Bolivia’s Same Old Revolution

Bolivia is at a defining moment in its history. It recently found a new source of wealth, natural gas, but may become yet another victim of the so-called “natural resource curse.” In their eagerness to embrace development policies that are proven failures, all of the candidates in the presidential election scheduled for December 18 appear unaware of this risk.

That risk is substantial. Ample evidence demonstrates that no country has ever been able to develop a strong and fair economy based on mineral or oil exports. Basing an economy on natural resources, the evidence shows, slows economic growth and expands poverty and inequalities.

It is not necessary to consider countries in Africa or the Middle East to understand the problem. Bolivia has enough experience of its own. The mountains of silver in Potosi and tin in Oruro are gone, with no traces of development or well-being left behind. Blaming the Spanish conquerors or the economic empires of the twentieth century cannot hide the fact that huge amounts of money financed corrupt governments, inefficient bureaucracies, big and useless “development” projects such as industrial plants or mineral mills, or a wide variety of subsidies to buy off powerful interest groups.

More than 50 trillion cubic meters of natural gas, and misleading expectations, are about to recreate this pattern of underdevelopment in Bolivia. Exports are yet to begin, but the threat of the resource curse is already present.