Bolivia is a country rich in natural resources. Much of its history has been affected by efforts to exploit this bounty. Similar patterns over the centuries have resulted in the wealth of the few dependent upon the labor provided by the large indigenous population. By linking their products to a world market, Bolivians have subjected their economic security to forces beyond their control. Capital and expertise, both necessary to turn rudimentary resources into more extensive economic gains, have been limited or gained from foreign sources. External influences continually shaped domestic factors of production and development. In recent decades, commodities such as water, coca and natural gas, have become highly politicized and resulting controversies extended well beyond basic market forces.


The most significant aspect of Bolivia's geography is its topographic variation (Figure 22a). The country has three distinct regions: the Andes Mountains and arid highlands in the west, semi-tropical valleys in the middle, and tropical lowlands in the east. The Altiplano is a 50 thousand square mile plateau located between two major Andean mountain ranges (Figure 21). Forty percent of Bolivia's population resides in this area 14,000 feet above sea level. The Altiplano is more arid in the south but less so in the north near Lake Titicaca. East of these two mountain ranges, the area known as Yungas, comprises the semi-tropical region of the country as the rivers drain into the Amazon basin (Figure 20). Forest covers approximately half the country.

Extreme terrain and elevation changes affect ease of internal movement within Bolivia. Of the 60,000 kilometers of roads, only 4,000 are paved. Absence of coordination is also a problem. There are 4,300 kilometers of rail lines, yet they are part of separate systems, only loosely coordinated. Another crucial feature of Bolivia's geography is that the country has been landlocked since 1879 when it lost its Pacific coast region to Chile (Figure 17). Despite 10,000 kilometers of navigable rivers, this absence of access to the ocean has affected economic development and resulted in various foreign policy concessions to overcome this limitation. Internal transportation has always been a problem in Bolivia. (1)

Only 15 percent of the country's land is arable. Of that, only 12 percent is used for farming and another 10 percent for grazing (Figure 22b). The result is a largely subsistence agricultural economy for the rural population. Higher elevations result in a colder and drier climate as well as poor soil. The indigenous population had to adapt to limited oxygen supplies at these high altitudes. They domesticated plants and animals who could adapt to this environment. The lowlands were more conducive to agricultural development yet were largely inaccessible until the modern era of transportation (Figure 19). Other problems in the lowlands include frequent flooding and landslides.

Before the Europeans arrived in the 1520s, the indigenous population integrated their diverse resources into a coordinated economic environment. Bolivians used llamas and alpacas as both beasts of burden and sources of wool because they could survive at high altitudes. Relying on intensive root crop rotation agriculture, the Altiplano Indians were able to produce sufficient food and clothes for their own use as well as surplus to trade for fish, fruit, maize and coca which could not be produced in the highlands. Exchange of products from sharply different ecological zones was a common feature of pre-Columbian Bolivia.

The Europeans introduced new crops and learned agricultural techniques from the native population. They also brought horses and sheep which altered the life of the indigenous population.

(1) Library of Congress Website: A Country Study: Bolivia


The presence of metal resources has shaped Bolivian history for the last 500 years (Figure 14). Whether it was gold and silver in the years of Spanish rule or tin during the nineteenth and twentieth centuries, these commodities have deeply affected the course of the nation's path. One question remains remarkably persistent: How to get the metal out of the ground and to the market. Centuries of relying on foreign sources for this necessary investment has limited the control Bolivian people have had over their destiny. Foreigners extracted these products without developing a manufacturing sector. Spanish colonists and twentieth century tin barons made decisions that are remarkably similar. Until the last fifty years, the government has existed to serve the interests of the mine owners and large land holders. The indigenous population has always provided the back breaking labor to bring forth this bounty in which they receive very little.

The main purpose of the Spanish conquest and colonization of Bolivia in the sixteenth century was to provide the mother country with gold and silver. Mining metal had existed in Bolivia for centuries before yet never to the extent that the Europeans would pursue. They were astounded with the riches they found, turning the first major mining center, Potosi (Figure 4) and (Figure 8) into the world's most populous city during the sixteenth century with 150,000 residents. The chief contribution of the indigenous population was to extract these metals from the mines. The Spanish Viceroy de Toledo resurrected the forced labor system, MITA, to guarantee sufficient workers. When this proved inadequate, the Spanish turned to Africa and created the transatlantic slave trade that eventually serviced all European powers in the Western Hemisphere (Figure 10).

