed.
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201411
• The economy has two sectors : a strategic sector (X1) and an income and labor generating sector (X2). Both sectors comprise productive activities and thus generate economic surplus.
• Strategic sector main activity is the exploitation of non-renewable resources
• A share of the income and labor generating sector’s economic surplus belongs to and is administrated by the redistributing state.
• Aggregate domestic demand is an important determinant of growth.
• The state intervenes in the economy through : (i) government spending toward both sectors (X1 and X2), and (ii) social transfers aiming to reduce poverty and improve the redistribution of income.
• State always keeps a balanced budget.
Structuring the New Economic Social Communitarian Productive Model
III. Economic Social Communitarian Productive Model
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201412
Structuring the New Economic Social Comunitarian Productive Model
II. Economic Social Comunitarian Productive Model
• The objective function of the state is to reach a production level in each period of time given by: 𝑈ሺ𝑋1,𝑋2ሻ= 𝑋1𝛼0𝑋2𝛼1
• Where (X1) and (X2) represent the production level of the strategic sector and of the income and labor generating sector, respectively. Both sectors comprise productive activities and thus generate economic surplus. Strategic sector’s main activity is the exploitation of non-renewable resources
• As the state always keeps a balanced budget, then taxes (T) are equal to spendings (G), and the budget constraint of the resdistributing state is :
• The optimizing Lagrangian is thus:
• And the FOC’s optimal solution is:𝑋 2
𝑋1
=𝜃1𝜃2
𝛼1𝛼0
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201413
Structuring the New Economic Social Comunitarian Productive Model
II. Economic Social Comunitarian Productive Model
• By using the optimal production relation and applying dynamic methods to the budget constraint, the following system is found to express the surplus’ dynamic of both sectors and the dynamic of the income and labor generating sector output’s share : 𝑣ሶ= ሺ𝑎1 −𝑏1𝑤ሻ𝑣 𝑤ሶ= ሺ−𝑎3 +𝑏3𝑣−𝑐3𝑢ሻ𝑤 𝑢ሶ= −ሺ𝑎2 −𝑏2𝑣ሻ𝑢
• By solving this system a set of solutions are found, these solutions have sinusoidal forms and thus fluctuate.
Where:- represents the dynamic of the income and labor generating sector ’s surplus.- represents the dynamic of the income and labor generating sector output’s share.- represents the dynamic of the strategic sector’s surplus.
𝑣ሶ= ሺ𝑎1 −𝑏1𝑤ሻ𝑣 𝑤ሶ= ሺ−𝑎3 +𝑏3𝑣−𝑐3𝑢ሻ𝑤 𝑢ሶ= −ሺ𝑎2 −𝑏2𝑣ሻ𝑢
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201414
Structuring the New Economic Social Comunitarian Productive Model
II. Economic Social Comunitarian Productive Model
It can be seen that the income and labor generating sector’s surplus is increasing over time, whereas (due to the availability’s limitation) strategic sector’s surplus is decreasing over time.
By running simulations of this system, assigning values to the parameters and finding its dynamic solution, the following behavior is found (see graph).
Therefore, the new Economic Social Comunitarian Productive Model sees the income and labor generating sector as the one that generates sustained economic growth.
Note also that the income and labor generating sector output’s share is increasing over time.
𝑢𝑡
𝑣𝑡
𝑤𝑡
Years
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201415
Structuring the New Economic Social Comunitarian Productive Model
II. Economic Social Comunitarian Productive Model
Therefore, the state assign the strategic sector’s surplus to policies: (i) aiming to expand the country's productive base and to industrialize, and (ii) aiming to support private sector through improvements in domestic demand, which will inject dynamism to the economy. With these policies the income and labor generating sector can be developed.
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201416
CONTENT
I. General facts of Bolivia
II. Economic Social Comunitarian Productive Model
III. Empirical evidence on the Economic Social Comunitarian Productive Model’s foundations
IV. Macroeconomic Results
VI. New Bolivia’s international image
V. Social Results
a) Growth and income distribution: The Kaleckian approach
b) Strategic sector’s surplus use in the New Economic Model
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201417
Abstract
• This paper aims to study the relationships between the distribution, aggregate demand and long-term growth in Bolivia. To do this, the study is based on a Kaleckian model of economic growth since it recognizes the importance of aggregate demand on growth. In this model, a better distribution of the output can have a positive or negative effect on economic growth, capital accumulation and productivity, depending on the relative response of the aggregate demand components and productivity, both define what is called Demand Regime and Productivity Regime.
