Effects of Globalization in Bolivia in the Last Five Years - PowerPoint Presentation Example

?Effects of Globalization in Bolivia in the Last Five Years: This country is d after their famous independence fighter Simon Bolivar. Bolivia left the Spanish rule in 1825 and it was followed by a series of military campaigns till the democratic system was established in 1982 and the democratic governments had to face the problems of poverty, social instability as well as production of different narcotics in the country. In the elections of December 2005, Evo Morales became the president of the country by the greatest margin since the establishment of democracy in 1982. His socialist policies were considered to be the key in his success. After his huge success, he started working on the empowerment of the poor but some of his policies have given rise to racial clashes in the country between the natives and non natives of the country. In the 2009 elections, he again came in to power by winning the election with a huge margin and now making attempts to change the system of his country. Figure 1: Map of Bolivia Source: Central Intelligence Agency. The World Fact Book, 2011 Bolivian Economy: Bolivia is among the poorest and the most undeveloped country in the Latin American region. There was a devastating economic crisis in Bolivia in the early 80s but then the economic reforms were made which improved the economy as well as reduced the poverty in the country. In the time period between 2003- 2005, there was political disturbance in the country along with racial clashes mainly on the issue of export of natural gas to northern hemisphere region. In 2005, newly elected government passed the hydrocarbon law according to which the royalties were raised significantly resulting in the withdrawal of all the local companies from the sector and foreign companies started to operate in the country. In 2008 due to higher rates of oil and gas, the surplus was significantly higher but in the later years, the economy started to decline due to following factors; i. Global Recession. ii. Decreased prices of oil and gas worldwide. iii. Poor infrastructure of the country. iv. Economic sanctions imposed by USA on Bolivia. a. GDP: Figure 2: GDP from 2000-2009 Source: Index Mundi, 2008. b. Exports and Imports: The main exports of the country include natural gas which constitutes the main financial reserve of the country and apart from this; the other exports include soybeans, crude petroleum, zinc ore and tin. Major countries which are involved in importing these items from Bolivia are Brazil which constitutes the largest export partner of Bolivia followed by USA, Japan, Columbia, South Korea and Peru. Main imports of the country include petroleum products, paper and plastics, aircrafts and their parts, ready to serve foods, automobiles and insecticides. The main partners in imports are Brazil, Argentina, USA, Chile and Peru. Figure 3: Exports of Bolivia Source: www.amchambolivia.com Figure 4: Imports of Bolivia Source: Index Mundi, 2008. c. Investment Opportunities: Direct Foreign Investment (DFI) is the main contributor to the growth in the private investment sector in the country. It has grown from 169 million US$ to about 1,000 million US$ in just seven years from 1992 to 1999. It represents about 10% of the GDP. The rapid increase in DFI in these years was basically due to process of privatization which was completed in 1999 and afterwards the DFI started to fall. In addition to this, the economic conditions got better in the neighboring countries and as a result, the DFI fell further in the years after 1999. The government from 2005 is working to have good economic conditions which support the interests of foreign investors. As a result of this commitment, irrespective of the social and political unrest in the country, GDP has grown to about 4% in last seven quarters. The overall deficit had narrowed and there was a surplus of 4.2% in 2006, the main reason for this improvement is the government policy about the hydrocarbon sector increasing its exports. Other factors include better revenue system as well as reform in the government sector to cutoff their non developmental expenditures. Due to the political stability after 2005, the growth in other sectors is also seen like non- traditional exports which were quite low in the time period of 1996-2005 due to political instability. d. Class Difference: The Bolivian population is mainly comprised of a small proportion of rich families which are usually of an European descent, a small number of middle class families and the majority belongs to