By the eighteenth century, silver output from Bolivia declined. Although there were still ample supplies, surface mining now gave way to shaft mining, necessitating more advanced techniques that required large amounts of capital and expertise. The Spanish monarchs were unwilling to make these expenditures, and the silver mining industry of Bolivia declined although it did not disappear. After independence in the early nineteenth century, yields of tin, central to an industrializing Europe and United States, created a renaissance in the Bolivian mining sector. Initial capital investments came from a handful of wealthy Bolivians, but as time passed, increasing demands led to external financing. Likewise, the Bolivian tin manufacturers were dependent on world market prices. They also required governmental support in terms of infrastructure development and protective tariffs. The result was a shift in the government from wealthy landowners to mining barons and those who would govern on their behalf.

During periods of high market prices, the tin industry was an enormous benefit to the government and elite of Bolivia. When prices dropped, the Bolivian economy, lacking commodity diversification, suffered greatly. By 1930, in the wake of the world wide depression, mine owners began to ask for government assistance in regulating production amounts. This shift, from the government acting as the agent of the owners to exerting its own authority, empowered the state in new ways. Additionally, mine workers began to agitate for better conditions and participation in the political process. Finally, populist political leaders inspired by leftist rhetoric from China and the USSR, resulted in major changes in South American industries after the middle of the twentieth century. A variety of factors led to broad societal shifts in the economic and political landscape, but the concept of state ownership seemed to be a way to build popular control over and benefit from the nation's economic bounty.

The next fifty years would witness many political approaches, from state-run socialism to military dictatorship to democratic capitalism. At no point, however, did the mining industry, still a large part of Bolivia's economic profile, serve to enrich the wealth of all members of the country.


Coca has become a highly symbolic commodity in Bolivian life. Never grown by the large land owners, coca is a crop that indigenous farmers have been cultivating for hundreds of years. A natural stimulant, coca is used in tea, flour and as a chewing substance, like tobacco. Bolivians grow coca on small parcels of land in the Yungas region (Figure 20). Farmers plant on centuries' old terraces in the foothills of the Andes Mountains.

Unfortunately when the coca crop leaves Bolivia, it is often turned into cocaine. There has been a strong effort to limit the domestic growth and sale of coca. Part of the terms for receiving economic assistance in the 1980s from the World Bank and the International Money Fund was curtailing coca cultivation, a condition with which the Bolivian government complied. This insistence on reducing coca production was part of the larger United States' annual billion dollar effort to end Andean cocaine production and sales.

By 2005, the amount of acres under coca cultivation had been cut in half. This reduction represents more than an economic choice. Being a coca farmer was a way of life for hundreds of thousands of indigenous Bolivians and curtailing its growth markedly affected their lives. They have fought back, using the increasingly popular venue of social activism to affect economics and politics in their country. Coca farmers staged protests, blocked roads, and battled security forces, eventually weakening the central administration. Indeed the current president, Evo Morales, began his political career organizing coca farmers. Morales, a coca farmer himself, was the first indigenous Bolivian to become the country's chief executive.

One of his campaign pledges was to decriminalize coca production. His decisive victory in December 2005, with 53% of the vote in Bolivia's parliamentary system, has given him a great deal of power within his country. His combative stance on coca is only part of his defiance towards the United States and his effort to reclaim control of Bolivian wealth for all Bolivians. He is careful to reassure the global community that he is not advocating drugs and makes the distinction between coca cultivation (which he supports) and drug trafficking (which he does not). At the same time, he asserts that US interests will not be pursued at the expense of the values and livelihood of Bolivia's indigenous population.


Bolivia is no longer in the era of the Incas or the Conquistadors or even the mining barons. Its people will not accept another round of exporting raw material that benefits the elite only. At the same time, Bolivia's newly elected government appreciates that foreign investment and expertise are important contributions to the development of the recent discoveries of natural gas in Bolivia. In the 1990s, Brazilian companies took a leading role in developing this industry in Bolivia.

