The ‘political poverty trap’: Bolivia 1999-2007

Abstract

We analyse the recent wave of political instability in Bolivia in the context of a ‘poverty trap’ model which suggests that elements in a country’s political system, as well as its economic structure, may be instrumental in perpetuating a state of poverty. In Bolivia the costs of adjustment in the recent phase have been very severe, with well over a hundred killed between 1999 and 2007 as a direct consequence of demonstrations against aspects of the globalisation and adjustment process, and an appearance of a return to a state of chronic political instability; other countries affected by the global crisis have suffered less severely. Is this because they used the available instruments of adjustment more effectively, or for other reasons? In particular, how does poverty impact fit into the story: would a ‘more effective’ pattern of adjustment have been more pro-poor?