BOLIVIA:
Ambitious Development Plan Bound by Status Quo
Franz Chávez

LA PAZ,  (IPS) - The development targets set by President Evo Morales -- which aim to reduce extreme poverty 7.5 percent by the end of his term in 2011 -- may miss their mark, say experts.

According to the plan for a "Respected, Sovereign and Productive Bolivia," intended to improve the quality of life for its citizens, 34.5 percent of the nation's population live in abject poverty -- the target is to bring it down to 27.1 percent in five years. This would represent a major step towards achieving the Millennium Development Goal (MDG, established by the United Nations General Assembly in 2000), of cutting in half by 2015 the percentage of people living in extreme poverty.

The government, under Morales and his Movement Towards Socialism party, which took power in January, has committed to reducing unemployment from 8.4 to four percent by creating 90,000 jobs per year. The targets are based on projections of 7.6 percent annual economic growth and 12.7 billion dollars in investment.

The third MDG progress report (2005) prepared by the government's Social and Economic Policy Analysis Unit (UDAPE), in conjunction with the UN, indicated that Bolivia would fulfil this particular MDG commitment by reducing extreme poverty rates to 24 percent by 2015.

However, the same report notes that the number of people currently living in extreme poverty has actually increased, taking into account government estimates for 2007 that put the figure at 36.4 percent. Regardless, the target proposed in Morales' plan, if met, would bring the government to within reach of the 2015 goal.

According to the National Statistics Institute (INE), 67.3 of the population lives in poverty of some degree.

Specific figures aside, the ambitious target may prove elusive as long as the government continues to follow an economic model that concentrates wealth in few hands, said Javier Gómez, policy coordinator and economist with the Centre of Labour and Agrarian Development Studies (CEDLA) in an IPS interview.

The expert explained that the key link in the chain of poverty is found in the country's western rural zones, home to many small-scale farmers who work small tracts of land and sell produce at less than true market value.

Their limited production capacity and the low prices that "subsidise" urban consumers illustrate the poverty cycle perpetuated by the current economic system, said Gómez, adding that aggressive reform measures are needed.

The five-year development plan aims to stimulate employment by investing close to 6.9 billion dollars of government funds into social programmes, and envisions a capital infusion of some 5.8 billion dollars from private national and foreign sources.

Gómez said private investment is unlikely to spur significant economic activity in Bolivia's depressed western areas, as capital flow is still focused on already highly profitable sectors.

The plan's productive aspect lays out a target of surplus and savings, to manage natural resources, create jobs and invest in public infrastructure.

Former UDAPE director Juan Carlos Requena told IPS that, any successful anti-poverty strategy would require not only an annual growth rate of seven percent of the gross domestic product (GDP), but also income from new products, natural gas and minerals.

Between 2002 and 2005, Bolivia's GDP grew between 2.43 and four percent, despite major political upheaval that included a string of three presidents since 2003; the country recorded its highest growth in 1992, with five percent.

On May 1, Morales nationalised the oil industry, returning hydrocarbon exploration, exploitation and distribution to state control. The industry generates some 700 million dollars annually and is the development strategy's financial cornerstone.

Requena noted that Chile and China, which saw positive results after successfully maintaining 15-year continuous-growth periods, clearly illustrate the necessity of implementing sustainable policies in the social sector and supporting labour-intensive manufacturing industries.

The foundation of the development plan hinges on efficient management of the hydrocarbon, mining, and gas industries, as well as the Mutún iron-and-steel project in the eastern border region of Puerto Suárez, which will generate 100 million dollars through royalties and other duties and taxes, according to government projections.

"Foreign companies will be subject to the state's sovereign power and performance criteria, and will purchase inputs produced in the Bolivian market," said Planning Minister Carlos Villegas during the development-plan presentation.

But Gómez questions the lack of a plan that changes the current economic scenario, in which the banking business of monetary intermediation has come to dominate the depressed industrial manufacturing sectors.

Likewise, the specialist challenges the allocation of resources to artisans, small and medium-sized enterprises and indigenous producers through the National Production Development Funding System because he does not see it as a viable solution for low-income families.

The agility and capacity of a few will once again edge out the neediest, who lack the know-how to obtain and manage credit, Gómez said.

As for employment, the researcher criticised the lack of strong initiatives to create jobs for the country's poorest, and the absence of any proposal to restructure farming in western Bolivia by establishing alternative manufacturing jobs to address the needs of 42 percent of the region's 9.2 million people.

The government's plans provide for the distribution of up to four million hectares of state-owned land to landless peasant farmers, but the subdivision of the properties has been questioned by experts, who recommend community property to obtain better agricultural yields.

Gómez suggests that the government invest in long-term biodiversity programmes that position the country for high future profits, thus creating new sources of public revenues, which plummeted following the sale of Bolivia's main telecommunication and electric companies, smelters, railways and airlines.

Requena noted that private-sector participation is dependent on the government message transmitted to private investors -- which is currently ambiguous, in the wake of the nationalisation of the oil industry, whose main actors include multi-national companies such as Brazil's Petrobras, Spain's Repsol and other British and U.S. companies.