From Kevin Healy, Llamas, Weavings, and Organic Chocolate: Multicultural Grassroots Development in the Andes and Amazon of Bolivia. Notre Dame, IN: Notre Dame University Press, 2001

Models In addition to the problems associated with Western and neo-colonial ethno-centrism, indigenous development was held back by the macro-economic development models used widely throughout Latin America. In Bolivia, the economic development models adopted by the state shaped both the socio-economic constraints and opportunities for Bolivia's indigenous peoples during the second half of the twentieth century. The first model, state capitalism, began with the MNR and was carried forward by a succession of military regimes and a civilian coalition government in its final phase. The second model, neo-liberalism, has dominated Bolivian economic life under freely elected civilian governments since l985. Neo-liberalism is closely associated with globalization which refers to the free flow of goods and services within the world economy and the increasing the use of extensive information and communications technologies. Neo-liberalism's standard policies of stabilization and structural adjustment tend to reorient and liberalize the rules of the economy's operations to facilitate contemporary globalization processes. The two models offer starkly different approaches in terms of the relationship between the state and the market. In the former case, a pro-active state shapes the operations of the economy through strategic interventions while the latter model provides a hands-off approach where governments pull back, allowing market forces alone to determine the course of socio-economic development. In practice, these economic development models are not as black and white as these abstract definitions would suggest. The Bolivian case shows that state capitalism and neo-liberalism may have overlapping similarities along with their fundamental differences.

This chapter will examine Bolivia's economic development models in terms of their main characteristics and socio-economic and environmental consequences for different social groups, regions and country as a whole. It will trace the trail of the two evolving models within Bolivian national life by examining their different stages, cumulative social and economic effects and relationship with the global economy.

Although launched 33 years apart, the two models owe their origins to same political party(the MNR), the same political leader(Paz Estennsorro) and the same principal foreign government sponsor(the United States government). In l985, the MNR returned to power after many years and overthrew the very state-led model which it had instituted in l952, replacing it with the neo-liberal globalization strategy.

The Rise and Expansion of the State Capitalist Model

Bolivia's experience with the state capitalist model for economic development began with the national revolution of l952. The revolution's most dramatic expression of economic nationalism was the expropriation and nationalization of the country's private tin mines, representing 70% of export earnings. Bolivia was the world's second leading tin producer at at that time. The Bolivian state mining corporation(COMIBOL) soon was operating twenty-one mining companies, several spare parts factories, various electricity plants, farms, a railroad and other agencies(Hudson and Hanratty l989,) in extending its control over two-thirds of the diversified mining industry.

For the next three decades, the Bolivian state constructed a modern capitalist economy by enlarging its own central role to propel the country's economic growth onward and upward (Conaghan and Malloy;l994). During much of this period, the state monopolized key economic sectors of tin, petroleum, and natural gas, organized its own major enterprises, and subsidized the organization of others(1). It played an interventionist and protectionist role through price-setting, regulating the flow of exports and imports, allocating financial credit, redistributing private and public lands, and investing in infrastructure. The MNR utilized a government bank, the Corporacion Boliviano de Fomento(CBF) to stimulate diverse kinds of mostly agro-industrial production.

Two other important tenets of the Bohan-inspired MNR plan of state capitalism were economic diversification and import substitution. By l953, mineral products especially tin were generating 97% of the economy's total export earnings (Arrieta et al;l990). To pursue this twin strategy, Bolivia began bolstering the state petroleum company's(Yacimientos Petroliferos Fiscales Bolivianos YPFB) to reduce the oil import bill and increase potential sales in world export markets(2). The growth of oil production and subsequently natural gas over the next two decades enabled Bolivia to attain a more diversified export portfolio as hydrocarbons began sharing center stage in the economy with mineral exports.

The MNR's strategy of economic diversification/ import substitution also led to support the expansion of a private sector for spearheading modernization and economic growth in the eastern lowlands of Santa Cruz and the Beni (Arrieta et al;l990 Conaghan and Malloy; ). Import substitution was very much in vogue throughout Latin America in the l940's and l950's thanks to the ECLA School in Chile. The goal of import substitution was to enable Latin American countries to escape their traditional straightjacket of disadvantageous terms of trade as exporters of cheap primary goods and importers of expensive industrial products from the United States and other industrial nations. Under import substitution policies, many South American governments embarked upon an industrialization strategy to replace foreign manufactured goods with national production.

The MNR-Bolivian version of import substitution inspired by the Bohan Plan went beyond oil to target the elimination of agricultural imports such as cotton, meat, sugar and rice representing 25 % of the national import bill. Bohan's view of import substitution had a contradictory twist that Bolivia would be better-off spending its scarce foreign exchange earnings on importing U.S. agricultural machinery for producing food rather than on the food itself (Arrieta et al; l990).

Thus during the decade of the l950's,and with the helping hand of Uncle Sam, the MNR began the sizeable transfer of public resources to Santa Cruz to carry out this strategy. The effort gave rise to an important new road network for national integration which connected the isolated Santa Cruz to the rest of the country. An agro-industrial sector with rice and cotton mills, oil seed, meat-processing,and textile factories along with the country's first sugar refineries also mushroomed As described in the previous chapter, the Servicio Agricola Interamericano(SAI), supported numerous agricultural producers involved in this modernization quest. During the decade of the l960's, these agricultural policies attained for Bolivia national self-sufficiency in the production of the mentioned agricultural products.

Yet as previously discussed, these policy packages for Santa Cruz and the Beni came in an elitist wrapper. Many of the initial producers welcomed into these programs had avoided expropriation of their farms and ranches under the land reform's escape clause of a "empresas agropecuarias". This small power elite of commercial agricultural and ranching interests quickly gained disproportionate leverage over the state's agricultural policy-makers and political leaders. The state's social exclusion was equivalent to holding state dinners with places set for the elite producers of sugar cane, rice, cotton, and cattle along with a few sugar industrialists while representatives of the indigenous majority supplying most of the country's food were conspicuously absent(3). Their menus listed price and agricultural credit subsidies, infrastructural investments, tax breaks, protective tariffs, agricultural machinery, marketing programs, relation to the agricultural programs of the universities and political connections. The socially closed relationships were most striking when rice producers immediately lost a place at the table because their elite leadership switched to cotton production (Grupo de Ibanez l983 ). The consequences of this elite policy for a group such as the Andean quinoa growers could be seen in the declining national production of quinoa during the l960's and l970's.(Arrieta;l990, Dandler et al ).

