Austerity Programs Under Conditions of Political Instability and Economic Depression: The Case of Bolivia
This chapter examines both the macroeconomic context of Bolivia's relatively good economic and social performance through the 1970s and its continual decline in the 1980s. It deals with the question of political regime and the costs of austerity programs. The decade of the 1970s was a period of relatively good macroeconomic performance for Bolivia. Economic and social performance was relatively positive in Bolivia through the 1970s. An escape from the poverty that the country had long suffered seemed possible. Bolivia was entering an extended period of economic depression and governmental instability. Banzer's departure in 1978 marked the beginning of a period of recession in Bolivia—an austerity enforced by deterioration in macroeconomic performance. One of the ironies of the Siles policy is that it may have created a much more active private sector at the same time it tried to increase state control over the economy.