Political Crises, Social Conflict and Economic Development

Political Crises, Social Conflict and Economic Development

The Political Economy of the Andean Region

Edited by Andrés Solimano

The contributors to this authoritative volume analyze the impact of political crises and social conflict on economic performance in the Andean region of Latin America.

Chapter 4: The political economy of the crisis in the Andean region: the case of Bolivia

George Gray Molina and Gonzalo Chávez

Subjects: development studies, development economics, economics and finance, development economics, political economy, politics and public policy, political economy


George Gray Molina and Gonzalo Chávez 4.1 INTRODUCTION The fragility of the economic and political achievements of the Andean region in recent years has revived an interest in using a political economy approach to explain the shifts in economic policy and in democratic strength. Bolivia initially appears to have had a successful experience of stabilization and structural adjustment (1985–89), and of political and institutional reform (1993–97). The implementation of reforms has, however, revealed the significant difficulties of the process and suggests the necessity of amending any analysis of the ‘success’ of these reforms with an analysis of the ‘viability’ of the conditions that facilitate or impede the implementation of any public policy of magnitude. In the last two years, social violence, road blocks, strikes, and the rise of antisystem movements suggests that the ‘democratic transition’ as much as the ‘structural adjustment’ of the last 80 years is still incomplete. Instead of extending the first and second generations of reform, there exists the perception in Bolivia that the country has only gone back to where it started from (see Graham and Pettinato 2001; Lora and Panizza 2002).1 In this chapter, we propose to (i) formulate an interpretive framework of the political economy to understand the success and the crisis behind the process of economic and political reform in the last two decades: (ii) analyse the determinants of governance, understood here as the political conditions that make the development of a representative democracy possible and the...

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