The MNR's Modernization Foods

The public support for rice and sugar by the MNR and successor regimes was having an impact on consumption as well as production. In the decade of the l940's, the country consumed about 10,000 hectares worth of rice, half of which was imported (Dandler et al;l987). By the mid-l970's,rice production on Bolivian small farms had increased to 40,000 hectares and 60 medium and large rice mills were processing white rice for an ever growing national market(Arrieta el all;l991,228).(Dandler et al;l987,89). Rice production and consumption also advanced through state resettlement programs where rice became the first crop planted for assuring one's subsistence under the new tropical forest conditions. Because of these efforts and changes, the availability of rice in Bolivia increased from 6.4 kilos to 36.2 kilos per capita between l958 and l991(Prudencio. and Franqueville,l995,14).

The rapid growth of sugar cane production and refined white sugar followed a similar development path. In the early l950's, Santa Cruz was producing 600 hectares of sugar cane for sale in raw form or as brown sugar for mostly regional markets. Refined white sugar had yet to reach rural Bolivia(Dandler et al). Import substitution policies steadily increased cane production, reaching 52,000 ha. by l975 which was supplying an industry comprising 6 private and public sugar mills which in turn used advertising over radio and other means to induce rural consumption of white sugar.

The penetration of white rice and white sugar into the rural diet also resulted from increased modern truck transport over new the feeder roads to widely scattered villages for the first time. Ease of conservation and relatively low prices of these mass consumption goods were other advantages. Similar to the wheat products, there was also a Western cultural status of superior "urban foods" associated with these processed and packaged products. Several case studies of grassroots development in this volume show local organizations distributing these products to their members, an indication of their wide acceptance as "articulos de primera necesidad" essential for a modernizing and monetizing rural society of the l970's.

However, the MNR's white processed foods(including the wheat flour, bread and noodles described in chapter 2) of Bolivian modernization most likely exacerbated increased calorie and protein deficits in rural consumption between l952 and l970 as another blow to social development from import substitution (Morales;l984 ). The Centro de Estudios de la Realidad Economica y Social(CERES), a research center specializing national agricultural and food issues, connected the arrival of these foods with the erosion of traditional, place specific food diversity in the countryside for a double whammy impact on both consumption and production. Rural families filled their stomachs with white rice, refined white sugar and imported wheat products while reducing or abandoning other more nutritionally valuable food products of the Andean and Amazonian cuisine.(Dandler et al l987 ). The preference by peasant families to sell their livestock products(meat and milk) in order to purchase the white-processed foods needed for the 'modern" low income diet was another expression of this syndrome. Santa Cruz, the cradle of import substitution, predictably was the region with the country's worst nutritional rankings.

State capitalism's promotion of national self-sufficiency in beef also increased the status of red meat as a preferred rural modernization consumption item. From public school textbooks to community education programs to radio and television ads, the superiority of beef and pork were trumpeted while nutritionally sound red meat of the llama languished in the shadows of national consumption. The political and economic power of the eastern ranching establishment and enthusiastic support for beef consumption from U.S. aid agencies in the l950's and l960's contributed to the slow acceptance--via legalization-- of llama meat in altiplano cities until the mid-l990's.(see chapter 7).

The "Economic Miracle"

The state capitalist model moved along under mostly right-of-center military regimes during the l960's and l970's with ever increasing amounts of foreign aid support from the United States and the multi-lateral banks(4). The Bolivian economy was growing at 5.5% per annum during the l970's thanks to an international commodity price boom which tripled the value of its prime exports during l970-l974. The big ticket commodity items of Bolivia's hydro-carbons had climbed from 5.1 % to 31.6% of total exports.(Dunkerley l984 223). Simultaneously mining exports by the mid-l970's(despite almost a doubling of the price of tin) had dropped in percentage to 65% of national exports and down to 27% of government revenues. Favorable mineral prices enabled the private mine-owners to make important progress to build upon gains made during the l960's(5). New luxury high-rise apartment and office building construction and related job creation in the capitol were signs of this economic boom while loan monies poured in from private international banks overflowing with petro-dollars. The Santa Cruz region had gone from an economic backwater of isolated ranches, farms and indigenous communities to an economic powerhouse with a modern metropolis, densely populated new farm settlements, intricate road networks and oil, gas, ranching and export-oriented agro-business sectors.

These economic developments enabled the military leaders to multiply the number of state entities engaged in agricultural and other sectors of economic modernization. Bolivia with its state-owned airlines, railroads, bus stations, hotels, mines, agro-industrial factories, cement and energy companies was adding decentralized regional development corporations, agricultural marketing boards, and more agricultural institutes specializing in specific crops(World Bank;l984 Torrico;l982:258). In several cases, state entities were created to manage projects by the World Bank and the Inter-American Development Bank. During the l970's, this state sector had swelled to 50 enterprise and financial government institutions, 350 regional government agencies and 120 organs of the central government operating as part of the national project of "modern development"(Dandler et al;l987,159). Meanwhile the number of public employees increased from 60,000 to 150,000 and the Bolivian state had become the major investor in the national economy(Gamarra and Malloy;l988)

Earlier import substitution policies had also paved the way for the export of sugar, cotton and cattle(along with timber and coffee) which had increased to be 5.6% of national export earnings(Dunkerley l984;223 ). In step with the MNR's policies, the military regimes were "building on the best" in Santa Cruz to re-concentrate wealth and income among a small minority of producers and interlocking economic interest groups(6). The military leader most generous with the country's public resources to bolster agricultural exports was Colonel Hugo Banzer(l971-l978) who heaped large tracts of public lands and sizeable quantities of subsidized credit from the national agricultural development bank(BancoAgricola Boliviano) on his middle class political associates, cronies and fellow officers(7). While some producers were bona fide cattle ranchers and cane growers many others were urban professionals and businessmen interested in taking advantage of the high prices for earning short term profits. Cotton was the agricultural money-making king in Santa Cruz and Banzer's producers were increasing its production at the rate of 45% per annum between l970 and l976.

A third economic growth phenomenon breaking into this picture by the late l970's was the country's rapidly expanding illicit coca-cocaine economy. Bolivian peasant farmers in the tropical Chapare region supplied coca leaves to agro-industrial and other elites from Santa Cruz for processing into the first stages of cocaine processing for subsequent air transport to Colombian refineries. The popularity of cocaine as the recreational drug of choice in the United States by the late l970's provided market impetus for economic growth and impressive employment generation from the illicit coca-cocaine economy(Healy; l986)(8). In short, these national and international market forces and economic changes were coming together to shape a narrative about Bolivia's first "Economic Miracle" under the state capitalist model.

The Social Costs of State Capitalism

While the state capitalists had greatly increased rural schooling and related literacy levels (from 31% to 67% between l950 and l976(Klein l982;264)), there had been little attention paid to the quality of rural public schooling. One sign of the educational quality problem was high drop-out rate in elementary schools where 93% of rural schoolchildren had left before the seventh grade (Carter l971:145). Just about every other social indicator told an equally grim story about the plight of indigenous peoples under the state capitalist model. Social and economic inequality and rural poverty were so extreme that Bolivia remained in the everlasting company of Haiti and Honduras, as Latin America's most impoverished nations.

