The Global South after the Crisis

The Global South after the Crisis

Growth, Inequality and Development in the Aftermath of the Great Recession

Edited by Hasan Cömert and Rex A. McKenzie

This volume is split into two accessible sections. The first part concentrates on the impact of the crisis on growth, inequality, policy responses and policy shifts in key areas such as central banking. The second part comprises individual country case studies and includes an exploration of the vulnerabilities related to the integration of developing economies into the world economy. The effect of the crisis on trade, and the ways in which some developing countries have entered into a prolonged period of stagnant growth following the global crisis are all considered.

Chapter 5: Commodities economy in times of crisis: Bolivia after the global financial meltdown

Orlando Justo and Juan E. Santarcángelo

Subjects: economics and finance, development economics, post-keynesian economics

Abstract

This chapter explores on the factors that made it possible for the Bolivian government to manage the consequences of the global financial crisis without major disruptions. The government of Evo Morales’ Movimiento al Socialismo (MAS) has shifted from past neo-liberal policies to giving the state a more relevant role in the economy, nationalized the hydrocarbons sector, increased transfer payments to help a vast segment of the population living in poverty, and passed a new constitution. Since the crisis erupted Bolivia has enjoyed a period of high commodity prices, which has provided the Morales administration large financial inflows from the natural resources companies controlled by the state. This funding allowed the government to implement an ambitious expansionary fiscal policy based on large government spending, particularly on social programs. At the same time, Bolivia has managed to diversify its foreign trade partners reducing the dependence from foreign markets that were severely affected by the financial crisis.

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