Strengthening Bolivian Competitiveness
166 pages
English

Strengthening Bolivian Competitiveness

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166 pages
English
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The government of Bolivia seeks to reinvigorate the nontraditional export sector as part of its national development strategy. This Country Study investigates the role that trade should play in Bolivia's development strategy, given the country's rich resource endowment, and examines the lessons of Bolivia's integration into the global economy. Considering the past links between trade and Bolivia's economy, the study analyzes the impact of different scenarios on growth, employment, trade flows, and poverty; it also evaluates barriers to higher export competitiveness and constraints on exporting firms. The study concludes that preferential access to world markets is necessary but not sufficient for success in nontraditional exports. Efficient services are necessary to reduce exporters' costs, and the government should be more proactive in laying the foundation for export diversification, increasing the effectiveness of institutions, and addressing impediments to crossborder trade.

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Publié par
Publié le 20 juillet 2009
Nombre de lectures 18
EAN13 9780821380222
Langue English
Poids de l'ouvrage 3 Mo

Exrait

A WORLD BANK COUNTRY STUDY
Strengthening Bolivian
Competitiveness
Export Diversification and Inclusive Growth
A WORLD BANK COUNTRY STUDY
Strengthening Bolivian
Competitiveness
Export Diversification and
Inclusive Growth



























Copyright © 2009
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ISBN-13: 978-0-8213-8021-5
eISBN: 978-0-8213-8022-2
ISSN: 0253-2123 DOI: 10.1596/978-0-8213-8021-5

Library of Congress Cataloging-in-Publication Data has been requested.
Contents
Preface ..................................................................................................................................... viii
Acknowledgments ...................................................................................................................ix
Abbreviations and Acronyms ................................................................................................. x
Executive Summary.................................................................................................................xii
Main Findings ...................................................................................................................xii
Policy Implications ...........................................................................................................xv
Notes.................................................................................................................................xvii
1. The Role of Trade in Bolivia’s Development Strategy................................................... 1
The Structure of the Economy: Value Added, Trade, and Employment..................... 1
Trade, Macroeconomic, and FDI Policies since the 1985 Liberalization...................... 7
Diversification and the Optimal Export Strategy for Bolivia...................................... 20
Conclusion ......................................................................................................................... 22
Notes......... 22
Annex 1.1. Restrictiveness of Bolivia’s Trade Policy.................................................... 24
2. Bolivia’s Integration into the World Economy .............................................................. 27
The Concentration of Exports and Potential for Diversification ................................ 27
Does Bolivia Trade Less than Other Countries Do?..................................................... 33
Conclusion.... 35
Notes................................................................................................................................... 38
Annex 2.1. Tests of Links between Exports and GDP Performance........................... 39
Annex 2.2. CGE Models ................................................................................................... 43
Annex 2.3. Partial Equilibrium Analysis of ATPDEA Preferences ............................ 49
Annex 2.4. Impact on Employment Using Partial Equilibrium Analysis.................. 58
Annex 2.5. Effects on Poverty.......................................................................................... 60
Annex Notes ...................................................................................................................... 65
3. Linkages between Trade and the Economy.................................................................... 67
Linkages between Trade, Growth, and Employment in the Past............................... 67
Notes................................................................................................................................... 90
Annex 3.1. Transports and Logistics .............................................................................. 94
Annex Note........................................................................................................................ 95
4. Export Competitiveness and Transport Logistics.......................................................... 96
Export Competitiveness in Bolivia ................................................................................. 96
Transport and Logistics.................................................................................................. 106
Notes................................................................................................................................. 121
iii iv Contents
5. A Firm-Level Analysis of the Factors Affecting Export Performance...................... 123
Is There a ‘Productivity Premium’ for Bolivian Exporters? ...................................... 123
What Factors Affect Exporters? .................................................................................... 128
What Factors Affect the Decision to Export? Estimating the Propensity to
Export........................................................................................................................ 131
Policy Implications ......................................................................................................... 135
Notes................................................................................................................................. 137
References............................................................................................................................... 138

