Human capital and industrialization in Bolivia

Abstract

There is wide academic consensus on institutional design being the key inhibitor of the Bolivian industrialization process during Evo Morales´s time in office. However, the effects of investment in human capital in the industrialization process has not been explored to the same degree. This is surprising since the country exhibited an outstanding performance in the improvement of human capital during this period. To explain this, we propose a new metric of human capital (industrial human capital) that sheds light on the failure of human capital to assist the Bolivian industrial effort. The results show that Bolivia made significant progress in promoting “generic human capital”, as in the case of other Latin-American and OECD countries, but its performance was radically different in terms of “industrial human capital”, with its main indicators stagnant or in decline. Instead of trying to reinterpret the explanation of Bolivia's industrial policy failure, we suggest that this inability to deploy successful industrial human capital was part and parcel of industrial institutional design failures.