• To estimate the prevailing regimes in Bolivia´s economy, two econometric methodologies are used with data from the period 1950-2012. Initially multivariate behavioral equations are used, subsequently an SVAR is estimated. Both methodologies conclude that Bolivia´s economy has a wages-driven demand regime and a contractionary global regime.
Distribution, Aggregate Demand and Economic Growth in Bolivia 1950 – 2012
David Quiroz Sillo José Alberto Villegas Gómez
Distribution, Aggregate Demand and Economic Growth in Bolivia 1950-2012
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201418
• The results suggest that in Bolivia with an improvement in the distribution of resources benefiting workers (reduction of the profit share), the consumption and demand increase will be greater than the investment disincentive, i.e. better distribution generates higher growth.
Distribution, Aggregate Demand and Economic Growth in Bolivia 1950 - 2012
David Quiroz Sillo José Alberto Villegas Gómez
Distribution, Aggregate Demand and Economic Growth in Bolivia 1950-2012
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201419
-0,5% -0,24%
Años Años
In Bolivia, a policy that diminishises wages in order to favor competitiviness and benefit entrepreneurs, reduces the aggregate output growth rate. This is due to the fact that lower wages reduces consumption, and this effect is bigger than the increase in investment. Thus, improvements in the distribution of income, accentuate aggregate demand and growth.
In Bolivia, an increase of the “profit share” will diminish capital accumulation. A decrease in wages reduces aggregate demand and thus enterprises’ sales, which as diminishes capitalists’ benefits will decrease aggregate investment and output.
Investment
UtilizationProfit share Unemployment rate
Productivity
Accumulated Response of the Profit-share (π) on Growth
Accumulated Response of the Profit-share (π on Capital accumulation
Note.- These two effects are non-significant
Estimation of Total’s effect through a SVAR
Distribution, aggregate demand and growth in Bolivia (1950-2012)
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201420
Commodity prices, fiscal policy and economic growth 2000-2013
Luis Alberto Arce Catacora and David Quiroz Sillo
Commodity prices, fiscal policy and economic growth 2000-2013
Abstract• This paper analyzes the effect of international commodity prices’ changes on
fiscal variables and the Bolivian output growth in both the short and long term.• For the short-term analysis a structural vector autoregressive model (SVAR) is
estimated, it suggests that an international commodity prices’ shock has a positive impact on tax revenue and gross domestic product; however, the effect on the latter is small.
• To study the long-term relationship a cointegration model is estimated following the methodology proposed by Johansen-Juselius. The results show that the main determinant of output in the long-term is public investment, this effect is greater than that of financial deepening. Interestingly, the effect of international commodity prices on growth in the long term is small and not statistically significant.
• These results suggest that with proper management (e.g. public investment), the resources coming from the strategic sectors in Bolivia can generate growth and eliminate any external vulnerability to international commodity prices’ changes.
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201421
CONTENT
I. General facts of Bolivia
II. Economic Social Comunitarian Productive Model
III. Empirical evidence on the Economic Social Comunitarian Productive Model’s foundations
IV. Macroeconomic Results
VI. New Bolivia’s international image
V. Social Results
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201422
-1.7
-2.6
2.43.0
3.8
4.6
5.3
1.6
4.34.7 4.7
4.4
5.0 5.0
0.4
2.5
1.7
2.5 2.7
4.24.4
4.84.6
6.1
3.4
4.1
5.2 5.2
6.8
5.6
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9(p
)
201
0(p
)
201
1(p
)
201
2(p
)
201
3(p
)
201
4 (
Trim
I)
(p) PreliminarySource: National Statistics Institute (INE)Elaborated by: Ministry of Economy and Public Finance
3.0 %
Average 1998-2005
5.0 %
Average 2006-2013
Bolivia: Real GDP growth, 1985 – 2013(In percentage)
IV. Macroeconomic Results – Sustained economic growth despite the global crisis