Tables
Table 1.1. Share of Value Added by Sector (Percent) ........................................................... 1
Table 1.2. Value Added and Labor Share in Selected Economic Sectors (Percent)........... 3
Table 1.3. Key Policy Mechanisms of Bolivian Integration.................................................. 8
Table 1.4. Value and Utilization of EU and U.S. Preferences for Selected Exporters....... 9
Table 1.5. Utilization Rate, ATPA/ATPDEA, 1997–2005 ...................................................... 9
Table 1.A.1. Import Tariffs Applied by Bolivia (Percent) 24
Table 1.A.2. Tariffs that Bolivian Exporters Face Abroad (Percent) ................................. 25
Table 1.A.3. Trade Taxes that Bolivia’s Exports Face Abroad (Percent) .......................... 26
Table 2.1. Bolivia’s Main Export Markets (2007 and 1998) ................................................ 28
Table 2.2. New Products, Observed and Predicted Values: Bolivia vs. Other LAC
Countries........................................................................................................................... 32
Table 2.3. New Products, by Rauch Categories: Bolivia vs. Other LAC Countries........ 33
Table 2.A.1. Contribution of Different Demand Components to Real GDP Growth
in Bolivia ........................................................................................................................... 39
Table 2.A.2. Results of Unit Root Tests of Real Exports and Real GDP ........................... 40
Table 2.A.3. Results of Johansen Cointegration Tests......................................................... 40
Table 2.A.4. Pairwise Granger Causality Tests.................................................................... 40
Table 2.A.5. Results of Unit Root Tests of Real Exports and Real GDP ........................... 41
Table 2.A.6. Results of Johansen Cointegration Tests for Traditional Exports and
GDP.................................................................................................................................... 41
Table 2.A.7. Results of Johansen Cointegration Tests for Nontraditional Exports
and GDP............................................................................................................................ 41
Table 2.A.8. Pairwise Granger Causality Tests, GDP and Nontraditional Exports........ 42
Table 2.A.9. Sectors Modeled................................................................................................. 44
Table 2.A.10. Impact of Different Trade Liberalization Scenarios on Bolivian
Exports, Selected Sectors, Percentage Change ............................................................. 45
Table 2.A.11. Impact of Different Tradvian
Imports, Selected Sectors, Percentage Change 46
Table 2.A.12. Impact of Different Trade Liberalization Scenarios on Bolivian
Output, Selected Sectors, Percentage Change.............................................................. 47
Table 2.A.13. Impact of Different Trade Liberalization Scenarios on Labor
Demand, Selected Sectors, Percentage Change ........................................................... 48
Table 2.A.14. ATPDEA Utilization Rates for Top Ten Bolivian Exports 2000–06........... 51 Contents v
Table 2.A.15. Supply Comparison of Andean Countries in Jewelry, Apparel, and
Crude Oil........................................................................................................................... 54
Table 2.A.16. Impact of Deepening MERCOSUR Integration on Exports and
Employment ..................................................................................................................... 58
Table 2.A.17. Probit Regression Results, Selection Equation (Prob. Unemployed)........ 63
Table 2.A.18. Regression Results, Income Equation ........................................................... 64
Table 2.A.19. Income Effects for Deeper MERCOSUR Integration, Manufacturing
(Income Change, %)......................................................................................................... 64
Table 2.A.20. Poverty Measures: MERCOSUR Integration, Manufacturing ................... 64
Table 2.A.21. Income Effects for Deeperation, Agriculture
(Income Change, %) 65
Table 2.A.22. Poverty Measures: MERCOSUR Integration, Agriculture......................... 65
Table 3.1. Regression Results Using Import and Export Values....................................... 72
Table 3.2.Impact of Different Trade Policy Scenarios on Bolivia’s Macro Indicators..... 76
Table 3.3. Scenario 1—Impact on Bolivian Exports to Selected Partners......................... 78
Table 3.5. Impact of a Hypothetical 10 Percent Increase in the World Price in
Selected Commodities..................................................................................................... 81
Table 3.6. Trade and Employment Effects of ATPDEA Elimination ................................ 85
Table 3.7. FTA: Simulated Expenditure Change ................................................................. 89
Table 3.8. Total Effects on Poverty and Welfare-MERCOSUR Integration ..................... 90
Table 3.A.1. Leading Nontraditional Export Products, 2006–07 ....................................... 95
Table 4.1. Export Volumes and Values by Main Exit Points, 2005–06............................ 107
Table 4.2. Typical Truck Tariffs between Main Transport Nodes .................................. 109
Table 4.3. Main Parameters for Exports of Wood from Northern Bolivia ..................... 110
Table 4.4. Bolivian Exports via the Paraguay-Parana Waterway, 1997–2006................ 112
Table 5.1. Characteristics of Firm-Level Data Sources on Bolivian Exporters............... 125
Table 5.2. Bolivian Exporters’ Premium on Wages, Capital, and Sales after
Controlling for Size, Industry, and Location.............................................................. 126
Table 5.3. Productivity Premium of Bolivian Exporters................................................... 127
Table 5.4. Estimated Factors Affecting the Probability to Export ................................... 134

