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Economy of Bolivia

The economy of Bolivia is the 95th largest economy in the world in nominal terms and the 87th economy in terms of purchasing power parity. It is classified by the World Bank to be a lower middle income country. With a Human Development Index of 0.675, it is ranked 108th (medium human development).

The Bolivian economy has had a historic pattern of a single-commodity focus. From silver to tin to coca, Bolivia has enjoyed only occasional periods of economic diversification. Political instability and difficult topography have constrained efforts to modernize the agricultural sector. Similarly, relatively low population growth coupled with low life expectancy and high incidence of disease has kept the labour supply in flux and prevented industries from flourishing. Rampant inflation and corruption also have thwarted development, but in recent years the fundamentals of its economy have showed unexpected improvement, leading major credit rating agencies to upgrade Bolivia's economic rating in 2010. The mining industry, especially the extraction of natural gas and zinc, currently dominates Bolivia's export economy.

Sectors

Agriculture and forestry

Agriculture and forestry gross domestic product (GDP) in 2003, down from 28 percent in 1986. Combined, these activities employ nearly 44 percent of Bolivia's workers. Most agricultural workers are engaged in subsistence farming—the dominant economic activity of the highlands region. Agricultural production in Bolivia is complicated by both the country's topography and climate.

Bolivia is the third largest producer of cocaine, estimated at 120 metric tons potential pure cocaine in 2007 and a transit country for Peruvian and Colombian cocaine destined for the U.S., Europe, Brazil, Argentina, Chile, and Paraguay. Since 2001, Bolivia's leading legal agricultural export has been soybeans. Additionally, cotton, coffee, and sugarcane have been viable exports for Bolivia. For domestic consumption, corn, wheat, and potatoes are the crops of choice of Bolivian farmers. Despite its vast forests, Bolivia has only a minor timber industry.

Mining

Mining continues to be vital to Bolivia's economy. Natural gas has supplanted tin and silver as the country's most valuable natural commodity. Gold and silver production has increased dramatically over the past decade. Annually, as of 2002 Bolivia extracted and exported more than 11,000 kilograms of gold and 461 tons of silver. Additionally, Bolivia has increased zinc production, extracting more than 100,000 tons each year. Other metals excavated include antimony, iron, and tungsten.

Lithium

According to the United States Geological Survey, Bolivia has 5.4 million tons of lithium, which can be used to make lithium batteries for hybrid and electric vehicles. This is the largest known concentration of lithium in any country, as Chile only has 3 million known tons of lithium and the United States has only 410,000 tons.

Industry and manufacturing

Annually, manufacturing has accounted for in between 14 and 15 percent of Bolivia's gross domestic product. The share of industry as a whole (including the mining industry) to the GDP increased from 30 percent in 2000 to 37,3 percent in 2010. Most industry is a small-scale, aimed at regional markets rather than national operations. Inadequate credit options and competition from the black market have kept Bolivia's manufacturing sector from developing fully. Leading manufactured goods in Bolivia include textiles, clothing, non-durable consumer goods, processed soya, refined metals, and refined petroleum.

Services

The services industry in Bolivia remains undeveloped. Inhabiting one of the poorest countries in South America, Bolivians have weak purchasing power. The retail sector suffers from weak demand and competition with a large black market of contraband goods. U.S. companies such as McDonald's and Domino's have pulled out of Bolivia in recent years.

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Economy Of Bolivia"

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