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201423
AVERAGE 1998 - 2005 AVERAGE 2006 - 2013
Source: Economic Commission for Latin America and the Caribbean (ECLAC)Elaborated by: Ministry of Economy and Public Finance
0.40.80.8
1.41.7
2.22.32.62.62.62.93.03.03.1
3.43.53.83.8
4.54.74.74.9
0.0 2.0 4.0 6.0
HaitiParaguayUruguay
ArgentinaVenezuela
ColombiaBrazil
Latin AmericaLatin America and the Caribbean
El SalvadorBolivia
EcuadorPeru
MexicoGuatemala
ChileHondurasNicaragua
PanamaDominican Republic
CubaCosta Rica
1.6
2.0
2.4
3.6
3.6
3.6
3.7
3.7
3.7
3.8
4.1
4.2
4.5
4.5
4.7
5.0
5.2
5.5
5.9
6.1
6.88.9
0.0 2.0 4.0 6.0 8.0 10.0
El Salvador
Haiti
Mexico
Honduras
Brazil
Guatemala
Latin America and the Caribbean
Latin America
Nicaragua
Venezuela
Chile
Ecuador
Cuba
Costa Rica
Colombia
Bolivia
Paraguay
Uruguay
Dominican Republic
Argentina
Peru
Panama
Latin America: Real GDP growth(In percentage)
IV. Macroeconomic Results – Higher economic growth despite the global crisis
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201424
-2.2
0.5
-1.8
4.5
-0.30.9
6.0
2.6
4.9
8.4
3.7 4.4
8.6
2.9
8.2
2.6 2.0
3.5
-2.0
3.0
3.3
-1.6
2.2
-0.3
-2.3
-0.3 -0.3
-3.4
2.3
-1.4
0.4
2.5
1.72.5 2.7
4.2 4.44.8 4.6
6.1
3.44.1
5.2 5.2
6.8
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6(p
)
200
7(p
)
200
8(p
)
200
9(p
)
201
0(p
)
201
1(p
)
201
2(p
)
201
3(p
)
Domestic demand External demand GDP growth
Domestic demand 2.2
External demand 0.7
Average 1998-2005
Domestic demand 5.4
External demand -0.4
Average 2006-2013
(p) PreliminarySource: National Institute of Statistics (INE)Elaborated by: Ministry of Economy and Public Finance
Bolivia: Incidence of domestic demand and net exports on GDP 1999 - 2013(p)
(In percentage)
IV. Macroeconomic Results – Economic growth based on domestic demand
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201425
Bolivia: Nominal Gross Domestic Product1986 – 2013(p)(Millions of USD)
Bolivia: Gross Domestic Product per cápita1986 – 2013(p)
(USD)
(p) PreliminarySource: National Institute of Statistics (INE)Elaborated by: Ministry of Economy and Public Finance
Bolivia: Nominal and per cápita Gross Domestic Product
IV. Macroeconomic Results – Sustained increase of the economy size and income per capita
30,381
9,521
0
4,000
8,000
12,000
16,000
20,000
24,000
28,000
32,000
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
(p)
2009
(p)
2010
(p)
2011
(p)
2012
(p)
2013
(p)
1,010
2,757
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
(p)
2009
(p)
2010
(p)
2011
(p)
2012
(p)
2013
(p)
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201426
72 98 122 147 184 232551
8101,016
1,530
177 177 203 230 222 228 297 326 481 551 650 694 725
960
1,158
1,503
1,695
245 265 285 295 251 187 221 194263
284427
475 472
566
743
1,084
1,144
505 531 583 639 585 500 602 629879 1,005
1,351 1,4391,521
2,182
2,897
3,781
4,519
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,0001
99
8
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
PG
E
Productive Infrastructure Social Multisectoral(*) The datum for 2014 is the amount of planned public investment in the General State BudgetSource: Vice Ministry of Public Investment and External Financing (VIPFE)Elaborated by: Ministry of Economy and Public Finance
Average 1998 - 2005
USD 572 millions
Average 2006 - 2013
USD 1,882 millions
Bolivia: Executed public investment by economic sector, 1991-2014*
(Millions of USD)
IV. Macroeconomic Results – Records of public investment boosts economic growth
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201427
(*) The datum for 2014 is the amount of planned public investment in the General State BudgetSource: Vice Ministry of Public Investment and External Financing (VIPFE)Elaborated by: Ministry of Economy and Public Finance
5856
53 52
46
3634
37
6269 68
72
6769
73
82 82
4244
47 48
54
6466
63
38
31 3228
3331
27
18 18
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.019
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
PG
E
Domestic resources
External resources
Bolivia: Public investment by funding source, 1998 – 2014* (In percentage)
IV. Macroeconomic Results – Public investment financed mostly by internal resources
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201428
