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Economy of Bolivia

Bolivia’s estimated 2008 gross domestic product (GDP) totaled $18.94 billion. Economic growth was estimated at about 5.6%, and inflation was estimated at about 11.5%.

In 1985, the Government of Bolivia implemented a far-reaching program of macroeconomic stabilization and structural reform aimed at maintaining price stability, creating conditions for sustained growth, and alleviating poverty. The most important change involved the "capitalization" (privatization) of numerous public sector enterprises. Parallel legislative reforms locked in place market-oriented policies that encouraged private investment. Foreign investors are accorded national treatment, and foreign ownership of companies is virtually unrestricted in Bolivia. Many of these reforms are currently under review. Nationalizations have taken place in both the hydrocarbon and mining sectors, and the role of the state in the economy continues to be a primary goal of the Morales administration. Foreign direct investment (FDI) inflows have dwindled as has long-term investment across most industrial sectors.

The hydrocarbon sector provides the most prominent example of the current investment climate. Bolivia has the second-largest natural gas reserves in South America. The Bolivian state oil corporation, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), has contracts to supply Brazil with natural gas through existing pipelines until 2019. Moreover, in 2006, YPFB signed a “ramp-up” contract with Argentina that steadily increases export levels until 2010, when gas deliveries to Argentina should be more than four times current levels. However, lack of substantial investment between 2005 and 2008 meant that gas production stagnated; increasing by less than 10% over four years (2008 production level was estimated at 960 million cubic feet). Companies appeared to be investing only what was necessary to maintain current operations.

Bolivian exports were approximately $6.8 billion for 2008, up from $652 million in 1991. Imports were $4.9 billion in 2008. Bolivia enjoyed an estimated $1.9 billion trade surplus in 2008. Hydrocarbons made up 50% of the exports, minerals 22.2% and manufacturing 23.65%. Bolivian tariffs are low, however, manufacturers complain that the tax-rebate program which allows some companies to claim refunds of import taxes on capital equipment is inefficient, with many companies now owed millions of dollars by the Bolivian Government, which can take years to recover.

Bolivia’s trade with neighboring countries is growing, in part because of several regional preferential trade agreements. Bolivia is a member of the Andean Community (CAN) and enjoys nominally free trade with other member countries (Peru, Ecuador, and Colombia). Bolivia is also an associate member of Mercosur (Southern Cone Common Market). Bolivia currently is focused on developing markets through its membership in Bolivarian Alliance for the Americas (ALBA) whose members include Venezuela, Cuba, and Nicaragua.

Until recently, the Andean Trade Promotion and Drug Eradication Act (ATPDEA) allowed numerous Bolivian products to enter the United States duty-free, including alpaca and llama products and, subject to a quota, cotton textiles. Effective December 15, 2008, President George W. Bush suspended Bolivia’s participation in the program based on its failure to meet international counternarcotics obligations; meeting those obligations is a criteria in the U.S. statute which created the preference program. On June 30, 2009, President Barack Obama determined that Bolivia was not meeting the program’s eligibility criteria. This determination does not affect Bolivia’s eligibility for benefits under the Generalized System of Preferences (GSP), which covers most of Bolivia’s exports to the United States.

In 2008 the United States exported $511 million of merchandise to Bolivia and imported $393 million. Bolivia’s major exports to the United States are tin, gold, jewelry, and wood products, with textiles playing an increasingly important role. Its major imports from the United States are electronic equipment, chemicals, vehicles, wheat, and machinery. A bilateral investment treaty (BIT) between the United States and Bolivia came into effect in 2001. While the Morales government has stated that it will respect all current BITs, officials have also publicly expressed Bolivia’s intent to “re-open” these treaties to align them with the new constitution.

Agriculture accounts for roughly 11.3% of Bolivia’s GDP. The amount of land cultivated by modern farming techniques is increasing rapidly in the Santa Cruz area, where climate permits two crops a year. Soybeans are the major cash crop, sold in the CAN market. The extraction of minerals and hydrocarbons accounts for another 14% of GDP and manufacturing around 11%.

