Tracing the reversal of fortune in the Americas: Bolivian GDP per capita since the mid-nineteenth century

Abstract

In the centuries before the Spanish conquest, the Bolivian space was among the most highly urbanised and complex societies in the Americas. In contrast, in the early 21 st century Bolivia is one of the poorest economies on the continent. According to Acemoglu, Johnson and Robinson (2002), this disparity between precolonial opulence and current poverty would make Bolivia a perfect example of "reversal of fortune" (RF). This hypothesis, however, has been criticised for oversimplifying long-term development processes by "compressing" history (Austin, 2008). In the case of Bolivia, a comprehensive description and explanation of the RF process would require a global approach to the entire postcolonial period, which has been prevented so far by the lack of quantitative information for the period before 1950. This paper aims to fill that gap by providing new income per capita estimates for Bolivia in 1890-1950 and a point guesstimate for the mid-nineteenth century. Our figures indicate that divergence has not been a persistent feature of Bolivian economic history. Instead, it was concentrated in the 19 th century and the second half of the 20 th century, and it was actually during the latter that the country joined the ranks of the poorest economies in Latin America. By contrast, during the first half of the 20 th century, the country converged with both the industrialised and the richest Latin American economies. The Bolivian postcolonial era cannot therefore be described as one of sustained divergence. Instead, the Bolivian RF was largely the combined result of post-independence stagnation and the catastrophic crises of the late 20 th century.

Natural Resources Curse in the Long Run? Bolivia, Chile and Peru in the Nordic Countries’ Mirror

“…Whereas this was obtained in 1825, economic dynamism and modernization recovered slowly in the late 1850s, i.e., decades later. Moreover, silver exports regained pre-independence levels just in the 1870s, which according to Herranz-Loncán and Peres-Cajías' estimates were not enough to pull an economy that was concentrated in agrarian activities (around 70% of total GDP) [30,37,38]. During the early 1890s, the drop in the international price of silver affected Bolivian exports and, in turn, its composition towards tin and rubber; thus, the rapid expansion of tin exports from 1904 compensated the 1890s' crisis [39,40].…”

“…Thus, in the following paragraphs, we present the main events that may allow us to understand the long-term trajectories of our economies under scrutiny. In the Bolivian case, it has been stated that its long-term economic performance was harmed both by poor growth during the 19th Century and the existence of three severe economic crisis during the 20th Century [30]. Regarding the first period, Bolivia was among those Latin American countries that suffered the most economic impact of independence [36].…”

“…For instance, in the first decade of 1900, the share of mining in GDP was the same in Sweden and Perú (around 7%; see Table 2). Sources: Bolivia, [30]. The rest of the countries from [31].…”

Natural Resources Curse in the long run? Bolivia, Chile and Peru in the Nordic countries’ mirror

“…In the Bolivian case, it has been stated that its long-term economic performance was harmed both by poor growth during the 19th century and the existence of three severe economic crisis during the 20th century. [32] Regarding the first period, Bolivia was among those Latin American countries that suffered the most the economic impact of independence. [35] Whereas this was obtained in 1825, economic dynamism and modernization recovered slowly in the late 1850s., i.e.…”

“…GDP per capita, selected years. Sources: Bolivia, [32]. Rest of the countries from [33] 1850 1870 1890 1913 1950 1970 2010 Bolivia 640 735 1006 1627 1759 4805 Chile 1011 1379 2174 3617 4399 6811 18075 Peru 725 933 471 916 2048 3439 9309 Finland 1035 1238 1501 2293 5208 14416 38074 Norway 1562 2095 3040 5250 7947 13333 72578 Sweden 1446 1807 2520 4825 8816 18133 42043 quantitative evidence for the pre-1950 period.…”