Industrialization Projects
IV. Macroeconomic Results – Industrialization of natural resources
Name of the ProjectTotal investment
(In millions of USD)Status
Río Grande Liquid Separation Plant 183 In operation
Gran Chaco Liquid Separation Plant 608 In process
Ammonia and Urea Plant 862 In process
Propylene and Polypropylene Plant 1,700 In process
Ethylene and Polyethylene Plant 1,760 In process
Plant pipes, fittings and polyethylene films 14 In process
Liquefied Natural Gas - LNG "Virtual Pipeline" 146 In process
Hydrocarbons
Name of the ProjectTotal investment
(In millions of USD)Status
Pilot Plant of Lithium Carbonate and Potassium Chloride-Uyuni
19 In operation
Industrial Plants of Lithium Carbonate (Li2CO3) and Potassium Chloride (KCl): Phase II – Uyuni
485 In process
Industrialization of Lithium - Phase III - Palca, Potosí 4 In process
Ausmelt Furnace’s Construction 39 In process
Mining
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201429
Industrialization Projects
IV. Macroeconomic Results – Industrialization of natural resources
Name of the ProjectTotal investment
(In millions of USD)Status
Bolivian Company of Almonds (EBA) 2 In operation
Palm Hearth Plant in Shinahota 1 In operation
Seed Production Strategic Company 6 In operation
Industrial Plant of Herbal Tea (Stevia and Coca) 0.5 In operation
Palm hearth Plant in Ivirgarzama 1 In operation
Citrus Plant in Caranavi 2 In operation
Public Company of Milk (LACTEOSBOL) 6 In operation
Citrus Processing Plant in Valle de Sajta 63 In process
Apicultural Production Public Company (PROMIEL) 6 In process
Fertilizers Company Production Strategic 6 In process
Sugar and Derivatives Industrial Plant (EASBA) 215 In process
Food Sector
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201430
2005 2013
Source: International Monetary Fund Elaborated by: Ministry of Economy and Public Finance
14.3
16.2
17.0
17.7
17.9
20.2
20.8
21.6
22.0
23.0
0.0 5.0 10.0 15.0 20.0 25.0
Bolivia
Brazil
Paraguay
Uruguay
Peru
Colombia
Argentina
Ecuador
Chile
Venezuela
16.6
19.2
19.3
19.7
23.7
24.0
24.2
25.7
27.9
28.2
0.0 5.0 10.0 15.0 20.0 25.0 30.0
Paraguay
Brazil
Bolivia
Uruguay
Colombia
Venezuela
Argentina
Chile
Peru
Ecuador
South America: Total investment as percentage of GDP
IV. Macroeconomic Results – Highest total investment by public investment
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201431
(p) Preliminary, up o July 2014
Source: Ministry of Economy and Public Finance – Central Bank of Bolivia (BCB). Latin American: International Monetary Fund (IMF). Elaborated by: Ministry of Economy and Public Finance
July
Bolivia: Fiscal Balance, 1980-2014(p)(As percentage of GDP)
IV. Macroeconomic Results – Prudent fiscal administration
-6,4
-22,3
-30,6
-8,3
-6,1
-1,8
-4,7
-8,8
-2,2
4,5
1,73,2
0,11,7
0,81,8
0,72,0
-36,0
-30,0
-24,0
-18,0
-12,0
-6,0
0,0
6,0
198
01
981
198
21
983
198
41
985
198
61
987
198
81
989
199
01
991
199
21
993
199
41
995
199
61
997
199
81
999
200
02
001
200
22
003
200
42
005
200
62
007
200
82
009
201
02
011
201
22
013
201
4
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201432
-5.1
-4.4
-3.2
-2.8
-2.6
-1.4
-0.3
-0.1
0.3
-5.5
-8.0 -6.0 -4.0 -2.0 0.0 2.0
Bolivia
Argentina
Brazil
Mexico
Colombia
Uruguay
Peru
Paraguay
Ecuador
Chile
Source: Ministry of Economy and Public Finance – Central Bank of Bolivia (BCB). Latin American: International Monetary Fund (IMF). Elaborated by: Ministry of Economy and Public Finance
Average 1998-2005 Average 2006-2013
Latin America: Fiscal Balance(As percentage of GDP)
IV. Macroeconomic Results – The second country with the highest fiscal surplus
-2.8
-2.5
-1.4
-1.4
-0.5
0.6
1.3
1.8
2.1
-2.9
-4.0 -2.0 0.0 2.0 4.0
Mexico
Brazil
Argentina
Uruguay
Colombia
Ecuador
Paraguay
Peru
Bolivia
Chile
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201433
1,6
91
1,9
63
2,3
25
3,1
71
3,3
51
3,5
23 4,6
59
5,3
97 6,3
71
4,1
00
4,5
12
1,2
88
1,7
40
2,2
33
1,2
66
1,3
01
402 601760
9571,254 1,278 1,154
1,979
3,079
4,083
4,478
5,947
7,137
8,604
5,366
5,813
0
1,500
3,000
4,500
6,000
7,500
9,000
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
3
201
4
Direct Tax to Hydrocarbons IDHRevenues without IDH
21%
Note: In 2009 and 2010 a statistical correction was made because of the repetition in the IUE’s tax payment made by YPFB in 2009.