The Government of Bolivia remains heavily dependent on foreign assistance to finance development projects. Estimates indicate that as of 2008, the government owed $4.6 billion to foreign creditors. Between 1986 and 1998, Bolivia attended seven rounds of negotiations with Paris Club creditors and received U.S. $1.35 billion of bilateral debt forgiveness. The United States forgave almost all of Bolivia’s bilateral debt between 1999 and 2002 and strongly supported efforts to have multilateral institutions do the same. Bolivia received U.S. $1.95 billion in debt relief from HIPC (Heavily Indebted Poor Countries) in 1998 and HIPC II in 2001, including almost complete bilateral debt forgiveness.

In June 2005, the G-8 countries decided to provide renewed World Bank and International Monetary Fund (IMF) debt relief for the 18 participant nations of HIPC I and II through the Multilateral Debt Relief Initiative (MDRI). Bolivia received U.S. $232.5 million in debt relief from the IMF in January 2006 and approximately U.S. $1.5 billion in debt relief from the World Bank in June 2006. The Inter-American Development Bank (IDB) forgave $1 billion in debt in March 2007. Bolivia was one of three countries in the Western Hemisphere selected for eligibility for the Millennium Challenge Account in 2004. Bolivia qualified again in 2005 and 2006, and presented a proposal to the Millennium Challenge Corporation (MCC) in December 2005, which was superseded by a new proposal submitted September 2007. An MCC assessment scheduled for December 2007 was postponed due to unrest surrounding the constituent assembly process. MCC’s technical engagement with Bolivia remained paused for a year due to internal political instability. In December 2008, the MCC Board of Directors decided to not select Bolivia as eligible for compact assistance.

Economy (2008 est.)
GDP: $18.94 billion.
Annual growth rate: 5.6%.
Per capita income: $4,500.
Natural resources: Hydrocarbons (natural gas, petroleum); minerals (zinc, silver, lead, gold, and iron).
Agriculture (11.3% of GDP): Major products--Soybeans, cotton, potatoes, corn, sugarcane, rice, wheat, coffee, beef, barley, and quinoa. Arable land--27%.
Industry (36.9% of GDP): Types--Mineral and hydrocarbon extraction, manufacturing, commerce, textiles, food processing, chemicals, plastics, mineral smelting, and petroleum refining.
Services, including government: 51.8% of GDP.
Trade: Exports (2008 est.)--$6.8 billion. Major export products--natural gas, tin, zinc, coffee, silver, wood, gold, jewelry, soybeans, and soy products. Major export markets (2007)--U.S. (9.8%), Brazil (46%), Argentina (5.8%), Republic of Korea (4.8%), Peru (4.1%), and Japan (7.6%). Imports (2008 est.)--$4.9 billion. Major products--machinery and transportation equipment, consumer products, construction and mining equipment. Major suppliers (2007)--U.S. (9.8%), Argentina (16.2%), Brazil (29.9%), Chile (10.5%), Peru (8.1%).