the lower socioeconomic status who mostly are the natives of this country and the president Morales basically aims on this population in his attempts to make the country prosperous by empowering this group of people and by minimizing the gap between the rich and the poor. External Influences: Foreign Countries: The Venezuela’s influence is on a constant increase on Bolivia and it is shown by the fact that its ambassador has direct links with the Bolivian president and he accompanies Morales in many of his foreign trips even and he is often involved in meeting with high ranked government officials of Bolivia. Venezuela is confronting US nowadays and Bolivia is one of its major allies in this plan along with Iran. Venezuela has supported Bolivia in many of the sectors like microfinance, strategic division as well as the oil sector. Venezuela has also supported Bolivia in the export of cocoa despite of the US opposition which resulted in a substantial increase in the reserve of Bolivia. The relations with America were never good since Morales came into power but they became the worst in 2008 when American ambassador was expelled from Bolivia on charges of causing civil unrest in the country and then the Americans did the same with the Bolivian counterpart. In the meantime, Bolivia tried to strengthen its ties with Russia who itself is watching allies in the American region The diplomatic relations were rebuilt in 2009 between USA and Bolivia but the international laws regarding cocoa are the main hurdle between the two countries. Corporate Sector in Bolivia: The major companies which contribute to the corporate sector in Bolivia are; I. Aguas de Tunari II. Aguas del Illimani III. BBPP, Cade IV. Cobee, Corani V. EGSA VI. Elfec VII. Empresa Petrolera Andina VIII. Entel, Monasterios IX. Osvaldo X. Public Institution XI. Sinchi Wayra ex-Comsu XII. TDE XIII. Telefonica Celular de Bolivia XIV. Transredes SA., Unitel Internal Influences: Politicians: Evo Morales and his allies are the main politically empowered group in the country and it is shown by the fact that Morales is selected by the people of his country twice with quite a huge margin. The policies of this political regime are appraised by the community and their aim to minimize the difference between the rich and the poor is quite popular in the country. Unemployment: The unemployment rate in Bolivia is around 6.6% and is ranked 61 in the world. Conclusion: As it is shown by the above given parameters that globalization has quite a positive effect on the economy as well as on the people of Bolivia. This is mainly because of the reason that the exports of Bolivia have significantly rise in the last five to six years due to the effects of globalization resulting in an increase in the financial reserves of the country and this resulted in a decrease in the rate of unemployment and also improves the standard and quality of living of Bolivian people. References: 1. BBC News, 2011. Bolivia Protests Challenge Evo Morales. [Online] Available at: [Accessed 2nd May 2011]. 2. BBC News, 2011. Brazil Joins Bolivia anti-drug fight. [Online] Available at: [Accessed 2nd May 2011]. 3. BBC Learning English, 2007. Bolivia proposes ban on the word ‘coca’. [Online] Available at: [Accessed 2nd May 2011]. 4. BBC Home. Broken News. Bolivia. [Online] Available at: [Accessed 2nd May 2011]. 5. Central Intelligence Agency, 2011. The World Fact book. South America. Bolivia. [Online] Available at: [Accessed 2nd May 2011]. 6. Countries of the World, 2011. Bolivia Economy 2011. [Online] Available at: [Accessed 2nd May 2011]. 7. Index Mundi, 2008. GDP- Per Capita (PPP) (US $). [Online] Available at: [Accessed 3rd May 2011]. 8. Exports FOB (Millions $ US). [Online] Available at: [Accessed 3rd May 2011]. 9. Index Mundi, 2008. Imports (Billion $). [Online] Available at: [Accessed 3rd May 2011]. 10. Bolivian- American Chamber of Commerce, Inc. Direct Foreign Investment in Bolivia. [Online] Available at: [Accessed 3rd May 2011]. 11. Document of the World Bank, 2006. Interim Strategy Note for the Republic of Bolivia. [Online] Available at: [Accessed 3rd May 2011]. 12. Latin America, 2011. Bolivia: Geography. [Online] Available at: [Accessed 3rd May 2011]. 13. The Telegraph, 2011. Bolivia Strengthens Relations with Russia after US Fall- Out. [Online] Available at: [Accessed 3rd May 2011]. 14. The New York Times, 2007. Venezuela Rivals U.S. in Aid to Bolivia. [Online] Available at: [Accessed 3rd May 2011]. 15. National Master, 2011. Labor Statistics> Unemployment Rate> Bolivia (Historical Data). [Online] Available at: [Accessed 3rd May 2011]. Read More