Figures
Figure 1.1. Sectoral Breakdown of GDP ................................................................................. 2
Figure 1.2. Bolivian Export Product Structure....................................................................... 4
Figure 1.3. Bolivia’s Share of World Exports ......................................................................... 5
Figure 1.4. Foreign Trade, Selected Indicators for 1985 and 2005....................................... 6
Figure 1.5. Trade Restrictiveness in the Andean Community (Uniform Tariff
Equivalent)........................................................................................................................ 11
Figure 1.6. Twelve-Month Inflation and Depreciation....................................................... 11
Figure 1.7. Central Bank Domestic Debt .............................................................................. 12
Figure 1.8. Multilateral Real Exchange Rate of Total Trade, and Traditional and
Nontraditional Exports ................................................................................................... 13
Figure 1.9. Multilateral Real Exchange Rate of Nontraditional Exports and
Selected Bilateral Real Exchange Rates......................................................................... 14
Figure 1.10. Bolivia’s Trade and Fiscal Balance (Percent of GDP) .................................... 15 vi Contents
Figure 1.11. Customs and Other Duties on Imports as a Share of Tax Revenues
(Percent) ............................................................................................................................ 15
Figure 1.12. FDI and Export Volume in Selected Sectors................................................... 17
Figure 1.13. Main Features of Bolivia’s Business Environment ........................................ 18
Figure 1.14. FDI by Sector ......................................................................................................19
Figure 1.15. FDI in Manufacturing Sector by Product, 1996–2005.................................... 19
Figure 2.1 Bolivia’s Export Concentration ........................................................................... 29
Figure 2.2. Growth of Bolivia’s Export Markets.................................................................. 30
Figure 2.3. New Products and Concentration in Bolivia’s Exports .................................. 31
Figure 2.4. Actual vs. Predicted Imports and Exports, Bolivia, 1992–2005...................... 34
Figure 2.5. Over-Importing and Under-Exporting vis-à-vis the World, 1992–2005 ....... 36
Figure 2.6. Over-Importing and Under-Exvis Brazil, Argentina, and
Chile, 1992–2005............................................................................................................... 36
Figure 2.7. Under-Importing and Under-Exporting vis-à-vis the United States,
1992–2005 .......................................................................................................................... 37
Figure 2.8. Over-Importing and Over-Exporting vis-à-vis CAN, 1992–2005 .................. 37
Figure 2.A.1. Andean Non-Oil Exports to the United States: Distribution of
Preferences Granted by Product .................................................................................... 49
Figure 2.A.2. Average Utilization Rates of ATPA/ATPDEA Preferences, by
Country ............................................................................................................................. 50
Figure 2.A.3. Bolivia’s Distribution of Exports to the United States, by Preferential
Program..... 50
Figure 2.A.4. Exports’ Evolution of Andean Countries in Main Bolivian Export
Markets...... 52
Figure 2.A.5. Losses on Bolivian Export Revenues to the United States as a Result
of Nonrenewal of ATPDEA Preferences (Partial Equilibrium Analysis) ................. 55
Figure 2.A.6. Bolivian Exports of Apparel and Raw Cane Sugar to the United
States.................................................................................................................................. 55
Figure 2.A.7. Simulation of Impact of Tariff Change on Bolivian Export Revenues
(in Apparel)....................................................................................................................... 56
Figure 3.1. Contribution of Net Exports to Real GDP Growth, 1971–2006 (Annual
Growth Rates)...................................................................................................................68
Figure 3.2. Export and Import Growth, 1971–2006 (Annual Growth Rates of
Exports and Imports of Goods and Services in Real Terms)...................................... 68
Figure 3.3. Long-Run Evolution of Real Exports and Real GDP (Variables in
Natural Logarithms)........................................................................................................ 69
Figure 3.4. Bolivian Exports by Groups of Products, 1962–2006 (US$ Millions) ........... 70
Figure 3.5. Distribution of Employment Growth, by ISIC Industry................................. 71
Figure 3.6. Export Growth and its Correlation with Employment ................................... 73
Figure 3.7. Change in Exports to the U.S. Attributable to the Elimination of
ATPDEA............................................................................................................................ 84
Figure 4.1. Telecommunications Connections (Ratio for Bolivia = 100)........................... 99
Figure 4.2. Logistics Performance (Overall Logistics Performance Index, Higher is
Better) ................................................................................................................................ 99
Figure 4.3. Gross CEDEIM Issuing and Nontraditional Exports .................................... 102
Figure 4.4. Imports under RITEX ........................................................................................ 103 Contents vii
Figure 5.1. Labor Costs, Capital Stocks, and Revenue of Exporting and
Nonexporting Firms in Enterprise Survey for Bolivia.............................................. 125
Figure 5.2. Factors Perceived to be Major or Severe Problems for Firm
Performance.................................................................................................................... 129
Figure 5.3. Perceptions of Bolivian Exporters on Key Factors for Firm Growth and
on Infrastructure and Network Services..................................................................... 130
Figure 5.4. Perceptions of Bolivian Exporters on Governance Issues............................. 131
Figure 5.5. Differences in the Predicted Probability to Export among Bolivian
Firms under Different Scenarios .................................................................................. 136