Most of the natural gas is located in the eastern portion of country (Figure 24) whose residents are increasingly agitating for more autonomy from the central government. Many in western Bolivia note the irony that these same individuals were not calling for separation when the nation's wealth came from tin mines in the west. Newly elected President Morales has taken strong steps to guarantee that all Bolivians gain wealth from the natural gas resource. About six months into his administration, in May 2006, he took steps to nationalize the natural gas industry. These actions did not include whole scale confiscation. In the 1950s, when the Bolivian government assumed complete control over the tin and petroleum industries, these actions did not reduce poverty for the majority of Bolivians. Nor did the government know how to run these industries. Morales hoped to gain control of the natural gas industry without losing the expertise of the foreign companies. He gave these companies 180 days to propose revenue sharing plans that would allow them and their experts to stay. The current arrangement is that 50-80% of the profits would be given to Bolivia's state owned energy company.

This move reflects far more than just economic gain. It speaks to a new and much more comprehensive concept of Bolivian nationalism. While calls for national unity have been invoked in the past, they have been abandoned quickly once mass support was no longer necessary. As the country's first indigenous president, Morales hopes actions such as profit-sharing with foreign companies will promote pride as well as riches to benefit the poor of his country. One component of this new nationalism is a lessening of dependence on former allies, particularly the United States. In general, the US has seen its influence in Latin America wane, in part because of its own policies and in part because of the rise of Hugo Chavez in Venezuela who promotes an aggressive anti-American stance (Figure 26). Chavez provides Bolivia with much more than rhetoric. He uses his country's vast oil wealth to support his allies.


Water may seem a strange commodity to identify, but in a country like Bolivia, access to this resource has become a highly politicized issue. Things we take for granted in the industrialized world, such as access to clean, safe, affordable water, is not guaranteed to Bolivians. At its most basic, the controversy raises questions about what rights people have to natural resources, whether it is acceptable to subject them to market forces simply because a profit can be made.

Water, in a world with increasing shortages, highlights these concerns. More than a billion people world wide have no access to clean water and 3 billion live without basic sanitation. For many, traditional water sources have been polluted, destroyed or abandoned. In some parts of Bolivia, residents have to travel many miles to get clean water or resort to using polluted sources. In the 1990s, international corporations began to see the value in privatizing water, promoting the notion that it would benefit the local population to bring market discipline and efficiency to this commodity.

In 2000 a subsidiary of the Bechtel Corporation tried to privatize water in various parts of the Altiplano, the 50 thousand square mile plateau between two major Andean mountain ranges and home to many Bolivians (Figure 25) . After securing a government contract in which there were no other bidders, the company was awarded a 40 year concession for two and half billion dollars. The result was disasterous as the company considered little about the reality of life in the area, disrupted social networks, and failed to provide a usable commodity for the people living in this region. Prices, even to connect to the system, were far too much for most local residents to pay. Farmers could not get the water they needed to irrigate their crops, and children became ill from drinking polluted water drawn from standing pools when their parents could not afford the company's water. Local leaders turned the discontent into an enormous popular protest. The army failed to protect the Bechtel workers and they eventually left. The water in the area is now controlled by a consortium of local owners and managers.

Water privatization failed in most parts of Latin America although El Alto, a city of 750,000 people, does have its water supplied by private companies. Approximately 25% of El Alto's residents do not have access to clean water.

  1. Are the coca growers responsible for what happens to their crop after they sell it?
  2. Should commodities such as water be privatized?
  3. Is it right for the Bolivian government to take over private companies?
  4. How is the sale of commodities much more than an economic issue?
  5. How is Bolivia both a rich and a poor country?
  • Finnegan, William. "Leasing the Rain." The New Yorker. April 8, 2002.
  • Forero, Juan. "Bolivia's Knot: No to Cocaine, But Yes to Coca." The New York Times. February 12, 2006.
  • Klein, Herbert S. A Concise History of Bolivia. Cambridge: Cambridge University Press, 2006.
  • Kohl, Benjamin. Impasse In Bolivia. London: Zed Books, 2006.
  • Library of Congress Website: A Country Study: Bolivia
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