Source: Ministry of Economy and Public FinanceElaborated by: Ministry of Economy and Public Finance
Bolivia: Tax revenues, 1990 - 2013(Millions of USD)
IV. Macroeconomic Results – Important increments on tax revenues
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201434
Source: The Organization for Economic Co-operation and Development (OECD)Elaborated by: Ministry of Economy and Public Finance
2000 2012
10.1
13.9
14.5
14.6
14.7
16.9
18.8
21.5
21.6
30.1
0 5 10 15 20 25 30 35
Ecuador
Peru
Paraguay
Colombia
Bolivia
Mexico
Chile
Argentina
Uruguay
Brazil
17.6
18.1
19.6
19.6
20.2
20.8
26.0
26.3
36.3
37.3
0 5 10 15 20 25 30 35 40 45
Paraguay
Peru
Mexico
Colombia
Ecuador
Chile
Bolivia
Uruguay
Brazil
Argentina
Latin American: Tax Burden 2000 and 2012(As percentage of GDP)
IV. Macroeconomic Results – Fourth place in the tax burden
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201435
( p) PreliminaryNota: The most important thresholds are 60% for the Maastricht Treaty (European Union), 50% for CAN (Andean Community of Nations) and 40% for MERCOSUR (Common Trade area of the South). Source: International Monetary Fund (IMF)-World Economic Outlook, Abril 2014Elaborated by: Ministry of Economy and Public Finance
2005 2013
7
33
35
38
39
39
46
69
80
84
87
0 20 40 60 80 100
Chile
Paraguay
Ecuador
Peru
Colombia
Mexico
Venezuela
Brazil
Bolivia
Uruguay
Argentina
13
13
20
24
32
33
46
47
50
59
66
0 20 40 60 80
Chile
Paraguay
Peru
Ecuador
Colombia
Bolivia
Mexico
Argentina
Venezuela
Uruguay
Brazil
Latin America: Total public debt, 2005 and 2013 (p) (As percentage of GDP)
IV. Macroeconomic Results – Public debt reduction to sustainable levels
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201436
(p) ]PreliminarySource: Central Bank of Bolivia and International Monetary Fund Elaborated by: Ministry of Economy and Public Finance
Bolivia: Current account (% of GDP) 1985 - 2013(p)
IV. Macroeconomic Results – Solid external profile
2.0
-4.1
-7.2
-1.2
-4.9
-7.8
-5.3
1.0
3.7
5.9
11.211.9
4.3
0.3
7.2
3.33.9
-3.4
-10.0
-5.0
0.0
5.0
10.0
15.019
90
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
(p)
2012
(p)
2013
(p)
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201437
-1.9
-1.8
-1.7
-1.1
-1.0
-0.8
-0.6
0.8
1.2
7.8
-4.0 -2.0 0.0 2.0 4.0 6.0 8.0
Peru
Bolivia
Brazil
Colombia
Ecuador
Uruguay
Chile
Argentina
Paraguay
Venezuela
Average 1998 - 2005 Average 2006 - 2013
Source: Central Bank of Bolivia and International Monetary Fund Elaborated by: Ministry of Economy and Public Finance
South America: Current account (% of GDP)
IV. Macroeconomic Results – Solid external profile
-3.1
-2.8
-1.6
-1.5
-0.1
0.8
1.1
1.7
6.1
6.8
-4.0 -2.0 0.0 2.0 4.0 6.0 8.0
Uruguay
Colombia
Peru
Brazil
Chile
Ecuador
Argentina
Paraguay
Venezuela
Bolivia
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201438
10 13 36 30 35 66 94
372472
599
734
19583
-291
278362
508426
672
859
1,750
1,060
703674
1,0081,024
128120
122
-500
0
500
1,000
1,500
2,000
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
(p)
2012
(p)
2013
(p)
(p) ]PreliminarySource: Central Bank of Bolivia and Economic Commission for Latin America and the CaribbeanElaborated by: Ministry of Economy and Public Finance
Bolivia: Net Foreign Direct Investment1985 - 2013(p)(Millions of USD)
IV. Macroeconomic Results – Higher foreing investment than in the privatization period
PRIVATIZATION PERIOD
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201439
2005 2013
Source: Central Bank of Bolivia and Economic Commission for Latin America and the CaribbeanElaborated by: Ministry of Economy and Public Finance
South America: Net Foreign Direct Investment (% of GDP)
-3.1
0.4
1.0
1.2
1.4
2.0
2.2
3.2
3.8
4.0
4.7
-4.0 -2.0 0.0 2.0 4.0 6.0
Bolivia
Paraguay
Venezuela
Ecuador
Brazil
South America
Argentina
Peru
Colombia
Chile
Uruguay
0.5
0.8
1.4
1.8
2.8
2.8
3.4
3.6
5.6
5.8
5.8
0.0 1.0 2.0 3.0 4.0 5.0 6.0
Ecuador
Venezuela
Paraguay
Argentina
South America
Brazil
Chile
Colombia
Uruguay
Bolivia
Peru
IV. Macroeconomic Results – Second with the highest percentage of FDI received
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201440
1,714
3,178
5,319
7,722
8,580
9,730
12,019
13,92714,430
14,937
0
3,000
6,000
9,000
12,000
15,00019
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
14
,
(*) Data for 2014 is up to August 22th Source: Central Bank of Bolivia and Central Banks of each country Elaborated by: Ministry of Economy and Public Finance