Boxes
Box 1.1. Beyond Diversification: The Export Strategy of Bolivia as a Resource-Rich
Country ............................................................................................................................. 21
Box 3.1. Estimating Manufacturing Jobs in Bolivia: 50,000 or 500,000 Jobs? ................... 72
Box 3.2. The GTAP Model ...................................................................................................... 77
Box 3.3. The GTAP Database ................................................................................................. 77
Box 3.4. Methodology Used for the Partial Equilibrium Analysis of the Impact on
Employment ..................................................................................................................... 83
Box 3.5. Measuring Income Changes for Households Resulting from a Trade
Shock.................................................................................................................................. 87
Box 3.6. Poverty in the 2005 Household Survey.................................................................. 87
Box 4.1. The International Market for ICT and Other Service Exports ............................ 98
Box 4.2. Obstacles Limiting Exports of Services—New Survey Evidence..................... 100
Box 4.3. International Experiences with Export Promotion Agencies 105
Box 4.4. Legal Framework for Bolivian Trucks Using Chilean Ports ............................. 111
Box 4.5. Cochabamba’s Many Small-Scale Nontraditional Exporters............................ 112
Box 4.6. Institutional Arrangements for Managing the Paraguay-Paraná River
Waterway (“Hidrovia”) ................................................................................................ 115
Box 4.7. Design Road Pavements to Withstand Overloaded Trucks.............................. 116
Box 4.8. Priorities of the Aduana Nacional de Bolivia...................................................... 118
Box 4.9. Transport International Routier System .............................................................. 119
Box 5.1. Why Are Exporting Firms More Productive? A Review of the Theoretical
Arguments ...................................................................................................................... 124
Box 5.2. Econometric Methodology to Estimate the Export Propensity among
Bolivian Firms ................................................................................................................ 133

Preface
olivia’s trade liberalization, launched in the mid-1980s, has resulted in a relatively B open trade regime; but the results have been mixed. Bolivia’s export-to-GDP ratio
and export entrepreneurship index rating are among the highest in the Latin American
and Caribbean (LAC) region and the country has achieved great success in making
soya the major export crop in less than 10 years. At the same time, the country’s share
in world trade has stagnated and exports are increasingly dominated by gas and
minerals.
Reinvigorating the nontraditional export sector is important for the government of
Bolivia as it implements its National Development Plan. As a resource-rich country, the
Bolivian government’s emphasis on export diversification is well-placed but the
optimal nontraditional export strategy should build on successes in the traditional
sector.
This study investigates (1) the role trade should play in Bolivia’s development
strategy considering the country’s natural resource endowment; (2) the lessons of
Bolivia’s integration to the world economy; (3) the linkages between Bolivia’s past
trade and economy and a forward-looking analysis of the impact of different scenarios
on growth, employment, trade flows, and poverty; (4) constraints to higher export
competitiveness and weaknesses related to transport and logistics; and (5) the
characteristics of exporting firms and the constraints affecting them.
The main findings of the analysis are that preferential access to world markets is
necessary but not sufficient for success in nontraditional exports; rather, success
depends largely on increasing the competitiveness of exporting firms. Second, a
neutral incentive regime is essential to the growth of nontraditional exports. Third,
efficient backbone services are vital for reducing exporters’ costs. Finally, the
government should be proactive in addressing institutional impediments to cross-
border trade.
The study presents prioritized policy implications of the analysis related to (1)
trade policy and preferential access to markets; (2) the incentives regime; (3) backbone
services; (4) increasing the effectiveness of institutions to promote cross-border trade;
and (5) setting the foundations for exports diversification


Vice President: Pamela Cox
Country Director: Carlos Felipe Jaramillo
Sector Director: Marcelo Giugale
Sector Manager: Rodrigo Chaves
Sector Leader: Carlos Silva Jauregui
Task Team Leader: Seynabou Sakho

viii

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