Bolivia’s Trade History Report

Added on - 28 May 2020

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RUNNING HEAD: Protectionism and free trade0Protectionism and free trade
Protectionism and free trade1IntroductionProtectionism refers to the actions and policies of government which constrains internationaltrade. These actions are taken to protect local business from foreign competition. It protectsbusinesses by slowing economic growth and pushing up prices. It also creates competitiveadvantages and jobs. The policies of protectionism can be applied by tariffs, import quotas,product standards, exchange rates and government subsidies. It is designed to restrict freetrade and boost manufacturing of domestic nation (Switzer, Tom & Daniel Hannan 26.). Freetrade allows a country to trade without any interference of government. These interferencesare tariffs, subsidies and quota etc. Free trade is an ideal trading situation. It is just theabsence of any trade policies. In this report, Bolivia’s trade history is discussed. The social,political, economic overview and orography of nation is explained. The export and importvalue of country is categorised. Trade constraints and documents required for export andimport are discussed. Trade facilitation roadmap of country is explained to understandprotectionism and free trade.Trade history of BoliviaBolivia is classified as lower middle income country by the World Bank. Bolivia ranks 88among the largest export economy in the world. In 2004, the country had an estimated tradesurplus more than $340 million. It represented significant change in Bolivia’s economy(Long & Alan 63-67). In 1998, before the increased hydrocarbon exports, the country faced atrade deficit of $888 million. In 2002 also the country had negative balance of payments.However it was altered by the increase in export value. In 2015, the country imported $9.7Band exported $9.1B, it resulted in negative trade of balance. In the same year the GDP was$33B and per capita GDP was $6.95k. The top exports are gold, ore, petroleum gas andsoybean meal and imports are cars, delivery trucks, refined petroleum, construction vehiclesand pesticides. Bolivia mainly exports to Brazil, US, Argentina, Colombia and China. Thecountry imports from Chile, United States, Argentina and China.Social, political and economic overviewBolivia is an isolated country in South America. The country has the largest percentage ofpeople nearly 9.3 million who make-up two third part of population. The population growsannually at a growth rate of 2.4 percent. The 90 percentage of population in Bolivia are
Protectionism and free trade2Roman Catholic and remaining is protestant. From the view of education, there is divide inrural and urban areas of country. The literacy rate of education in urban areas remains high.The strength of the Bolivia economy are natural resources such as gas, oil, gold, silver, zinc,tin and manganese. The country has membership of Andean community and is associatedwith Mercosur. It also has the large foreign currency reserve.Bolivia is a democratic republic country. The country has the executive, legislative andjudicial branches of government. The president is elected after every five years. An executivecabinet is also elected. The president of country is responsible for setting economic policies,commanding armed forces and foreign diplomacy (Drury, Cooper, Jonathan Krieckhaus &Chika Yamamoto 39).. Bolivia is the world’s 95 largest economies. It has the second-largest stashes of natural gas.The country is also one among the world’s largest producers of cocoa. It is the main source ofincome for farmers in the country. The country’s economic development remains troubled byoperational and institutional problems. It suffers from the lack of energy due to thedependency on hydrocarbon sector. The weak regulatory framework and poor economicinfrastructure of country obstructs expansion of production. The involvement of state ineconomic activities is increasing through nationalisation. The judicial independence isreducing political interference in country (Lake, James & Daniel Millimet 156-178). The lawis not applicable in many areas due to widespread corruption. The lack of availability offinance in market stops entrepreneurial growth. Since 2014, the fall in gas and oil prices hasreduced the value of exports and revenues of government. According to the World Bank’sdoing business survey report, the country ranks 149thout of 189 countries. The shortcomingsin doing business are regulatory framework, rule of law and control of corruption (Graca,Joao Carlos & Teresa Nunes 111-140). Risk of social conflict, insecurity and drug traffickingare weakness of the country. The less economic diversity and dependence on oil and gas alsosymbolizes weakness. The country is landlocked and size of informal sector is small.Orography of BoliviaThe orography of the country is rare among the nations of South America. It is also one of thelandlocked countries on the continent. Bolivia’s orography includes Altiplano and LakeTiticaca. Altiplano is a highland hill of Andes and Lake Titicaca is the highest sturdy lake onthe Earth. The feature adds to Altiplano is Lake Titicaca on it’s northern end. The lake
Protectionism and free trade3controls the climate for a significant distance nearby it. It makes crops like maize and wheatpossible even in shielded areas. It is above the sea level. Altiplano is the highest hill and issituated between the two mountains, Cordillera Occidental and Cordillera Oriental. Altiplanocontains four major basins. The eastern side of the Altiplano is a flat area, which has servedas country’s north south transport corridor.Infrastructures (road, maritime, rail)Bolivia has varying infrastructure. The transport and communication policies are improvingand expanding transportation system of Bolivia. For the establishment of community,infrastructure is one of the operations of the country. Railway has a small role in thetransportation system of country. Mostly, transportation is done by road. The country has90.568 km of road, out of which 9,792 km are paved. 34,840 km is rock-strewn and 45,936km is dirt. The paved roads are connected La Paz to Africa, Desaguadero, Potosi, Trinidad,Cochabamba and Santa Cruz. Others roads are not passable and are extremely slow going dueto lack of poor maintenance. The country relies on road for transportation communication.Bolivia does not have actual coastline. At the end of four year war, the country lost 400 km ofcoastline and 120,000 km of territory. Chile has invested $100 million to assist maritimetrade of nation and offered some kind of access to sea. Peru approved dock facilities, tradefree zone and space for economic activities in 2010. It also offered an option to build apacific coast (Gandolfo & Giancarlo 253-275).The rail system of Bolivia has 3,960 km of track. It is divided into two divisions. The westerndivision is 2,500 km long which connects La Paz to Africa and Antofagasta, lake anchorageof Guaqui and main cities in Altiplano and Andean valleys. Most of the part of westerndivision is not operational and is in poor condition. It is because country is affected by thenatural disasters due to change in climate. The eastern division links Santa Cruz to Brazil andArgentina. It is operational and is maintained on regular basis. The country is constantlyincreasing it’s trade relations with other countries after becoming the member ofMERCOSUR (Krugman & Paul 171-179).Export and import valueAccording to the report of Economic Complexity Index 2015, Bolivia is the 88thlargestexport economy. It has the second largest natural gas stashes. The export of the country
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