One of the most poignant demonstrations of the social contradictions contained within Bolivia's state capitalism was a 1974 peasant protest in the Cochabamba Valley. While prices for Bolivian commodities were skyrocketing on the world market, Colonel Banzer issued decrees that doubled prices of many basic consumer goods especially the white-processed food staples upon which the rural poor now depended without commensurate adjustments in Andean agricultural produce.(Asamblea Permanente;l974). This triggered roadblockades of 100 kilometers of a main highway by 20,000 peasant protesters. Their effort represented the first rural protest mounted by the indigenous majority to defy Banzers dictatorial rule and socially regressive economic policies(Asamblea Permanente,l974 Dunkerley;l984 ). Banzer sent the army equipped with tanks, helicopters and machine guns to break up this non-violent protest which led to the massacre of 70 protestors and wounding dozens of others. The tragic event became known in the annals of Bolivian grassroots peasant struggles as the "Masacre Del Valle". The tragedy became documented in a publication of the National Human Rights Assembly ghost-written by Xavier Albo, the prolific Jesuit anthropologist for dissemination through grassroots and union organizations opposed to the dictatorship.

Agricultural policies geared to secure cheap food for the cities (Dandler et al, l987), tended to lower agricultural prices for small farmers and when combined with rural population growth and environmental degradation further reduced productivity, agricultural diversity and incomes in minifundia farming communities(Painter; l995). In a society in which indigenous peasants supplied 70% of the nationally produced foodstuffs, it was a cruel paradox that were so few economic incentives, supports or culturally appropriate and effective programs to bolster their production, technologies and incomes(Dandler et al,l987). To survive under these precarious conditions, many indigenous peasant families sought off-farm sources of income and employment. Many joined a highland to lowland migrant stream as seasonal agricultural laborers earning low wages in Santa Cruz cutting sugar cane and picking cotton.

Economic Decline and Collapse of the State Capitalist Model

Yet by the late l970's, when the economic boom fizzled and Banzer abandoned power in response to a nation-wide hunger strike and a new United States human rights policy, lingering questions about the economic, environmental and social viability of military-led state capitalism resurfaced. Mismanagement, corruption and political clientelism were rife within the state bureacracies leading to a number of public scandals including extravagant white elephant projects. The state's agricultural development bank teetered on the brink of bankruptcy from uncollected loans from cotton producers and cattle ranchers(9). Oil production had dropped from the lack of exploration of new wells and the state tin mining industry was inefficient and unprofitable(Malloy and Gamarra l988). Greatly increased oil, natural gas and tin exports had been a function of higher prices rather than increased production as oil and tin declined while natural gas stagnated(Dunkerley l984 223 ). As mentioned in chapter 2, agricultural modernization is the eastern lowlands was plagued by wholesale environmental damage to forests, rivers, air, wildlife, and soil(World Bank, l993) and by negative health effects from the steady spread of agrochemical residues. Topping off this grim panorama, Banzer's free-wheeling borrowing from international banks had left an international debt soaking up 30% of the country's annual export earnings which could have been used for social investments.

After three aborted national elections and five military juntas blocked their path to power, the Unidad Democratica Popular(UDP), an elected coalition government, finally took office in l982. The majority electoral support for a left-of-center program provided Bolivia with a strong mandate to begin gearing the state model toward the needs of the vast working class majority(Lazarte and Pacheco l992). Yet the UDP's efforts were hampered by this legacy of mismanagement, mounting international debt, falling foreign tin prices and production. Finally, the UDP responded to demands of labor and peasant movements by issuing new bills to finance development programs, in a public policy blunder that triggered one of the worst hyperinflationary spirals of the 20^th century.

Inflation reached the absurd heights of 24,000% and the peso's devaluation represented a drop from 25 pesos to the dollar to 1,000,000 pesos to the dollar. One of the almost comical manifestations of this crumbling economy was having the country's third major import item as paper peso bills, printed in West Germany, Brazil and England. Bolivian salary earners stopped depositing their currency in the national banking system to convert pesos to dollars on the black market in an attempt to protect their money from eroding in value. In mid-l985, the value of the peso could be halved within several weeks time because of the runaway rate of currency devaluation.

An additional hardship from the hyperinflation was making synthetic medicines unaffordable to many citizens. During l983 and l984, their prices increased 5,000 to 6,000 per cent and one of the most important pharmaceutical firms saw its annual sales drop from $10 million to $1 million. These price rises caused many Bolivians to take renewed interest in herbal remedies for various maladies and even the Ministry of Health endorsed the use of native medicines for the first time.

The economic downturn could also be seen from closure of 8,000 small enterprises and 28 medium size bankruptcies announced by the Ministry of Commerce in l984. As a whole, the Bolivian economy had been registering negative annual growth rates between l980 and l984, while family incomes and per capita consumption had fallen by 28% and 30% respectively(Morales l984). Tin production had plunged to production levels of a decade earlier and received a lethal blow from the total collapse of its international price in l985.

As if the man-made disasters were not enough, Bolivia also suffered one of its worst droughts of the century during the l983-84 growing seasons in the Western highlands. The drought continued the downward fall in rural levels of living. On a national scale the availability of the staples of the Bolivian diet such as potatoes, corn and barley greatly declined. In many highland departments, a large part of the livestock population, especially cattle, sheep, llamas and alpacas died from lack of forage. Since Andean indigenous people often use a few head of cattle as a capital reserve fund for times of crisis, the massive loss of livestock pushed many poor Andean families to the edge of survival by wiping out this form of subsistence insurance.

Under the mentioned pressure from the CSTUCB, the UDP had produced a few albeit tenuous social gains such as greatly increased amounts of agricultural credit for the peasantry, the incorporation of the Santa Cruz cotton pickers and sugar cane cutters into the labor code, some pathbreaking community-based health programs in the poor urban neighborhoods, and the establishment of the government's first bilingual literacy program using native languages. Yet the unstable economic conditions disintegrated into chaos, ultimately compelling the UDP to make an early exit from office in l985(Lazarte and Pacheco l992). As the sinking state capitalist model hit bottom, it opened the way for a radically different market-led program aggressively promoted by international financial community. By the time the Berlin Wall fell in l989, Marx's ideas together with the political left, had already been buried by an Andean avalanche of devalued pesos.