Geography of Bolivia

Location: Central South America, southwest of Brazil Geographic coordinates: 17 00 S, 65 00 W Map references: South America Area: total: 1,098,580 sq km land: 1,084,390 sq km water: 14,190 sq km Area - comparative: slightly less than three times the size of Montana Land boundaries: total: 6,743 km border countries: Argentina 832 km, Brazil 3,400 km, Chile 861 km, Paraguay 750 km, Peru 900 km Coastline: 0 km (landlocked) Maritime claims: none (landlocked) Climate: varies with altitude; humid and tropical to cold and semiarid Terrain: rugged Andes Mountains with a highland plateau (Altiplano), hills, lowland plains of the Amazon Basin Elevation extremes: lowest point: Rio Paraguay 90 m highest point: Nevado Sajama 6,542 m Natural resources: tin, natural gas, petroleum, zinc, tungsten, antimony, silver, iron, lead, gold, timber, hydropower Land use: arable land: 2% permanent crops: 0% permanent pastures: 24% forests and woodland: 53% other: 21% (1993 est.) Irrigated land: 1,750 sq km (1993 est.) Natural hazards: flooding in the northeast (March-April) Environment - current issues: the clearing of land for agricultural purposes and the international demand for tropical timber are contributing to deforestation; soil erosion from overgrazing and poor cultivation methods (including slash-and-burn agriculture); desertification; loss of biodiversity; industrial pollution of water supplies used for drinking and irrigation Environment - international agreements: party to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Nuclear Test Ban, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands signed, but not ratified: Environmental Modification, Marine Dumping, Marine Life Conservation, Ozone Layer Protection Geography - note: landlocked; shares control of Lago Titicaca, world's highest navigable lake (elevation 3,805 m), with Peru

Government of Bolivia

The 1967 constitution, revised in 1994, provides for balanced executive, legislative, and judicial powers. The traditionally strong executive, however, tends to overshadow the Congress, whose role is generally limited to debating and approving legislation initiated by the executive. The judiciary, consisting of the Supreme Court and departmental and lower courts, has long been plagued by corruption and inefficiency. Through revisions to the constitution in 1994, and subsequent laws, the government has initiated potentially far-reaching reforms in the judicial system.

For the first time in history, Bolivians chose their departmental prefects (similar to governors) by popular vote on December 18, 2005. Bolivia's nine departments received greater autonomy under the administrative decentralization law of 1995, although several departments--especially Santa Cruz and Tarija--are seeking increased autonomy. In a July 2006 referendum, Bolivia's four eastern departments voted in favor of increasing regional autonomy, and the other five provinces opposed the measure. The autonomy movement rallied around Sucre's August 2007 demand that the constituent assembly consider moving all branches of government to the traditional capital. Civic committees in six departments (Santa Cruz, Tarija, Beni, Pando, Cochabamba, and Chuquisaca) supported hunger strikes and protests in Sucre, which led to Bolivian Government-sponsored talks between Sucre and La Paz leaders, which were inconclusive as of March 2008. The Santa Cruz government approved an autonomy statute in December 2007; the governments of the other eastern departments followed Santa Cruz's lead. Santa Cruz held a popular referendum on its autonomy statute on May 4, 2008, in which the majority of voters voted for autonomy. The Bolivian Government considered this referendum to be illegal and does not recognize its results. Some government-aligned parliamentarians have advocated popular elections for the civic committees, which they claim disproportionately represent elite and opposition interests.

Bolivian cities and towns are governed by directly elected mayors and councils. Municipal elections were held in December 2004, with councils elected to 5-year terms. The popular participation law of April 1994, which requires a 20% allocation of national revenues to municipalities for discretionary use, has enabled previously neglected communities to make improvements in their facilities and services.

Current Administration
On December 18, 2005, MAS candidate Evo Morales Ayma was elected to the presidency by 54% of the voters. During his campaign, Morales, a coca union leader of indigenous descent, vowed to nationalize hydrocarbons and alleviate poverty and discrimination towards indigenous persons. Morales was and remains highly critical of the "neo-liberal" economic policies that have been implemented in Bolivia over the past several decades. On January 22, 2006, Morales and his Vice President Alvaro García Linera were inaugurated into office.

Since then, President Morales has moved to fulfill his campaign promises, promoting policies to decriminalize coca cultivation, including raising the ceiling for licit coca cultivation from 12,000 hectares to 20,000 hectares. On May 1, 2006 the government issued a decree "nationalizing" the hydrocarbons sector and calling for the renegotiation of contracts with hydrocarbons companies. In November 2006 the government and companies signed new contracts that should result in higher revenues for the government; however, errors in the contracts may require further negotiations. These policies have pleased Morales' supporters, but have complicated Bolivia's relations with some of its neighboring countries, foreign investors, and members of the international community.

