Abstract
This chapter analyzes the impact of the Bolivian export sector on the development of the economy from 1870 to 1950. This case study may help to reassess the export-led growth model because of four reasons: the constant dependence on a limited number of commodities (silver, rubber and tin), the geographic concentration of the export sector, a market structure of local production featured by a high concentration in few companies and the concentration of exports’ destination. The chapter presents new evidence on Bolivian foreign trade and recalculates several trade and economic indicators. The new empirical evidence stresses the erratic ability of the Bolivian export sector to foster the overall Bolivian economy.
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Notes
- 1.
Map 3.1 deploys current borders of Bolivia, which were set in 1935. Territorial losses against Chile in the War of the Pacific (1879) implied the loss of a territory rich in mining exports; territorial losses against Brazil in the Acre War (1903) implied the loss of a territory rich in rubber exports.
- 2.
The local origin of most export businessmen would suggest that most of profits were reinvested in Bolivia. However, the Bolivian historiography has stressed that local capitalists sent most of their profits abroad. For a discussion on this issue, see Peres-Cajías and Carreras-Marín (2018).
- 3.
It must be stressed that these corrections does not substantially modify the main trends identified in the original Bolivian official foreign trade statistics.
- 4.
Although the sector went into crisis from the middle seventeenth to the middle eighteenth century, Potosi mining experienced a second boom in the last third of the eighteenth century (Tandeter, 1992).
- 5.
The colonial heritage can also be seen in Map 3.1, as the location of exports during the republican era was located in the same geological rich region of Potosí.
- 6.
These complaints can be found in different official documents such as the yearbooks of the Ministry of Finance or in speeches of Bolivian Presidents.
- 7.
This approach departs from the notion that Bolivian mining elites were politically powerful. For instance, Almaraz Paz (1976, pp. 65–123) stresses the ability of tin elites to control the Bolivian Government indirectly through different mechanisms and influences. It is argued that this political empowerment supposed a restriction to the development of the overall Bolivian economy since mining elites were able to oppose and eliminate any policy which affected their interests. This author, among others such as Walter Montenegro, has been very influential on the Bolivian historiography as well as on the Bolivian common knowledge. Not by hazard, the three main mining producers of the first half of the twentieth century (which produced 75% of tin output from the early 1930s to the early 1950s) are known as the Tin Barons, which, in order of importance, are Simón I. Patiño, Mauricio Hochschild and Victor Aramayo.
- 8.
Own translation. Gómez (1978) identifies other critical determinants such as technological restrictions, the prevalence of cheap labor and the weakness of the national government.
- 9.
As it has been shown in Peres-Cajías and Carreras-Marín (2018), the value added of Bolivian exports of tin was quite low. The main smelter of Bolivian tin was in Britain, a feature that explains the high concentration of Bolivian ore exports to that country.
- 10.
- 11.
These measures are the prohibition of the issue of weak currency and the elimination of the silver monopsony enjoyed by the Bolivian State since Independence.
- 12.
According to Mitre (1993, pp. 82–87), the understanding of this process requires to distinguish between mining production in silver, mixed and tin districts. Regarding the former, mining production persisted until that moment when the decrease of the international price of silver made unprofitable the gains derived from railway construction. As for mixed districts, mining production depended on the ore content of tin and the distance to the railway line. In those mines that were far away from the train, tin exports were profitable only if ore content was high—either by luck or by its enrichment through rude smelting; in those mines that were close to the railway line, it was still profitable to export silver deposits which, in turn, reduced railway transport costs and allowed exporting tin of lower quality. Finally, in the case of tin districts, a higher dynamism was identifiable in those mines where the ore content was high and the distance to the railway line was shorter.
- 13.
The first publications were restricted to aggregate trade data between Bolivia and its main trading partners. From 1912 onward, detailed information on exports and imports was published according to the Brussels Convention. Anyway, the first volume of this collection shows information about the destination, composition and value of exports since 1908.
- 14.
For the 1850–1912 period, the obtained annual growth rate for Bolivia is 2.5%, a figure that fits outside the ideal target which ranged between 3.2% and 11%.
- 15.
In 1913, foreign capitals were mostly from Chile, the United Kingdom and, to a lesser extent, the United States (Contreras, 2003).
- 16.
This agreement operated between 1931–1933, 1934–1936 and 1937–1941 (Hillman, 1988).
- 17.
This last feature has generated another significant debate in the Bolivian historiography. On the one hand, it has been suggested that, given the existence of price agreements between Bolivia and the United States, the Bolivian economy did not take full advantage of its privileged position as tin supplier during the war (see, for instance, Ruiz, 1955, pp. 80–84). However, Hillman (1990) has stressed that Bolivia did not really have the opportunity to increase the price of tin because of the existence of tin stocks in developed economies and the available option to control tin content in those industrial products that used it as an input.
- 18.
Whereas the comparability between our series and that of CEPAL (1958)—which starts in 1925—is not perfect, data from this source shows that this relative order between consumer and intermediate and capital goods was maintained during the 1930s. By contrast, during the 1940s, intermediate imports would have been of greater importance.
- 19.
Notice that according to CEPAL (1958) estimations, the relative importance of food imports maintained during the 1930s and increased during the 1940s.
- 20.
Another well-known argument here relates to military spending. In this case, reliability of trade data is not granted since military expenditure was strategic information that not always was made public. We only have an approach to that, through the importance of imports of different kinds of weapons. It has to be said here that we do not know if these goods were for private or public consumption. In any case, the share of weapons imported from abroad is quite small, below 0.6%.
- 21.
Whereas local oil production started in the early 1920s, Bolivia substituted its oils imports just in 1954.
- 22.
- 23.
It is still necessary to account for the impact that banking had on the Bolivian economy during the years covered in this work.
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This research has benefited from the financial support of the Science and Innovation Ministry of Spain through the project Market integration and its spatial impact: Latin American regions in the very long term (1890–2010) (ECO2015-65049-C2-2-P; MINECO/FEDER, UE). Peres-Cajías also thanks the financial support from the Swedish Research Links/Vetenskapsrådet through the project Sustainable Development, Fiscal Policy and Natural Resources Management: Bolivia, Chile and Peru in the Nordic countries’ mirror (2016-05721). The authors thank the editor and the participants of the present volume for comments on previous drafts. Research assistance has been provided by Maira Dávalos, Adriana Sanjinés and Turfa Vargas. Usual disclaimer applies.
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Peres-Cajías, J.A., Carreras-Marín, A. (2017). The Bolivian Export Sector (1870–1950). In: Kuntz-Ficker, S. (eds) The First Export Era Revisited. Palgrave Studies in Economic History. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-62340-5_3
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