Launching Bolivia into the Globalization Era

In l985, a MNR-led government once again played a historical role in launching the nation on a new course of economic, social, cultural and even political change. Stabilization and structural adjustment measures instituted a radical process of dismantling the state's bloated bureacracies and interventionist practices and setting in-motion the liberalization and privatization of the national economy. These reforms would push Bolivia not only further "outward" into global markets but also "downward" into local towns and villages by de-centralizing state authority and the distribution of public resources. In contrast to MNR- style modernization of national agricultural self-sufficiency, expanded state functions, national economic and cultural integration, its new neo-liberal leanings led to greater integration into global markets and use of information-based and communications technologies, reforming state agencies and forging a national identity based upon cultural pluralism.

Most of the neo-liberal reform measures and laws under the MNR coalitions took shape during two distinct intervals in time. The first set of measures, the New Economic Plan (NEP), were issued under the presidential decree no. 21060 in l985. The NEP devalued the exchange rate, removed price controls and subsidies, and reduced the state's role in social development by slashing public budgets in the health and education fields. Tax reform measures went into effect and workers had their rights to collective bargaining reduced through measures liberalizing employer regulations for hiring and firing. The MNR's trade liberalization program also lowered tariffs to a uniform rate, and replaced export taxes with enticing export incentives. The most visual symbol of neo-liberalism's arrival was the closure of the largest state-owned tin mines, the epicenter of the MNR's revolutionary dance with state capitalism.

The restructuring of the national petroleum company(YFPB) reduced it workforce by one-third and led to a proliferation of oil exploration contracts with foreign firms(10). The neo-liberal government also began methodically closing the state's de-centralized corporations, agricultural marketing boards, autonomous agencies and crop-centered institutes established by the military regimes.

The second generation of neo-liberal reforms( l992- l997), the "Plan de Todos", strengthened and deepened the process of economic restructuring by focusing on institutional reforms and an array of measures to mitigate the effects of a growing social crisis.(Grebe l998 ) These neo-liberal reform laws aimed to redesign and shrink the state apparatus, reshape it into less of a top-down, paternalistic structure and open channels for flows of public resources to NGO's and community administered development programs.

New mining, environmental, land tenure, energy, electricity, banking, telecommunications, and forestry laws were incorporated into a new governmental regulatory framework suitable for a market-led economic paradigm. The "privatization" of public airlines, railways, telecommunications, and hydrocarbon enterprises gave 51% ownership and management control of them to foreign firms(11). Out of this effort, Bolivia's innovative "capitalization program" resurfaced giving new pension benefits for Bolivian retirees(12). The Plan de Todos also included educational, land and decentralization reforms which became "indigenized" by adding bilingual and intercultural education, indigenous territorial rights and popular participation mechanisms to them.

While Bolivia's reforms were the most textbook application of neo-liberalism yet to appear in the Americas, they were more than a knee jerk response to a powerful international financial community. For the Bolivian embrace of neo-liberalism grew out of an internal political consensus building and analysis among businessmen, state technocrats, MNR politicians and their advisors anxious for the nation to exit from its profound economic crisis.(Conahan and Malloy; l982). The multi-lateral banks promptly stepped forward with the several hundred million dollars and technical expertise to bankroll the launching of this experiment in free market economic policy.

It was no secret that the U.S. Embassy in La Paz had been lobbying for a full-fledged neo-liberal program since the Reagan administration's foreign policy in the early l980's(Malloy and Gamarra;1984 ) By the end of the l980's, support for this policy resided with a larger group of think-tanks, multi-lateral banks, and key U.S. government agencies known as the "Washington Consensus"(Gonzalez l999 ). Both generations of Bolivian reforms reflected this Washington Consensus --as well as its revised thinking in that group over time-- that had occurred since the first round of adjustment programs in Bolivia and elsewhere.

The Ups and Downs of a New Economic Order

The most immediate achievement of the NEP measures was its impact on the stabilization of prices, bringing down inflation from the stratospheric heights reached under the UDP government. Inflation first fell all the way to 66% in l986, then again to 11% the following year while averaging 12% per annum between l985 and l992. In economic growth terms, by l987, the neo-liberal economy had reversed its downward plunge and rebounded with positive albeit low economic growth rates averaging 2.5% through l990. The stabilization and adjustment program had successfully pulled back the economy from the brink of collapse and the new model appeared to be providing a new lease on life. Jeffry Sachs, a Harvard whiz kid economist who advised the MNR on the NEP through weekend consulting trips to La Paz, was subsequently invited to Poland and Russia to work some of this same policy making magic for revitalizing their sagging economies.

Another sign of economic revival was the growth in exports effectively reversing the declining levels suffered under UDP government. Tin production regained importance to represent 35% of the country's export earnings yet now its major producers were private medium size private mines while COMIBOL's had retained its few profitable mines. Gold mining was rapidly expanding to add income and employment to the national economy yet its potential tax revenues evaporated from the leakage of 80% of this mineral through smuggling across national borders(Hudson and Hanratty l989). Silver, zinc, lead, antimony also were making incremental increases thanks to other private mining initiatives during this period(Hudson and Hanratty l989;137). Soybeans increased their export earnings six fold with an increase from 223 metric tons to 649 metric tons, representing $8.5 million and $42 million respectively between l985 and l988 (CEDLA l990,18)(13).

In terms of social impact, the increasing globalization of the economy by the neo-liberal reforms racked up high social costs from its inequitable patterns of economic growth resulting in the lowering of employment, wages, salaries and production in both rural and urban areas(Avirgan et al l995). After many decades of state capitalism's discriminatory agricultural policies, Bolivia's small farmers were ill-prepared to compete with the flood of foreign often subsidized agricultural produce into local and regional marketplaces. Marketplaces began to fill up with Peruvian potatoes, barley, carrots, onions and tomatoes; Chilean fruits, jams and dairy products, and Brazilian rice and corn. The costs of production along with increased transport costs from the removal of fuel subsidies in relation to produce market prices exacerbated the terms of trade inequities for indigenous producers(14). This deteriorating situation was manifest in national figures showing a minus 4% drop in food production between l985 and l989(excluding soybeans, coffee and the coca leaf(CEDLA l990; 18)(15).

Yet the tremendous influx of products from the world economy into the Bolivian market was hardly the basis of a consumer paradise for your average low-income buyer. A popular refrain making the rounds in urban neighborhoods during this period was that, "Before during the period of hyperinflation we had the enough money to buy what we needed yet due to hoarding of goods by merchants there was little to purchase. Nowadays with our markets are overflowing with consumer products from all over, we have no money to purchase them."

Indeed, Bolivian urban areas were hurting as evidenced by a decline in open unemployment from 15.5% to 21.5%.(Iriarte l983; 420). Yet unemployment rates appeared the less relevant social indicator in a context where most Bolivians forge economic survival practices among the underemployed in an ever-swelling informal economy that fills capitol city curbsides with vendors peddling small quantities of every imaginable petty commodity(16). These urban subsistence strategies multiplied from the closure of the state mines which led to dismissal of 22,000 out of 28,000 unionized mineworkers(17). Many ex-miners also headed for the coca leaf growing areas in search of the few enticing economic opportunities in the national economy.