Fulfilling another campaign promise, Morales secured passage of legislation convoking a special election for delegates to a constituent assembly to draft a new constitution. The MAS performed well in those elections, capturing 137 of 255 seats. The assembly convened on August 6, 2006, and planned to complete its work by August 2007; however, the Congress extended its mandate to December 14, 2007 after the constituent assembly faced political deadlock over its voting rules. Although rules were ostensibly clarified in February 2007, the subject reemerged in August, after the legality of a vote on the location of the capital was contested by the opposition. An agreement could not be reached, and the opposition delegates walked out of the assembly. The MAS approved a constitution without the opposition vote in November 2007, in a controversial assembly session in which opposition delegates were blocked from voting by demonstrators and the armed forces. On December 14, 2007, Morales presented the constitutional text to the National Congress to request a referendum for its approval in 2008. The opposition-controlled Senate prevented the referendum legislation from moving forward.

Under the administrative decentralization law of 1995, Bolivia’s nine departments had received greater autonomy, and on December 18, 2005, Bolivians elected their departmental prefects (similar to governors) by popular vote for the first time in history. In a July 2006 referendum, Bolivia’s four eastern departments voted in favor of increasing regional autonomy, and the other five provinces opposed the measure. The autonomy movement rallied around Sucre’s August 2007 demand that the constituent assembly consider moving all branches of government back to the traditional capital of Sucre. Civic committees in six departments (Santa Cruz, Tarija, Beni, Pando, Cochabamba, and Chuquisaca) supported hunger strikes and protests in Sucre. The strikes led to government-sponsored talks between Sucre and La Paz leaders. The talks were inconclusive. The Santa Cruz government approved an autonomy statute in December 2007; the governments of the other eastern departments followed Santa Cruz’s lead. Santa Cruz held a popular referendum on its autonomy statute on May 4, 2008, in which the majority of voters voted for autonomy. Voters in Beni, Pando, and Tarija also voted for increased autonomy in referenda that followed the Santa Cruz referendum. The Bolivian Government considered these referenda to be illegal and refused to recognize the results.

In May 2008, the Senate endorsed MAS-introduced legislation for a recall referendum on the mandates of the President, Vice President, and eight of nine departmental prefects, held on August 10, 2008. President Morales was ratified with 67% of the vote. Opposition prefects in the so-called “Media Luna” departments of Santa Cruz, Tarija, Beni, and Pando were also ratified with substantial majorities. Political tensions between the government and the opposition over the new constitution, the autonomy statutes passed in some department legislatures, and the division of tax proceeds from the hydrocarbon industry led to civil unrest, including incidents of violence and sabotage. Shortly thereafter, a conflict between government supporters and opposition members in the northern department of Pando left 13 dead over two days and led to the declaration of martial law. The government accused Pando prefect Leopoldo Fernandez of being responsible for the deaths. Although the constitution grants prefects immunity from prosecution, the government detained him without trial and appointed an interim prefect. Fernandez remained imprisoned without trial as of July 2009.

In late September 2008, the government and opposition prefects began a “national dialogue” in Cochabamba, but talks collapsed with no agreement. The dialogue moved to the Congress, and President Morales called on his social movement supporters to surround the Congress to pressure opposition members of Congress to vote for the government-sponsored approach. On October 21, 2008, the government and congressional opposition reached a compromise scheduling a constitutional referendum in exchange for textual modifications. Voters approved the new constitution on January 25, 2009.

The new constitution calls for elections on December 6, 2009 for president, vice president, and members of the new Plurinational Assembly (formerly called National Congress) and April 2010 for governors and municipal leaders.

A new Bolivian constitution was promulgated February 8, 2009, replacing Bolivia’s 1967 constitution. The 2009 constitution provides for legislative, executive, judicial, and electoral branches of government. It strengthens the executive branch and centralizes political and economic decision-making. It also provides new powers and responsibilities at the departmental, municipal, and regional levels, as well as in newly-created indigenous autonomous areas.

