Term Paper: Economic Dependency Neo-Liberal Path to Capitalism

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Economic Dependency: Neo-Liberal Path to Capitalism

Bolivia is located in Central South America, to the South West of Brazil. (Bolivia, Geography) Bolivia will always continue to remain in a place where it is dependent on cocoa, on Washington, and under severe economic pressure from all sources, including the very shape of its political and its economic institutions. Even its new liberal model has come under pressure, and it is generally believed that this model would serve the purpose of a testing ground for the way in which it would cope with the ongoing problems of not only social but also political exclusion. Al Gore has categorically stated that Bolivia would be a perfect example of improvement and also that the 'entire world is marching on the Bolivian road', but the reality is that Bolivia is one of the poorest country in entire South America, and is faced with the very real problems of economic dependence, impoverishment and economic underdevelopment. Sanchez de Lozada remains loyal and faithful to Washington, but the fact is that this could in fact prove to be his undoing, as more and more Bolivians are coming to the realization that the United States of America has become an impediment to the betterment of their futures. (Nicholls, 2003)

Why is it happening to Bolivia and what is the political and economic background of Bolivia? Located in South America, near the Andes, this region has had a long history. From time immemorial, political strife and instability have been dominating Bolivia, and although independence was proclaimed in the year 1809, this did not bring any sort of stability to the region. Coups, short-lived constitutions and internal strife have been dominating this country for a long time, and when the War of the Pacific took place during the years from 1879 to 1883, it was very much evident that Bolivia was indeed a weak country, because of the fact that it was during this War that it lost its seacoast and also its extremely nitrate rich fields to Chile. However, during the 1800's, Bolivia was granted a sort of reprieve from poverty when the price of silver all over the world happened to go up. The same phenomenon of economic stability continued into the early part of the twentieth century when silver was replaced by tin as Bolivia's most important metal, and when the prices happened to go about, Bolivia enjoyed its benefits. (Background Note: Bolivia: Bureau of Western Hemisphere Affairs)

However, the governmental structure that ruled this country was so very unstable that one evidenced a succession of economic and socially elite governments followed by governments that encouraged the 'laissez-faire' attitude. All through this, the living conditions of the indigenous people of Bolivia were miserable and deplorable, and one example of this is the fact that people were forced to work in mines under extremely primitive conditions that would not be tolerated elsewhere in the developed world. In addition, these people were forced to work in a feudal status on the various estates all over Bolivia, and they did not any type of access to good education, to economic opportunities, and also to political involvement and participation. The Chaco War that took place in the years from 1932 to 1935 in which Paraguay managed to defeat Bolivia proved to a turning point for Bolivia because of the huge loss of life ad property that occurred as a result of the War. The traditional ruling class was completely discredited, and the general public became more politically aware.

However, nothing much could come out of this type of awareness, and soon Bolivia became convulsed with the trend of emerging politics in the region. From the National Revolutionary Movement that emerged at that time, to the succession of several weak governments that were overthrown one after the other, creating great unrest and weakening the very political fabric of the country, Bolivia became very weak and susceptible to external forces of domination. In 1981, when Garcia Meza was forced out of office, and Herman Siles Zuazo became the President, to when he was overthrown and taken over by General Banzer in 1985, to the takeover by Paz Estenssoro, Bolivia was being thrown into one crisis, both economic and political, one after the other. This was also the time, during the 1980's when economic exports and imports had been declining for several years previously. Therefore, when Paz Estenssoro took over Bolivia, he was faced with a country that was in the grip of a severe economic dependence and crisis. (Background Note: Bolivia: Bureau of Western Hemisphere Affairs)

Hyperinflation had reached a point where the figures revealed that it was an astounding 24,000%. In addition, there was widespread social unrest, and an uncontrollable number of strikes, and also heavily unchecked drug trafficking everywhere in Bolivia. However, in the four years of Paz Estenssoro's rule, Bolivia managed to achieve a modicum of economic and political stability, and he actually managed to keep the military out of politics, and also managed to force the existing political parties to commit themselves to the cause and principles of democracy. The point is that success does not come cheaply, and when the government managed to achieve all this, it also had to lay off more than 20,000 miners, and this led to tremendous amounts of social dislocation and maladjustments. In 1989, Paz Zamora took over the rule from his predecessor, and he made attempts to continue the economic reforms that had been initiated by Paz Estenssoro. He also put his foot down on domestic terrorism and on drug and narcotics trafficking activities.

When Sanchez de Lozada took over in the year 1993, he followed a policy of offering a certain amount of monetary compensation for the voluntary eradication of illegal coca in certain regions in Bolivia. In 1997, Banzer took over, and he too continued the policies of free markets and of several privatization policies and Bolivia continued to bloom under his governance. However, his attempts to eradicate illegal farming of coca plants within his territories ended in the planters incurring huge losses, and when Gonzalo Sanchez de Lozada in 2001 took over, he found that Bolivia was not economically stable nor was it independent. The economic recession that had affected Bolivia in the previous four years, and the extremely tight fiscal policies and the situation that had been caused by this, all culminated in a revolt that almost toppled over the existing government, and this resulted in the changing of the president, and the present ruler is Mesa. (Background Note: Bolivia: Bureau of Western Hemisphere Affairs) These are the figures that reveal the economic condition of Bolivia at the present time: its GDP is 8.0 Billion, its annual growth rate is 4.1%, its per capita income is $1,100, and its most important natural resources are in mining and in hydrocarbons. (Background Notes, Bolivia: U.S. Department of State)

The truth is that Bolivia was made dependent on the U.S.A. For its economic stability and this is what has made the country so very economically dependent in all its actions. For example, during the year 1956, the relations between the U.S. And Bolivia had reached a crossroad, and it came to be understood that the U.S. aid for Bolivia has actually grown from a sort of stopgap measure that would eventually prove that Washington could in fact promote economic stability in a poor country, and also that inter-American economic relationships would make the life of the average Bolivian better in some small ways. (Responding to nationalism: The Bolivian Movimiento Nacionalista evolucionaria and the United States


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