During this period, 130 manufacturing firms collapsed, sending an additional 4,000 workers and their families into the informal economy. Rural to urban migration resulting from the deteriorating conditions in the countryside was another source of newcomers to the informal economy for activities in petty trading, transport, commerce and artisanry production. The numbers of women and youth swept up in this human tide of desperation also grew along with the number of street children in major cities. Black market, contraband and coca-cocaine related activities were also places for these economic refugees to stay above water. And food aid led by wheat had passed in value the sum total of other Bolivian food imports in l990(Prudencio B. and Franqueville l995;16).

Alarmed by the magnitud of the national social crisis and potential political impact from the NEP's initial years, the Bolivian government established the hemisphere's first "Social Emergency Fund"(SF) crafted by World Bank's technocrats and subsequently underwritten by the Bank and other European donors geared to put unemployed people to work through investments in labor-intensive, short-term activities such as school and health clinic construction, and road-building. It was designed as an autonomous government unit under the direction of one of Bolivia's wealthiest, honest businessmen who worked outside mainline ministries. The SF was innovative in its demand-driven approach of responding to requests from local organizations and municipal governments as opposed to a top-down pattern of assistance. The SF channeled substantial public resources for NGO- administered development projects on a scale hitherto unknown in Bolivia. Most independent researchers and World Bank's evaluations give high marks for the SF's positive impact on generating temporary employment(18 foonote on tendler). To institutionalize this entity for the long term, the "emergency" was changed to "investment" for the Social Investment Fund.

Under World Bank guidance, the Bolivian government proceeded to set up other government "funds" modeled on this demand-driven approach which in reality had been peddled by the Inter-American Foundation, OXFAM America and other small donors during several decades. The Fondo de Desarrollo Campesino for rural credit(which channeled $12.8 million between l989 and l994) and a Fondo Nacional de Desarrollo Regional(which channeled $127 million between l987 andl994) for urban and regional investment projects covering basic sanitation to transport(World Bank l996;73) and a "Fondo del Medio Ambiente" for environmental protection investments. Despite the optimism about this approach to redesigning state structures as wave of the future for tackling poverty, an internal World Bank report a decade later offered a more guarded assessment.

"The two major institutions that the Bank has funded--Fondo Nacional de Desarrollo Regional(FNDR) and Fondo de Inversion Social(FIS)--have been considered successes and models for social protection for many other countries. These two social funds have contributed to capacity-building, social development, and investment in social infrastructure in the communities where they have provided resources. But the administrative structure of these and other social funds has become top-heavy, bureaucratic and duplicative. There are also some indications that the techniques used to target social fund investments have not been effective"(World Bank l998,7).

Perhaps a more far reaching and financially sustainable effort at slowing the social crisis resulting from Bolivia's economic restructuring can be found in "Plan de Todos" enacted by Goni Sanchez De Losada's coalition government. This coalition government with Victor Hugo Cardenas, the Aymara vice-president and his tiny indigenous political party, and left of center political independents and party, the Movimiento de Bolivia Libre(MBL) used their combined political muscle to push the innovative social reforms through congress. These and other government reformers and political elites also appeared to be hearing the drumbeats of Shining Path's guerilla army in neighboring Peru and fearing its potential spread or emulation amidst Bolivia's social crises (Van Cott l998).

In addition to the usual timber and agro-business interests as insiders within the state apparatus, the Sanchez De Losada coalition brought into government a number of ecologists, feminists, and indigenista activists with experiences managing community-based development programs. This progressive flair also surfaced by giving politically correct names to new political units for "Sustainable Development", "Human Development" and "Ethnicity and Gender" created under his government.

Perhaps its most pathbreaking economic and political reform was welding together the interdependent laws of decentralization and popular participation. This social reform generated fanfare throughout the hemisphere and as far away as Africa where Bolivians have traveled to disseminate it. A national redistricting of political-administrative boundaries potentially empowered the rural indigenous peasantry by leaving 85% of the municipalities with rural majorities. This political commitment to rural residents was also advanced by transferring 22%(over a previous 8%) of the national budget allocation to municipal governments, one of the highest percentages of this type anywhere in Latin America. The related reform effort of "popular participation" promised to take decentralization much farther through local mechanisms for participatory planning, incorporation of indigenous cultural practices at sub-municipal levels, and vigilance councils from civil society that oversee municipal budgets and plans.

The implementation of these reforms has encountered numerous obstacles including intransigent local political cultures, pervasive corruption, and a lack of national political will from a successor government. Over the long run, however, if these new structures become consolidated, they will have profound effects on the way rural communities control and develop local social services and productive infrastructure, and open spaces for a more participatory democracy.

Another important social innovation is Bolivia's progressive l995 educational reform. To compete effectively for global markets and investments requires a well-educated and highly skilled work force. This reform is an attempt to overhaul the nation's entire administrative and pedagogical school system and give primary and secondary schools a much greater share of educational resources. The educational reform involves re-training teachers and adopting an educational philosophy that values student cultural knowledge and critical analysis over common practices of "learning" by rote-memory and copying. For the indigenous peasant majority, the commitment to bilingual and intercultural education was one of its most attractive features. This reform also bolsters indigenous participation through mechanisms of greater parental participation in rural schooling and a shift in financial, administrative and operational responsibility over schools from the national to the regional levels(Luykx l999;56)..

The Sanchez de Losada government also turned its sights on reforming the country's land tenure system with its irrational land utilization practices and the vast unproductive areas that had been created by the public lands given away by the military. More efficient, modernized landholding system would be the basis of a development of a free market economy along neo-liberal lines. The La Ley INRA, passed by the Bolivian congress in l996 was in essence a "reforma de la reforma" as an attempt to correct the l953 agrarian reform and the tenure system it had shaped in the eastern lowlands. The INRA Ley used the policy instrument of land taxation rather than expropriation to goad landowners into making improvements on their farms and ranches or compelling them to sell them to others interested in profit-making motivations. Another important aspect of the law for indigenous peasants was the recognition of collective land rights of diverse indigenous peoples in the county's eastern lowlands. However, the implementation of this reform was running into problems with both entrenched local landed elites as well as from President Banzer's questionable political will in effecting the interests of his constituents among the country's agro-business, timber, and ranching elite that had always counted on his supportive policies.