The executive consists of the president, vice president, and the ministers of state. The president and vice president are selected through national elections. The ministers of state are appointed.

The Plurinational Assembly (formerly called National Congress) is composed of two bodies: the Chamber of Deputies and the Chamber of Senators. The Chamber of Deputies has 130 members, and the Chamber of Senators has 36 members (4 from each of the 9 departments). Within the Chamber of Deputies, 70 members will be selected by direct vote, 62 by party list, and eight in special indigenous areas.

The judiciary consists of a Supreme Court, an independent Constitutional Tribunal, and departmental and lower courts. The 2009 constitution reformed the selection of judicial officials, who will now be elected by the Assembly. Under President Morales, a number of judicial bodies including the Supreme Court and the Constitutional Tribunal (which is responsible for deciding questions of constitutionality) have been substantially weakened. After lawsuits initiated by the executive branch, a wave of resignations, and an impasse in appointments, the Constitutional Tribunal has none of its 10 members left, effectively leaving Bolivia with no judicial oversight on constitutional questions.

Bolivian cities and towns are governed by directly elected mayors and councils. Municipal elections were held in December 2004, with councils elected to 5-year terms. The popular participation law of April 1994, which requires a 20% allocation of national revenues to municipalities for discretionary use, has enabled previously neglected communities to make improvements in their facilities and services.

Principal Government Officials
President--Juan Evo MORALES Ayma
Vice President--Alvaro GARCIA Linera
Minister of Foreign Affairs--David CHOQUEHUANCA Céspedes
Charge d’Affaires of the Bolivian Mission to the United States--Erika DUEÑAS
Ambassador to the Organization of American States--José Enrique PINELO Navarro
Chargé d’Affaires to the United Nations--Pablo SOLON Romero

Bolivia maintains an embassy in the United States at 3014 Massachusetts Ave., NW, Washington, DC 20008 (tel. 202-483-4410); consulates in Los Angeles, San Francisco, Miami, New Orleans, and New York; and honorary consulates in Atlanta, Chicago, Cincinnati, Houston, Mobile, Seattle, St. Louis, and San Juan.

Type: Republic.
Independence: August 6, 1825.
Constitution: 1967; revised 1994.
Branches: Executive--president and cabinet.
Legislative--bicameral Congress. Judicial--five levels of jurisdiction, headed by Supreme Court.
Subdivisions: Nine departments.
Major political parties: Nationalist Revolutionary Movement (MNR), Movement of the Revolutionary Left (MIR), Movement Towards Socialism (MAS), New Republican Force (NFR).
Suffrage: Universal adult, obligatory.

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History of Bolivia

The Andean region probably has been inhabited for some 20,000 years. Beginning about the 2nd century B.C., the Tiwanakan culture developed at the southern end of Lake Titicaca. This culture, centered around and named for the great city of Tiwanaku, developed advanced architectural and agricultural techniques before it disappeared around 1200 A.D., probably because of extended drought. Roughly contemporaneous with the Tiwanakan culture, the Moxos in the eastern lowlands and the Mollos north of present-day La Paz also developed advanced agricultural societies that had dissipated by the 13th century of our era. In about 1450, the Quechua-speaking Incas entered the area of modern highland Bolivia and added it to their empire. They controlled the area until the Spanish conquest in 1525.

During most of the Spanish colonial period, this territory was called "Upper Peru" or "Charcas" and was under the authority of the Viceroy of Lima. Local government came from the Audiencia de Charcas located in Chuquisaca (La Plata--modern Sucre). Bolivian silver mines produced much of the Spanish empire's wealth, and Potosi, site of the famed Cerro Rico--"Rich Mountain"--was, for many years, the largest city in the Western Hemisphere. As Spanish royal authority weakened during the Napoleonic wars, sentiment against colonial rule grew. Independence was proclaimed in 1809, but 16 years of struggle followed before the establishment of the republic, named for Simon Bolivar, on August 6, 1825.

