Sociopolitical Conflict and Economic Performance in Bolivia

Abstract

Abstract This chapter discusses the effect of social conflict on economic performance in Bolivia. It first describes the landscape of social and political conflicts in Bolivia, the main organizations and actors, and how these have evolved in the past few decades. The chapter then examines how appropriative conflict, governance, and economic performance interact, and argues that conflict in Bolivia affects economic performance in a number of distinct ways. First, the different types of conflict have direct economic costs that take away resources from production, consumption, and investment. Second, conflict changes the incentives that would normally be expected in a frictionless world of markets so that production, investment, and innovation are distorted in ways that significantly impinge on economic performance. Third, conflict and the levels of resultant economic activity affect investments in "institutions," "governance," or "property rights," which in turn affect future levels of conflict and economic performance.