Economic Globalization and Its Limits in the l990's

What has the more open, liberalized and privatized economy accomplished in Bolivia during the l990's? In national aggregate terms, the share of the labor force working in services increased from 35% in l985 to 69% in l995(Muller and Asociados.l998). As discussed, the major achievement was slaying hyperinflation and bringing it down to single digits after l992 while Bolivian currency became one of the strongest in South America. Economic growth rates averaged a modest 4% during the l990's and economic diversification continued apace from the growth of non-traditional exports. During the l990's, a bona fide Bolivian stock market took root with 14 companies representing value of $12 million.

Soybeans remained an impressive foreign exchange earner and the leader of Santa Cruz industrial and mechanized agricultural production(which includes sugar cane and cotton) which as a whole increased at the rate of 20% per annum between l989 and l995(Kazan l999). Bolivian commercial farmers, Mennonite and Japanese producers, and Brazilian entrepreneurs used "empresas agrogrecuarias" (Kazan;l999) to enable soybeans to generate as much as 20% of national export revenues during their best years (19). However, at the end of the l990's dark clouds were hovering above this soybean picture as the turmoil from the Asian financial crisis and Brazil's crisis in Bolivia's own backyard were taking their toll on soybean prices and Bolivia's competitiveness in these global markets.

And similar to earlier patterns of social and economic development in Santa Cruz under state capitalism, this economic boom has generated high social and environmental costs. Few indigenous peasants have access to the capital requirements for soybean production. As a heavily mechanized production system using land-clearing machinery and combines, soybean production generates little seasonal employment and few if any economic to with the impoverished rural communities in the Eastern lowlands and Western highlands. As small peasant farmers have even less access to financial credit under neo-liberalism than under state capitalism, they have been excluded de facto from the fruits of the country's soybean boom(20). The environmental management of the rainforest ecology associated with soybean production has taken its toll on valuable non-renewable natural resources. Soybean expansion from 50,000 ha to 452,000 between l984 and l996 accelerated deforestation with the corresponding destruction of soils, wildlife, medicinal plants, and other genetic resources.

Bolivia's has faithfully adopted a full-fledged neo-liberal program, yet making it work as a supplier of raw materials to the global economy has placed serious limits on what is possible. For the country's economic and social fate continues to rely for almost half of its export earnings on the price swings of minerals and hydrocarbons, which remain highly vulnerable to shocks from the international economy. The demise in natural gas reflected this free market vulnerability. After replacing tin as the economy's leading export in the l980's, its value fell from $ 375 million to $98 million dollars between l985 and l994. Whereas the mineral exports of tin and silver together with hydrocarbons represented 83% of the total exports in l985, ten years later that figure had been reduced to 18% of total exports.

During the l990's, the mineral export portfolio became more diversified with the rise in importance of gold, and zinc while tin represented 9% of total exports. Yet those minerals too have been negatively effected by price cycles in world markets that led to price plunges during the l980's and then again between l994-l997, bringing an overall cumulative decline of 73% for Bolivia's minerals since l980.(World Bank l998 ). The struggling cooperative and small mining sectors offer vivid testimony to this pattern. Under pressures from falling prices and increased competition, at the end of the l990's, the cooperative mines had diminished from 5,000 to 842 organizations and the small mines from 6500 to 500 enterprises(Bolivian Times l998c). These combined sectors had employed upwards of 150,000 miners at the beginning of the decade. However, Bolivia's increased economic diversification also resulted from non-mineral production and sales of non-traditional exports such as flowers, leather goods and jewelry which are a far cry from the products necessary for economic transformation of this developing nation.

Since the advent of the structural adjustment measures, Bolivia's small manufacturing sector has shown a slight increase from 15.5 % to 17% of GNP. The inflow of foreign products under the NEP essentially wiped-out the country's large manufacturing enterprises leaving in their wake small and medium enterprise survivors that have poor access to financial credit from the private banks and inefficient technologies for competing(Larrazabal;l996). The small and micro enterprises include many artisenal activities that remain viable because of their "comparative advantage" of low wages and high transport costs in Bolivia(Buechler et al l998).

This picture of modest economic growth under neo-liberal economic policies has failed to attain the necessary economic expansion and employment for making a major dent in the nation's panorama of poverty. Since l985, per capita income has increased at the paltry rate of 1.7%. per annum and despite advances in reducing infant mortality and increasing life expectancy, Bolivia's social indicators are on a par with those of sub-Saharan Africa(World Bank l998;1 ). Bolivia's structural dependency and dubious status as a major recipient of food aid shipments from the United States and elsewhere is a commentary on these societal failures. Similar to the mining industry within the global economy, the continuing terms of trade squeeze faced by the rural poor continue to stifle agricultural production and income improvements. Some 81% of the rural population(representing 42% of the national total) remain below the poverty line while only 27% of them have access to safe water(World Bank l998 1). Having 67% of its population still in poverty after trying two different economic development models over a half century, suggests little change in the number of the country's impoverished indigenous majority. Income distribution patterns showing that the wealthiest 20% receiving 56% of the country's aggregate labor income while the bottom 20% comprising indigenous social sectors receiving 4% also lays bare these social contradictions(World Bank l998;4). Such national figures call into question whether the current economic model is any more capable than the previous development model for creating development patterns which engender greater social equity for the nation as a whole.

In addition to the problem of cyclical price trends for raw materials on the world market, these modest economic growth rates also result from the lowest rates of savings and investment in South America(World Bank l998, Pacheco l998 ) Bolivia's investment rates averaged a coefficient of 13.8% of Gross Domestic Product between l986-l997 even though they have tended to rise temporarily in recent years thanks to the mentioned "capitalization program" and foreign investments underwriting a the construction of gas pipeline to Brazil(Pacheco l998 90). Bolivia's neighbors, Chile and Peru enjoy investment rates of 25% and have made more inviting investment climates for multi-national corporations. Bolivia's l990's investment rates are lower than for its own much maligned state sector between l960 and l977(Pacheco l992 ). A list of factors deterring greater foreign investment include the country's tax laws for mineral exploitation, high transportation costs, chaotic judiciary and legal systems and rampant government corruption (Pacheco; 138. Bolivian Times 1998c ).

Bolivia's poorly educated and low skill workforce also dampens foreign investor interest. The high drop-out rates, poorly trained teachers, substandard educational equipment, and antiquated teaching methods of the public schools present deeply-rooted obstacles for competing in the global economy. The national educational reform is trying to turn this situation around yet many obstacles lie in its path.(Luykx l999 56 ).