Bolivia: Central Bank’s Net International Reserves 1976- 2014*(Millions of USD)
IV. Macroeconomic Results – High levels of reserves
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201441
Source: Central Bank of Bolivia and Central Banks of each country Elaborated by: Ministry of Economy and Public Finance
Latin America: International reserves (% of GDP), July 2014
IV. Macroeconomic Results – First place on international reserves as percentage of GDP
5
6
7
12
15
15
17
21
30
31
48
0 10 20 30 40 50
Ecuador
Venezuela
Argentina
Colombia
Mexico
Chile
Brazil
Paraguay
Peru
Uruguay
Bolivia
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201442
Jul
Source: Financial System’s Supervision Authority (ASFI)Elaborated by: Ministry of Economy and Public Finance
Bolivia: Financial System Deposits 1995 - July 2014
(Millions of USD)
IV. Macroeconomic Results – Population´s saving capacity has increased
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201443
169 210 266 307 346 348 396 428 494 466129 131 148 162 185 195 219 239 276 259
1,511 1,7822,159
2,8333,528
4,2094,785
5,4236,101 6,540
1,9112,240
2,719
3,479
4,2594,952
5,623
6,330
7,1407,540
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 jul.-14
Th
ou
san
ds
of
acco
un
ts
Higher than USD 2.000.001 Between USD 1.000.001 and USD 2.000.000 Between USD 500.001 and USD 1.000.000
Between USD 200.001 and USD 500.000 Between USD 100.001 and USD 200.000 Between USD 50.001 and USD 100.000
Between USD 30.001 and USD 50.000 Between USD 20.001 and USD 30.000 Between USD 15.001 and USD 20.000
Between USD 10.001 and USD 15.000 Between USD 5.001 and USD 10.000 Between USD 1.001 and USD 5.000
Between USD 501 and USD 1.000 Lower than USD 500
87%
Source: Financial System’s Supervision Authority (ASFI)Elaborated by: Ministry of Economy and Public Finance
Bolivia: Number of Deposits Accounts in the Financial System, by stratification amount, 2005 – July 2014
(Thousands of accounts)
IV. Macroeconomic Results – The accounts number is almost four times the 2005´s level
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201444
Source: Financial System’s Supervision Authority (ASFI)Elaborated by: Ministry of Economy and Public Finance
Bolivia: Financial System Net Credit Portfolio and NPL rate1995-July 2014
(Millions of USD and percentage)
IV. Macroeconomic Results – Upward credit trend due to economic dynamism
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201445
10.1
7.6
6.5
6.3
5.5
3.6
3.5
2.7
1.5
0.9
0.7
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0
Bolivia
Argentina
Paraguay
Peru
Ecuador
Uruguay
Brazil
Colombia
Mexico
Chile
United States
3.5
3.2
3.2
2.9
2.8
2.6
2.1
2.0
1.8
1.7
1.5
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Peru
Mexico
United States
Brazil
Colombia
Ecuador
Chile
Paraguay
Uruguay
Argentina
Bolivia
2005 2013
Source: World Bank and Financial System’s Supervision Authority (ASFI)Elaborated by: Ministry of Economy and Public Finance
Selected Countries: Non-Performing Loans (NPL) Rate(In percentage)
IV. Macroeconomic Results – Bolivia is the country with the lowest non-performing loan rate
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201446
14 137 6 5 5 6 6 7
1016
23
36
46 47 56
64
7277 78
3 3 3 4 4 3 3 3 2 4 815
2035
40
58
71
81
89 92
0
10
20
30
40
50
60
70
80
90
1001
995
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
Per
cen
t
Deposits
Credits
DOLLARIZED ECONOMY DE-DOLLARIZATION
Source: Financial System Supervisory Authority (ASFI)Elaborated by: Ministry of Economy and Public Finance
Bolivia: De-Dollarization of Deposits and Credits, 1995-July 2014(In percentage)
IV. Macroeconomic Results – De-Dollarization contributes to solidity the financial system
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201447
CONTENT
I. General facts of Bolivia
II. Economic Social Comunitarian Productive Model
III. Empirical evidence on the Economic Social Comunitarian Productive Model’s foundations
IV. Macroeconomic Results
VI. New Bolivia’s international image
V. Social Results
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201448
7.27.5
8.58.7 8.7
8.1 8.0
7.7
4.4
4.9
3.8
3.23.2
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.019
99
2000
2001
2002
2003
2005
2006
2007
2008
2009
2011
2012
(p)
2013
(p)
(p) PreliminarySource: National Statistics Institute (INE)Elaborated by: Ministry of Economy and Public Finance.