Independence did not bring stability. For nearly 60 years, coups and short-lived constitutions dominated Bolivian politics. Bolivia's weakness was demonstrated during the War of the Pacific (1879-83), when it lost its seacoast and the adjoining rich nitrate fields to Chile.

An increase in the world price of silver brought Bolivia a measure of relative prosperity and political stability in the late 1800s. During the early part of the 20th century, tin replaced silver as the country's most important source of wealth. A succession of governments controlled by the economic and social elites followed laissez-faire capitalist policies through the first third of the century.

Living conditions of the indigenous peoples, who constituted most of the population, remained deplorable. Forced to work under primitive conditions in the mines and in nearly feudal status on large estates, they were denied access to education, economic opportunity, or political participation. Bolivia's defeat by Paraguay in the Chaco War (1932-35) marked a turning point. Great loss of life and territory discredited the traditional ruling classes, while service in the army produced stirrings of political awareness among the indigenous people. From the end of the Chaco War until the 1952 revolution, the emergence of contending ideologies and the demands of new groups convulsed Bolivian politics.

Revolution and Turmoil
The Nationalist Revolutionary Movement (MNR) emerged as a broadly based party. Denied its victory in the 1951 presidential elections, the MNR led the successful 1952 revolution. Under President Victor Paz Estenssoro, the MNR introduced universal adult suffrage, carried out a sweeping land reform, promoted rural education, and nationalized the country's largest tin mines.

Twelve years of tumultuous rule left the MNR divided. In 1964, a military junta overthrew President Paz Estenssoro at the outset of his third term. The 1969 death of President Rene Barrientos, a former member of the junta elected President in 1966, led to a succession of weak governments. Alarmed by public disorder, the military, the MNR, and others installed Col. (later General) Hugo Banzer Suarez as President in 1971. Banzer ruled with MNR support from 1971 to 1974. Then, impatient with schisms in the coalition, he replaced civilians with members of the armed forces and suspended political activities.

The economy grew impressively during most of Banzer's presidency, but human rights violations and eventual fiscal crises undercut his support. He was forced to call elections in 1978, and Bolivia again entered a period of political turmoil. Elections in 1978, 1979, and 1980 were inconclusive and marked by fraud. There were coups, counter-coups, and caretaker governments.

In 1980, Gen. Luis Garcia Meza carried out a ruthless and violent coup. His government was notorious for human rights abuses, narcotics trafficking, and economic mismanagement. Later convicted in absentia for crimes, including murder, Garcia Meza was extradited from Brazil and began serving a 30-year sentence in 1995.

After a military rebellion forced out Garcia Meza in 1981, three other military governments in 14 months struggled with Bolivia's growing problems. Unrest forced the military to convoke the Congress elected in 1980 and allow it to choose a new chief executive. In October 1982--22 years after the end of his first term of office (1956-60)--Hernan Siles Zuazo again became President. Severe social tension, exacerbated by economic mismanagement and weak leadership, forced him to call early elections and relinquish power a year before the end of his constitutional term.

Return to Democracy
In the 1985 elections, the Nationalist Democratic Action Party (ADN) of Gen. Banzer won a plurality of the popular vote (33%), followed by former President Paz Estenssoro's MNR (30%) and former Vice President Jaime Paz Zamora's Movement of the Revolutionary Left (MIR, at 10%). But in the congressional run-off, the MIR sided with MNR, and Paz Estenssoro was chosen for the fourth time as president. When he took office in 1985, he faced a staggering economic crisis. Economic output and exports had been declining for several years. Hyperinflation had reached an annual rate of 24,000%. Social unrest, chronic strikes, and drug trafficking were widespread.

In four years, Paz Estenssoro's administration achieved economic and social stability. The military stayed out of politics and all major political parties publicly and institutionally committed themselves to democracy. Human rights violations, which badly tainted some governments earlier in the decade, were greatly reduced. However, Paz Estenssoro's remarkable accomplishments were not won without sacrifice. The collapse of tin prices in October 1985, coming just as the government was moving to reassert its control of the mismanaged state mining enterprise, forced the government to lay off over 20,000 miners. The highly successful shock treatment that restored Bolivia's financial system also led to some unrest and temporary social dislocation.

