Sustained Macroeconomic Reforms, Tepid Growth: A Governance Puzzle in Bolivia?

Abstract

We are increasingly cognizant of the limits to large cross-country empirical studies in trying to understand in-depth a particular country reality, in ways useful for advice. At the same time, merely relying on a single country account at a particular point in time ignores the historical and comparative cross-country perspective. Worse, an in-depth investigation of a single issue within a country begs the question of whether such particular issue may be fundamental for the country's growth and development relative to other determinants, or not. Further, drawbacks exist from excessive reliance on narrow empirical approaches, or on mere qualitative narrative. Consequently, the approach undertaken here for the case of Bolivia is of an integrated nature, combining the following strands: i) an historical perspective from the twin standpoints of the evolution of the enterprise and government sectors over the past half century; ii) an in-depth review of the literature on explanations of Bolivia's performance; iii) an empirical analysis of the country's enterprise sector performance on the basis of a detailed firm-level survey conducted recently in 80 countries, and, iv) an empirical analysis of Bolivia's public agencies based on a survey of public officials in Bolivia working in over 100 institutions. To provide an additional element of comparability, we also utilize cross-country governance indicators.