Bolivia: Urban open unemployment rate 1999 – 2013(p)
(In percentage)
V. Social Results – Unemployment rate reduction
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201449
Latin America: Unemployment rate(In percentage)
(p) PreliminarySource: (*) National Statistics Institute (INE); Economic Commission for Latin America and the Caribbean (ECLAC)Elaborated by: Ministry of Economy and Public Finance.
2005 2013(p)
V. Social Results – The lowest unemployment rate
14.3
12.4
12.2
11.6
9.8
9.6
9.2
8.5
8.1
7.6
4.7
0.0 5.0 10.0 15.0 20.0
Colombia
Venezuela
Uruguay
Argentina
Brazil
Peru
Chile
Ecuador
Bolivia
Paraguay
Mexico
10.6
8.1
7.8
7.1
6.7
5.9
5.9
5.7
5.4
4.7
3.2
0.0 5.0 10.0 15.0
Colombia
Paraguay
Venezuela
Argentina
Uruguay
Peru
Chile
Mexico
Brazil
Ecuador
Bolivia(*)
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201450
40.7
45.2
38.8
39.5
34.5
38.2
37.7
37.7
30.1
26.1
20.9
21.6
18.8
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
1999
2000
2001
2002
2003
-20
04
2005
2006
2007
2008
2009
2011
2012
(p)
2013
(p)
(p) PreliminarySource: National Statistics Institute (INE)Elaborated by: Ministry of Economy and Public Finance.
Bolivia: Extreme poverty, 1999 – 2013(p)(In percentage)
V. Social Results – Outstanding extreme poverty reduction
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201451
28.0
18.7
14.2
10.4
9.9
9.7
6.0
5.4
3.1
1.7
1.2
0.0 10.0 20.0 30.0
Paraguay(c)
Bolivia(c)
Mexico
Colombia
Ecuador
Venezuela
Peru
Brazil
Chile(c)
Argentina
Uruguay
34.7
32.1
20.2
19.0
17.4
15.9
11.6
10.6
9.1
4.1
3.2
0.0 10.0 20.0 30.0 40.0
Bolivia(a)
Paraguay
Colombia
Ecuador(a)
Peru
Venezuela
Mexico(a)
Brazil
Argentina
Uruguay
Chile(b)
(a) Datum for 2004, (b) Datum for 2006, (c) Datum for 2011Source: Economic Commission for Latin America and the Caribbean (ECLAC)Elaborated by: Ministry of Economy and Public Finance.
2005 2012
Latin America: Extreme poverty(In percentage)
V. Social Results – Bolivia is not anymore the poorest country in the region
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201452
(p) PreliminarySource: National Statistics Institute (INE)Elaborated by: Ministry of Economy and Public Finance.
Bolivia: Gini Index, 1999 - 2005(Values between 0 and 1)
V. Social Results – Greater equity on income distribution
0.58
0.63
0.59
0.61 0.60
0.59
0.56
0.53
0.50
0.46
0.47
0.45
0.47
0.49
0.51
0.53
0.55
0.57
0.59
0.61
0.63
0.65
1999 2000 2001 2002 2005 2006 2007 2008 2009 2011 2012(p)
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201453
0.57
0.55
0.54
0.53
0.52
0.52
0.50
0.49
0.47
0.47
0.45
0.44
0.41
0.38
0.30 0.40 0.50 0.60
Brazil
Paraguay(c)
Colombia
Panama(c )
Domincan Republic
Chile(c )
Costa Rica
Mexico
Bolivia(c )
Ecuador
Peru
El Salvador
Venezuela
Uruguay
0.61
0.60
0.57
0.55
0.53
0.53
0.53
0.53
0.52
0.50
0.49
0.49
0.47
0.46
0.30 0.40 0.50 0.60 0.70
Brazil
Bolivia
Domincan Republic
Colombia
Ecuador
Panama
Mexico
Paraguay
Chile(a)
Peru(d)
El Salvador(b)
Venezuela
Costa Rica
Uruguay(d)
(a) Datum for 2006(b) Datum for 2004(c) Datum for 2011(d) Datum for 2007Source: Economic Commission for Latin America and the Caribbean (ECLAC)Elaborated by: Ministry of Economy and Public Finance.