MNR candidate Gonzalo Sanchez de Lozada finished first in the 1989 elections (23%), though, again, no candidate received a majority of popular votes, so Congress determined who would be president. The Patriotic Accord (AP) between Gen. Banzer's ADN and Jaime Paz Zamora's MIR, the second- and third-place finishers (at 22.7% and 19.6%, respectively), led to Paz Zamora's assuming the presidency.

Paz Zamora was a moderate, center-left president whose political pragmatism in office outweighed his Marxist origins. He continued the neoliberal economic reforms begun by Paz Estenssoro. Paz Zamora also took a fairly hard line against domestic terrorism, a 1990 attack on terrorists of the Nestor Paz Zamora Committee and authorizing the 1992 crackdown on the Tupac Katari Guerrilla Army (EGTK).

The 1993 elections continued the tradition of open, honest elections and peaceful democratic transitions of power. The MNR defeated the ruling coalition, and the "Goni" Sanchez de Lozada was named president by a coalition in Congress.

Sanchez de Lozada pursued an aggressive economic and social reform agenda, relying heavily on successful entrepreneurs-turned-politicians like himself. The most dramatic program--"capitalization", a form of privatization under which investors acquired 50% ownership and management control of the state oil corporation, telecommunications system, airlines, railroads, and electric utilities, with moneys directed to the pension system instead of the Treasury--was strongly opposed by certain segments of society, with frequent and sometimes violent protests from 1994 through 1996.

In the 1997 elections, Gen. Hugo Banzer, leader of the ADN, beat the MNR candidate (22% of the votes. 18%). The Banzer government basically continued the free market and privatization policies of its predecessor, and the relatively robust economic growth of the mid-1990s continued until regional, global and domestic factors contributed to a decline in economic growth. Job creation remained limited throughout this period, and public perception of corruption was high. Both factors contributed to increasing social protests during the second half of Banzer's term.

Banzer instructed special police units to physically eradicate the illegal coca of the Chapare region. The policy produced a sudden and dramatic four-year decline in Bolivia's illegal coca crop, to the point that Bolivia became a relatively small supplier of coca for cocaine. In 2001, Banzer resigned from office after being diagnosed with cancer. He died less than a year later. Banzer's U.S.-educated Vice President, Jorge Quiroga, completed the final year of the term.

In the 2002 national elections, former President Sanchez de Lozada (MNR) again placed first with 22.5% of the vote, this time followed by coca-growing syndicate leader Evo Morales (Movement Toward Socialism, MAS) with 20.9%. The MNR platform featured three overarching objectives: economic reactivation (and job creation), anti-corruption, and social inclusion.

A four-year economic recession, tight fiscal situation, and longstanding tensions between the military and police led to the February 12-13, 2003, violence that left more than 30 people dead and nearly toppled Sanchez de Lozada's government. The government stayed in power, but was unpopular.

Trouble began again in September 2003 when a group of tourists became trapped in the town of Sorata. After days of unfruitful negotiations, Bolivian security forces launched a rescue operation, but on the way out, were ambushed by armed peasants and a number of people were killed on both sides. The incident ignited passions throughout the highlands and united a loose coalition of protestors to pressure the government into halting the proposed project to export liquefied natural gas, most likely through Chile. Anti-Chile sentiment and memories of three major cycles of non-renewable commodity exports (silver through the 19th century, guano and rubber later in that century, and tin in the 20th century) touched a nerve with many citizens. Tensions grew and La Paz was subjected to protesters' blockades. Violent confrontations ensued, and most of the approximately 60 deaths occurred when security forces tried to bring supplies into the besieged city.

