Presentation on theme: "1 Natural Gas and Inequality in Bolivia Lykke E. Andersen Symposium on Natural Gas and Sustainable Development Doha, Qatar, 6-8 February 2006."— Presentation transcript:
1 Natural Gas and Inequality in Bolivia Lykke E. Andersen Symposium on Natural Gas and Sustainable Development Doha, Qatar, 6-8 February 2006
2 Overview The history of oil and gas in Bolivia Bolivian attitudes towards gas exports Investigating the distributional consequences of the Natural Gas boom in a Computable General Equilibrium (CGE) model The structure of the Bolivian economy Simulations in a Bolivian CGE model Conclusions
The History of Oil in Boliva Bolivian Gulf
The History of Natural Gas in Boliva YPFB Bolivian Gulf
5 Bolivian attitudes towards export of Natural Gas More than 2/3 of the Bolivian population does not want the Gas to be exported (According to an opinion survey by UNDP in 2003).
6 Why cant people just relax and enjoy the big revenues? (about $400 million/year or 30%) Bad experiences with the mining sector. Only the rich will benefit.
7 The structure of the Bolivian economy Table 2: Employment and income in Bolivia 1999, by labor category Main exporting sectors: Mining, Modern Agriculture, Natural Gas
8 Figure 1: Natural gas exports from Bolivia (1972 – 2019)
9 The effects of the Natural Gas boom on the Bolivian economy Figure 2: Increase in GDP growth rates due to Natural Gas exports
10 Figure 3: Increase in total GDP due to Natural Gas exports
11 Figure 4: Government savings in percent of total savings, GAS versus NO GAS scenario
12 Figure 5: Changes in sectoral value added due to Natural Gas exports
13 Figure 8: Changes in household income due to Natural Gas exports
14 Figure 9: Increase in GDP with Natural Gas exports but inefficient capital formation
15 Figure 10: Changes in factor incomes with inefficient capital formation
16 Conclusions What have the natural gas boom meant for Bolivia so far? Five years of severe social unrest and economic crisis. The military massacre during the Gas War of 2003 resulted in more deaths than in any previous presidency (including military dictatorships). The resignation of several presidents.
17 Conclusions Layoffs (about 50% of the workforce in the sector was laid off after capitalization). Massive government revenues. But these benefit mainly skilled workers in the public sector, thus causing higher inequality. None of these consecuences are inevitable, though. Results depend very much on how the government is re- investing the revenues, and much less on how big those revenues are.