2005 2012
Latin America: Gini Index(Values between 0 and 1)
V. Social Results – Sixth country with better income distribution
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201454
(p) PreliminarySource: Unit Analysis of Social and Economic Policy (UDAPE) information from Household Surveys (EH) National Statistics Institute (INE)Elaborated by: Ministry of Economy and Public Finance.
113
28
79
128
35
157
46
18
89
0
20
40
60
80
100
120
140
160
180
National Urban Rural
199620052012(p)
Bolivia: Income ratio between the richest 10% and the poorest 10%, 1996-2012
(Frequency)
V. Social Results – Reduction of the gap between rich and poor
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201455
CONTENT
I. General facts of Bolivia
II. Economic Social Comunitarian Productive Model
III. Empirical evidence on the Economic Social Comunitarian Productive Model’s foundations
IV. Macroeconomic Results
VI. New Bolivia’s international image
V. Social Results
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201456
Source: Fitch Rating, Moody’s and Standard & Poor’sElaborated by: Ministry of Economy and Public Finance
Standard & Poor’s Justification: Sustained economic growth Permanent fiscal and current
account surplus Decrease of public debt Creditor international investment
position Record level of international
reserves Increasing economic stability
Fitch Ratings Moody’s
Oct20,2003 May6,2010 May19,2011 Aug22,2011 May18,2012 May15,2014
B-
B
B+
B+
BB-
negative
positive
stable
positive
stable BB
stable
Apr16,2003 Sep28,2009 Dec2,2010 Dec12,2011 Jun8,2012
B3
B2
B1
B1
Ba3
stable
positive
stable
Historic: Standard & Poor's grants a rating "BB" to Bolivia
VI. New Bolivia’s international image
Mar17,2004 Sep8,2009 Oct5,2010 Oct18,2011 Oct2,2012 Aug12,2014
B-
B
BB-
stable stable
positive
B
B+ B+
BB-
stable
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201457
3.36
3.39
3.59
3.71
3.83
3.95
4.07
4.08
4.09
4.84
2 3 4 5
Paraguay
Bolivia
Ecuador
Venezuela
Peru
Uruguay
Colombia
Brazil
Argentina
Chile
Source: World Economic Forum Elaborated by: Ministry of Economy and Public Finance
2005 2013
3.35
3.61
3.76
3.84
4.05
4.18
4.19
4.25
4.33
4.61
2 3 4 5
Venezuela
Paraguay
Argentina
Bolivia
Uruguay
Ecuador
Colombia
Peru
Brazil
Chile
South America: Global Competitiveness Index, 2005 and 2013(Score 1 - 7)
VI. New Bolivia’s international image
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201458
2005 2013
Source: World Economic Forum Elaborated by: Ministry of Economy and Public Finance
3.8
3.9
4.0
4.5
4.5
4.5
4.7
4.7
5.2
5.8
0.0 2.0 4.0 6.0
Uruguay
Bolivia
Brazil
Paraguay
Peru
Colombia
Argentina
Venezuela
Ecuador
Chile
3.1
4.1
4.5
4.6
4.9
5.2
5.6
5.7
5.9
6.0
0.0 2.0 4.0 6.0 8.0
Venezuela
Argentina
Uruguay
Brazil
Paraguay
Ecuador
Colombia
Bolivia
Peru
Chile
South America: Global Competitiveness Index, Category: Macroeconomic environment, 2005 and 2013
(Score 1 - 7)
VI. New Bolivia’s international image
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201459
2005(1) Apr-2014 Jul-2014
(1) October 2005 Source: Getulio Vargas Foundation, Economic Survey of Latin America - November 2007 and the Economic Survey of Latin America May and August 2014 Elaborated by: Ministry of Economy and Public Finance
92
92
100
100
108
110
116
130
136
136
140
50 100 150
Mexico
Ecuador
Bolivia
Paraguay
Colombia
Latin America
Argentina
Brazil
Perú
Chile
Uruguay
92
92
100
100
108
110
116
130
136
136
140
50 100 150
Argentina
Brazil
Chile
Latin America
Mexico
Ecuador
Uruguay
Paraguay
Colombia
Peru
Bolivia
55
57
73
84
89
102
104
105
112
113
131
50 100 150
Brazil
Argentina
Ecuador
Latin América
Chile
Mexico
Uruguay
Paraguay
Peru
Bolivia
Colombia
Latin America: The Economic Climate Index (In points)
VI. New Bolivia’s international image
Luis A. Arce Catacora – Minister of Economy and Public Finance Harvard University – September 201460
Thanks…