Bolivia and the Dutch Disease: What are the risks and how to avoid them?

Abstract

Since the beginning of the 19th century, the Bolivian economy has been highly dependent on the production of natural resources, and therefore its economy has been very vulnerable to external shocks. The document analyzes if the boom in the gas sector occurred in recent years could lead to the "Dutch disease" and describes the possible policies that could be applied in case of evidence of it. Analyzing the main macroeconomic indicators and exploring the evolution of the different economic sectors, we find evidence that Bolivia would not be facing a "Dutch disease", but that Bolivia is likely to face the symptoms of this economic phenomenon in the future.