In the end, large demonstrations forced Sanchez de Lozada to resign on October 17, 2003. Vice President Carlos Mesa Gisbert assumed office and restored order. Mesa appointed a non-political cabinet and promised to revise the constitution through a constituent assembly, revise the hydrocarbons law, and hold a binding referendum on the country's natural gas deposits. The referendum took place on July 18, 2004, and Bolivians voted overwhelmingly in favor of development of the nation's hydrocarbons resources. But the referendum did not end social unrest. Large-scale protests led to Congress approving a confiscatory hydrocarbons law on May 17, 2005. After a brief pause, demonstrations resumed, particularly in La Paz and El Alto. President Mesa offered his resignation on June 6, and Eduardo Rodriguez, the president of the Supreme Court, assumed office in a constitutional transfer of power. Rodriguez announced that he was a transitional president, and called for early elections within six months.

People of Bolivia

According to the 2001 census, Bolivia’s ethnic distribution is estimated to be 55% indigenous, 15% European, and 30% mixed or mestizo (all categories are self-identified and answers vary widely depending on how questions are phrased). The largest of the approximately three dozen indigenous groups are the Quechua (29% or 2.5 million), Aymara (24% or 2 million), Chiquitano (1% or 180,000), and Guarani (1% or 125,000). No other indigenous groups represent more than 0.5% of the population. German, Croatian, Serbian, Asian, Middle Eastern, and other minorities also live in Bolivia. Many of these minorities descend from families that have lived in Bolivia for several generations.

Bolivia is one of the least developed countries in South America. Almost two-thirds of its people, many of whom are subsistence farmers, live in poverty. Population density ranges from less than one person per square kilometer in the southeastern plains to about 10 per square kilometer (25 per sq. mi.) in the central highlands. The annual population growth rate is about 1.77%.

The great majority of Bolivians are Roman Catholic (the official religion), although Protestant denominations are expanding rapidly. Many indigenous communities interweave pre-Columbian and Christian symbols in their religious practices.

About half of the people speak Spanish as their first language. Approximately 90% of the children attend primary school but often for a year or less. The literacy rate is low in many rural areas.

The cultural development of what is present-day Bolivia is divided into three distinct periods: pre-Columbian, colonial, and republican. Important archaeological ruins, gold and silver ornaments, stone monuments, ceramics, and weavings remain from several important pre-Columbian cultures. Major ruins include Tiwanaku, Samaipata, Incallajta, and Iskanwaya. The country abounds in other sites that are difficult to reach and have seen little archaeological exploration.

The Spanish brought their own tradition of religious art which, in the hands of local indigenous and mestizo builders and artisans, developed into a rich and distinctive style of architecture, painting, and sculpture known as "Mestizo Baroque." The colonial period produced not only the paintings of Perez de Holguin, Flores, Bitti, and others but also the works of skilled but unknown stonecutters, woodcarvers, goldsmiths, and silversmiths. An important body of native baroque religious music of the colonial period was recovered in recent years and has been performed internationally to wide acclaim since 1994.

Bolivian artists of stature in the 20th century include, among others, Guzman de Rojas, Arturo Borda, Maria Luisa Pacheco, and Marina Nunez del Prado. Bolivia has rich folklore. Its regional folk music is distinctive and varied. The "devil dances" at the annual carnival of Oruro are one of the great folkloric events of South America, as is the lesser known carnival at Tarabuco.

Nationality: Noun and adjective--Bolivian(s).
Population (July 2009 est.): 9,775,246.
Annual population growth rate: 1.77%.
Religions: Predominantly Roman Catholic; minority Protestant.
Languages: Spanish, Quechua, Aymara, Guarani.
Education (2001): Years compulsory--ages 7-14. Literacy--86.7%.
Health (2008): Infant mortality rate--44.6 per 1,000 births.
Work force (2008, 4.46 million): Nonagricultural employment--2.48 million; services, including government--42%; industry and commerce--58%.
Ethnic groups (2001): 55% indigenous (primarily Aymara and Quechua), 30% mestizo or mixed, 15% European.