7/19/2004

Pride is Causing a Fall

A country’s resources can do it a great deal of economic good providing politics don’t get in the way. This is the case with Bolivia the poorest country in South America. Thanks to foreign investment in exploration, Bolivia has the opportunity to capitalize on having the continent's second-largest gas reserves outside Venezuela. Politics unfortunately is ruining Bolivia’s chances of continued foreign investment and free-market policies espoused by the country since the mid-1980s which delivered steady economic growth—but not enough to dent poverty.
Counter-reform—or muddle along? highlights some of the political battles that are having a certain impact on foreign investment and growth. The battle is certain to include an increase in taxes on multinationals with fields in Bolivia, who include Spain's Repsol-YPF, Brazil's Petrobras and Britain's BP and BG Group. The industry has invested some $3.5 billion since 1997. Oil and gas producers say that the government already takes 69% of their pre-tax profits; in 2003 these totaled $122m on revenues of $806m. The government also wants to increase its say over the destination and price of exports of oil and gas. And it wants to revive the state oil company, giving it a stake in all future projects.
Pride will cause economic growth to come to a standstill in Bolivia and no doubt will have a negative long term affect on future.

4 comments:

Ned said...

It's doubtless Bolivia isn't doing to well, or handling outside investments very well, but could you really call it pride? Maybe pride of leaders who handle the affairs. The problem seems to be political. You ask most people for easy money and they'll say yes, so its no surprise that the Bolivians will want outside investments to be heavily taxed. They want as much money as soon as possible for programs. That always seems to be the trouble with politicians. Instead of long term ideas that work, they want to please the people.

Dr. Tufte said...

I'll go one step further. Are politicians who get themselves into situations like this suffering from too much pride, or are they just evil? Remember that concept of statistical murder? Making bad choices that lead to the loss of someone's life is still murder or manslaughter. This applies to politicians who make choices which lead to too little GDP in an economy.

kavindavis said...

Do they have to much pride, or evil. I would have to say evil.

Dr. Tufte said...

Spelling mistake in Kavindavis' comment.

Interesting point though - most religions make a point of coming out against pride.