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Socio-Political Conflict and Eonomic Performance in Bolivia

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Author Info

  • Jose Luis Evia

    ()
    (Catholic University of Bolivia and Andean University "Simon Bolivar" of Bolivia)

  • Roberto Laserna

    ()
    (CERES- Bolivia)

  • Stergios Skaperdas

    ()
    (Department of Economics, University of California-Irvine)

Abstract

We examine how socio-political conflict in Bolivia has affected its economic performance since the 1970s. Such conflict includes strikes, demonstrations, road blockades, and conventional rent-seeking. Since conflict has costs, it diverts resources away from production, tends to reduce investment and could therefore reduce economic growth. We first review the characteristics of conflict in Bolivia using a unique data set. We then provide estimates of the direct costs of conflict and examine the relationship with economic performance using hypotheses derived from a simple model. In particular, we make a distinction between economic growth that is due to external factors like changes in income due to movements in the terms of trade and economic growth that is due to productive investment. Growth due to external factors tends to be positively related to conflict, whereas growth due to productive investment should be negatively related to conflict. Finally, we discuss how levels of conflict, economic performance, and governance might be related in Bolivia’s recent history.

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Bibliographic Info

Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 070814.

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Length: 43 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:irv:wpaper:070814

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Keywords: Economic growth; Property rights; Governance;

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References

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  1. Alesina, Alberto & Devleeschauwer, Arnaud & Wacziarg, Romain & Kurlat, Sergio & Easterly, William, 2003. "Fractionalization," Scholarly Articles 4553003, Harvard University Department of Economics.
  2. Paul Collier & Anke Hoeffler, 2004. "Greed and Grievance in Civil War," Development and Comp Systems 0409007, EconWPA.
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  6. Gregory D. Hess, 2002. "The Economic Welfare Cost of Conflict: An Empirical Assessment," Claremont Colleges Working Papers 2002-08, Claremont Colleges.
  7. Stergios Skaperdas & Constantinos Syropoulos, 2002. "Insecure Property and the Efficiency of Exchange," Economic Journal, Royal Economic Society, vol. 112(476), pages 133-146, January.
  8. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September.
  9. Alberto Abadie & Javier Gardeazabal, 2001. "The Economic Costs of Conflict: A Case-Control Study for the Basque Country," NBER Working Papers 8478, National Bureau of Economic Research, Inc.
  10. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
  11. Francisco M. Gonzalez, 2005. "Insecure Property and Technological Backwardness," Economic Journal, Royal Economic Society, vol. 115(505), pages 703-721, 07.
  12. Lee, J. & Skaperdas, S., 1998. "Workshops or Barracks? Productive versus Enforcive Investment and Economic Performance," Papers 97-98-20, California Irvine - School of Social Sciences.
  13. Paul Collier & V. L. Elliott & Håvard Hegre & Anke Hoeffler & Marta Reynal-Querol & Nicholas Sambanis, 2003. "Breaking the Conflict Trap : Civil War and Development Policy," World Bank Publications, The World Bank, number 13938, October.
  14. Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Public Choice, Springer, vol. 63(2), pages 101-112, November.
  15. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, Elsevier.
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Cited by:
  1. Stergios Skaperdas, 2009. "The Costs of Organized Violence: A Review of the Evidence," CESifo Working Paper Series 2704, CESifo Group Munich.
  2. Garfinkel, Michelle R. & Skaperdas, Stergios & Syropoulos, Constantinos, 2008. "Globalization and domestic conflict," Journal of International Economics, Elsevier, vol. 76(2), pages 296-308, December.

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