Industrial policy and structural change in Bolivia: resource curseor historical institutional failure?

Abstract

After fifteen years of state interventionism during the presidencies of EvoMorales in Bolivia, the data show that the country did not achieve thedesired structural changes. The literature offers two explanations for thisindustrialisation failure: first, the resource curse hypothesis, and second,a dysfunctional institutional framework. However, none of these analy-ses look at the wide variety of instruments used to apply industrial policyin order to reach deeper conclusions on the nature of industrial perfor-mance. In our analysis, we adopt a wider scope (financial, fiscal andtrade incentives) in order to explain the specific nature of the failure ofindustrial policy in Bolivia. Our results point to two causes of indus-trial failure. Firstly, the strategic sectors suffered from classic institutionalproblems (bureaucratic inefficiencies, politicisation, etc.) and secondly,the new manufacturing sectors showed a pattern of rentier behavioursassociated with the resource curse expenditure boom.