The low investment rates are also a function of savings rates which at 11% of Gross Domestic Product are among the lowest in the world. Such low wages and earnings and precarious conditions of self-employment and farming contribute to a vicious circle where savings rates are systematically kept low. These low savings and investment rates in turn have created the need for a continuing flow of concessional loans and grants from bi-lateral agencies and multi-lateral banks to cover the country's fiscal deficit. About half the international aid of approximately $600 million yearly are loans whose repayments have worsened an international debt which currently absorbs 28% of national export earnings. This debt undermines the Bolivian state's capacity to finance its own productive investments and social expenditures without having to beg and borrow from abroad. Although the state's social expenditures for the l990's although above its levels under the first years of the NEP were below levels under state capitalism during the l970's (Morales l996; l33)

About one-third of the foreign aid flows to Bolivia are grants to the ever-burgeoning NGO sector where hundreds of organizations manage health, education, agricultural, artisan, livestock and other programs in the rural communities and urban neighborhoods throughout the country( Perez l996;273). NGO's have become a kind of informal sector for middle-class employment during state lay-offs and indispensable local development actors within a neo-liberal framework of de-centralization and popular participation. Similar to the autonomous, decentralized and other government agencies that multiplied during the l960's and l970's, the NGOs have had exponential growth during the l980's and l990's. Bolivian NGO's such as BANCOSOL and PRODEM have achieved deserved international prominence for their micro-finance services for the bare-bones activities in petty artisanry, commerce, trade and transportation within the informal economy (Buechlers et al l998). However, they have been unable to spread these development benefits beyond 15% of the country's micro-enterprises (World Bank l998:2). The World Bank is one of Bolivia's most devoted donors (averaging almost $40 million annually since the advent of the NEP) and offers considerable technical advice in guiding Bolivia's economic and social course of action. Recently, it has redoubled its efforts for combating the country's poverty through promoting modest debt relief to the tune of $ 760 million via the Initiative for the Heavily Indebted Countries(HIPC) and sponsoring a consortium meeting among donors that raised an additional $980 million for new social and infrastructural investments(21). Indeed, there is a buzz about Bolivia at the Bank. In addition to being the first Latin America country to gain debt relief, it is also the hemisphere's guinea pig for the Bank's latest development planning innovation called the "Comprehensive Development Framework" which emphasizes building partnerships with the private sector, civil society, the state and other donors for project related activities. Giving Bolivia preferred nations'status once again is a function of it having done everything asked of it by the multilateral banks with little to show in terms of changing the country's "big picture" of massive poverty.

USAID is another major player in the aid game, continuing as the country's most important bi-lateral giver while simultaneously channeling an ever-increasing share of economic and financial resources to Bolivian NGO's. USAID's relatively high economic support for Bolivian continues because a Cold War replaced a Drug War in U.S. Andean policy. The ensuing combat in the coca fields goes hand in glove with economic assistance to small farmers for financing substitute crops, infrastructural investments and various social services.

This outward leaning, neo-liberal economy has also served up the latest U.S. cultural artifacts, tastes and institutions in Bolivia. In addition to food, fashion and trendy brand names conveyed by the global media, Bolivians inhabit a cultural universe replete with downtown shopping malls, large supermarkets, video game parlors, cellular telephones, the computer, VCR's, multi-channel television and Michael Jordan. Its cellular telephone market was one of the fastest growing in South America. And about 50,000 computers are sold year each year and 3 out of the governments 12 ministries and most universities have opened web sites(Bolivian Times l998a ). Fast food chains also were arriving in Bolivia during the l990's thanks to the powerful economic and cultural forces of globalization. Pizzerias were particularly popular and had begun home deliveries in affluent neighborhoods in the capitol(Bolivian Times l999c). When Burger King opened its first franchise in the capitol under the ownership of an ex-planning minister of Bolivia's second neo-liberal government, the combination of fast food with neo-liberal planning models became visually solidified. Instead of utilizing Andean cultural patrimony, Burger King distributed Dutch seed potato to peasant farmers to open a channel of local potato suppliers for its french fry production. The Westernizing cultural facets of globalization represent some of the most serious concerns both among advocates as well as critics of globalization's (Friedman l998 ) culturally homogenizing and demeaning effects on Third World cultures and peoples.

In ending this short history of Bolivia's two dominant economic development models of the last half-century, I will discuss an intriguing globalization phenomenon that mixes cultural with economic dimensions. Soon after the NEP opened Bolivia's borders to increased international trade, there has been a growing influx of used American clothing on the monthly order of 3,000 tons of pants, shirts, underwear, jeans, jackets and other clothing in l998 for nationwide distribution. In the capitol, these products are sold mostly by hundreds of street vendors operating in the informal economy(Bolivian Times l999e ). Bolivian wholesalers and retailers purchase them by bulk weight from U.S. distributors and then sell consumers individual items. Their comparatively low prices and high quality explain much of their popularity among the low-income populations. Youth are enamoured with American cultural symbols and brand names such as the Nike products from sports franchises appearing on television and sweatshirts and T-shirts emblazoned with university sports icons from the likes of NotreDame,Princeton and Michigan.

Is this the invisible hand of the self-regulating market economy which insures that affordable, higher quality goods reach vast numbers of low wage consumers with few prospects for major economic improvement within the neo-liberal economy? Is this a market mechanism for ameliorating some of the excessive social inequities generated by globalization? Curiously, the major opposition to this American clothing are the local Bolivian-owned textile sweatshops whose low wage, labor intensive production system cannot compete with the prices for second hand products probably made by textile sweatshops in other parts of Latin American and Asia.

The competition among textile sweatshops, the informal sector's key marketing role, the policy favoritism of consumers over producers, the long distance trading networks which include smuggling activities along with the penetration of American cultural values and artifacts is a microcosm of the neo-liberal globalization paradigm operating in Latin America. Yet it is precisely this process of providing greater social equity in clothing that does not exist for satisfying the basic health, housing, nutrition, income, credit and employment needs of the population majority in Third World countries such as Bolivia. The used American clothing phenomenon represents a peculiar pattern of social equity that has eluded Bolivia's poor for most everything else under both the state capitalism and neo-liberalism. These macro-economic policies and structures have created difficult parameters for grassroots development even for those visionary organizations revitalizing indigenous cultural resources. The book's case studies will show the importance of these macro-micro linkages in shaping the pattern of grassroots social and economic change.

Footnotes

1) However, the state-owned structure with respect to oil was interrupted by the Gulf Corporation's production operations and other private exploration. The U.S. economic assistance to the MNR came with the condition that Bolivia reform its petroleum investment code to foment foreign investment which it did in l956. George Eder wrote that" U.S. policy at that time was opposed to financing government petroleum operations that could not be undertaken by private capital"(Eder l968 60). Out of these changes, the Gulf Oil Company carried out oil production operations until its nationalization by the Ovando government in l969. The YPFB resumed its oil monopoly yet began giving out exploration contracts to foreign oil companies under a new foreign investment code for hydrocarbons decreed by the Banzer government in l972(Dunkerley l984; 204)

2) Yacimiento Petroleros Fiscales Bolivianos(YPFB) was created by the nationalization of the Standard Oil Companies holdings in Bolivia in l936 when Bolivian government created a state monopoly.

