Description:
Bolivia's trade liberalization,
launched in the mid-1980s, has resulted in a relatively open
trade regime; but the results have been mixed.
Bolivia's export to Gross Domestic Product (GDP) ratio
and export entrepreneurship index rating are among the
highest in the Latin American and Caribbean (LAC) region and
the country has achieved great success in making soya the
major export crop in less than 10 years. At the same time,
the country's share in world trade has stagnated and
exports are increasingly dominated by gas and minerals.
Reinvigorating the nontraditional export sector is important
for the government of Bolivia as it implements its national
development plan. As a resource-rich country, the Bolivian
government's emphasis on export diversification is
well-placed but the optimal nontraditional export strategy
should build on successes in the traditional sector. This
study investigates: (a) the role trade should play in
Bolivia's development strategy considering the
country's natural resource endowment; (b) the lessons
of Bolivia's integration to the world economy; (c) the
linkages between Bolivia's past trade and economy and a
forward-looking analysis of the impact of different
scenarios on growth, employment, trade flows, and poverty;
(d) constraints to higher export competitiveness and
weaknesses related to transport and logistics; and (e) the
characteristics of exporting firms and the constraints
affecting them. The main findings of the analysis are that
preferential access to world markets is necessary but not
sufficient for success in nontraditional exports; rather,
success depends largely on increasing the competitiveness of
exporting firms. Second, a neutral incentive regime is
essential to the growth of nontraditional exports. Third,
efficient backbone services are vital for reducing
exporters' costs. Finally, the government should be
proactive in addressing institutional impediments to
cross-border trade. The study presents prioritized policy
implications of the analysis related to: (i) trade policy
and preferential access to markets; (ii) the incentives
regime; (iii) backbone services; (iv) increasing the
effectiveness of institutions to promote cross-border trade;
and (v) setting the foundations for exports diversification.