Bolivia: The Hydrocarbons Boom and the Risk of Dutch Disease

June 1, 2008

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Eugenio M Cerutti, and Mario Mansilla. Bolivia: The Hydrocarbons Boom and the Risk of Dutch Disease, (USA: International Monetary Fund, 2008) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The hydrocarbons sector has become one of the most dynamic economic activities in the Bolivian economy and the main driver of improved export performance and international reserve accumulation. The central role of the hydrocarbons sector in the economy is attributable to the high levels of investment made in the late 1990s, which permitted much higher production levels, particularly of natural gas. However those positive developments in the hydrocarbons sector have given rise to the possibility of a new case of "Dutch disease." While Bolivia's economy has already seen many benefits from its higher gas exports, especially in terms of lower external vulnerability and improved fiscal stance, the new resources could also limit the development of other economic sectors in terms of output and factor income. This paper explores the transmission channels of Dutch disease, as well as its main symptom, the appreciation of the real exchange rate

Subject: Dutch disease, Exports, Natural gas sector, Real effective exchange rates, Real exchange rates

Keywords: Effect, Export, Government, Price, WP, YPFB

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/154
Stock No:

WPIEA2008154
ISBN:

9781451870121
ISSN:

1018-5941

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