3) The cattle ranchers, and cotton producers referred to were exclusively from the white and mestizo social sectors representing medium and large operators. For sugar cane production by l980, the medium and large caneros represented 37.3% of the production units yet controlled 81.7% of the area under production. The small farm sector represented 43% of the production units while controlling 15.6% of the cultivated area(Arrieta el al l990 232). Cotton producers were overwhelmingly from the peasant sector yet there also existed a better off commerical producer groups that remained with rice until they switched to the more lucrative cotton during the l960's.

4) During the zenith of the Cold War period, United States government's economic and military aid to Bolivia between the mid-fifties through l974 totaled $650 million while multilateral and third-country economic assistance through the same period amounted to $360 million. During the first period in the Banzer government(l972-l974) economic and military bilateral aid from the U.S. shot up to $150 while international organizations provided $124 million and third countries at least $8 million.(U.S.General Acccounting Office l975;3). The grants of military aid for l973 and l974 were three times as great as any previously made to a Latin American government(Dunkerley;l984;205). This was a period when military dictatorships pursuing a national security doctrine were the norm in the southern cone and Bolivia occupied a geo-political strategic geographic location. Position.

5) These mine-owners represented 25 enterprises organized under the Asociacion de Mineros Medianas(ANMM) received favorable government treatment and their members controlled a major part of the production of tungsten, antimony and copper production and in total approximately one-fifth of the country's total mineral production(Dunkerley l984;226).

6) Gill identifies multiple economic interests covering import houses, banks, automobile dealerships, retail stores, and money exchange houses(Gill l984 100-124)

The pattern of land distribution by the l980's had reverted back to a highly inegalitarian pre-revolutionary pattern. Now 93% of the landowners possessed 11% of the total land area for farming and ranching while 7% of the landowners possessed 89% of these total lands.(Urioste l987 38 )

7) During the Banzer period more agricultural and ranching lands were distributed through this public lands policy than during all the previous government's combined since l952( Grupo de Ibanez, l983 Albo l979 ). Land grants went as high as 50,000 ha. for cattle enterprises and 2,000 ha.for agricultural enterprises. Medium size holdings granted to individual operations were as high as 2,500 ha. for ranchers and 600 ha. in size for farms(Urioste l987;38). Also the military government's credit policies channeled 82.9% of the BAB's public credit for agriculture the non-indigenous commercial farmers with 3.5% destined for the peasant indigenous producers. Banzer raised the amount benefitting the peasant farming class to 8.6% of the whole which meant this policy similar to the public land grants policy was increasing social and economic inequalities in the countryside.

8) This pattern of production distribution changed when the military regime of Garcia Mesa fell from power thereby opening the way for peasant producers to engage in the first stages of cocaine processing at the site where coca leaf was produced in Bolivia's tropical Chapare region. Santa Cruz and Beni economic elites shifted to higher levels of refining into pure cocaine and in trafficking to the Colombian processing centers.

9)The Agricultural Development Bank(BAB) had to be bailed out of bankruptcy by the Bolivian government. The principal reasons under the military regimes especially Banzer were lax systems of internal control, rampant political cronyism, and improper loans for non-agricultural and speculative investments(including coca paste and cocaine base processing) as well as the participation of urban investors with little agricultural know-how for managing these farms when prices dropped (Dunkerley l984; and Malloy and Gamarra l988).

10) However, over the l980's oil sales under YPFB's had dropped from 47,000 barrels per day in l973 to 21,000 barrels in l988 mostly from mismanagement problems( ). Some 75% of this oil production originated in Santa Cruz. Also it should be pointed out that in the late l980's, YFPB was still exporting 90% of the country's natural gas.

11) The first part of YPFB sold to a private company in l997 was its transport division and out of that effort a new company, TRANSREDES emerged which absorbed a major part of the gas pipeline while another private company proceeded to acquire part of this infrastructure as well. The remaining installations including YPFB's oil refineries were slated to be privatized in l998 and l999.

12) Bolivia's capitalization program also generated considerable interest throughout Latin America. Under this arrangement 50% of the largest state enterprise ownership was sold off to investors. The remaining 50% ownership earnings were distributed as pension funds to 3.2 million 'Bolivians. The Bolivian government in effect was strikiing a balance between complete state ownership or private ownership and succeded in capturing approximately $1.8 billion in foreign investments in these enterprises.

13)The production of soybeans in Bolivia originated with the Japanese colonists in Santa Cruz as a traditional food for home consumption(Arrieta et al l990 254). Subsequently, better-off Bolivian farmers with access to agricultural machinery for cotton production were able to utilize the same agricultural technology for soybeans. The commercial production of soybeans began to attain importance in Bolivia during the agricultural year l969-l970 when it reached 800 ha.(Arrieta et al l990;254). Over the next ten years, the production area for soybeans increased to 41,000 ha. while the Japanese colonies production percentage of the total diminished.

14) The World Bank reported in l990 that a "price index of agricultural products declined by 29% from the stabilization to the end of l988 relative to overall consumer prices"(World Bank l990).

15)Total production fell by 17 % during this period which in volume terms in l988 remained 15% below the l980-l985 average(World Bank l990 32). A World Bank report summing up this spectacle of declining food production and falling farmer incomes commented that "that both the volume and value-added of the goods produced by the poor have decreased, indicating a fall in welfare. This has resulted in a decline in real prices and quantity of agricultural products'(World Bank l990,32)

16) For an excellent discussion of Bolivia's informal sector economy in La Paz see (Buechler et al l998).

17) Bolivian tin mining industry was losing money with the highest cost underground mines and smelters in the world( Hudson and Hanratty l989;136) and was becoming increasingly obsolete given the types of technology and production practices being developed in Malaysia and China, other major world producers.

18) Tendler report

19) Kazan points out that the growth in cultivated area of soybeans has been at the annual rate of 23% between l989 and l996. He adds that the rapid increase in soybean production represents an expansion in land cultivated rather than from improved technology and productivity (Kazan l999 50).

20) Rural credit for the peasant indigenous producers had become more inaccessible under the NEP with the closure of the national agricultural development bank. Private banks often made urban property a prerequisite form of collateral to qualify for loans which in effect excluded the low income rural population. Another problem with agricultural credit were the exorbitantly high interest rates charged for agricultural investments.

21) The debt relief program orchestrated by the World Bank for select countries grew out of the public education and media campaigns organized by OXFAM and other voluntary agencies focused on this important issue for combating Third World poverty. For more detail on the World Bank fundraising effort through a consortium see the Bolivian Times(l999f).