The Economic Rescue of Bolivia: A Methodological Proposal

25 Jan The Economic Rescue of Bolivia: A Methodological Proposal

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First: No one has all the answers, and that is why this must be a team effort.

Second: There is a crucial distinction between a planned economy and economic planning. My seasoned colleagues in economics will know what I mean.

Third: As seen in many international, private, and public institutions, the creation of short-, medium-, and long-term strategic plans is a fundamental practice.

With these principles in mind, I propose a seven-step methodology to address Bolivia’s economic challenges.

Step 1: Define a clear five-year objective

Establish a specific and measurable development goal for the next five years. Examples include reducing poverty by a certain percentage, lowering inequality, cutting CO₂ emissions, or creating a specific number of jobs.

The cornerstone of this process is alignment: all policies, strategies, and resources should support this overarching objective. For instance, controlling inflation is not an end goal but rather a means to achieve broader developmental aims.

Step 2: Engage the macroeconomic team

Pose a straightforward question to this team: What level and type of economic growth are needed to achieve the five-year objective identified in Step 1?

Certain relationships are relatively simple. For example, reducing informal unemployment may require the economy to grow at a specific rate. Other goals, such as reducing CO₂ emissions, might demand a slower, more sustainable growth trajectory or structural adjustments.

Once the macroeconomic team runs their models, they will provide the growth targets necessary to meet the defined objective.

Step 3: Involve the sectoral team

This team comprises experts in key industries such as agriculture, tourism, hydrocarbons, mining, and banking. Ask them: How much must each sector grow, and in what way, to meet the macroeconomic targets from Step 2?

The insights from this team will outline a sector-specific roadmap for achieving national growth.

Step 4: Collaborate with the social team

This group includes specialists in employment, health, education, gender equity, and poverty alleviation. Their task is to address a vital question: How will the projected economic growth impact social indicators?

If challenges arise—such as job losses in state-owned companies like YPFB—this team should propose mitigation measures. This step is essential to ensure that economic growth is inclusive and socially equitable.

Step 5: Consult the private sector

Engage private sector stakeholders with a clear query: Can you contribute to achieving the development objective (Step 1), growth targets (Steps 2 and 3), and social goals (Step 4)?

They will outline their capacity to support these goals, often highlighting the need for tax reductions, incentives, or other concessions. Your role is to listen and record their input for further analysis.

Step 6: Consult with your fiscal, monetary, and legal teams (thanks to Juan Pablo for the addition)

Fiscal team: Determine the structure of Bolivia’s national budget—revenues, expenditures, public investment, and debt—that will support the goals outlined in Steps 1–5.

Monetary team: Identify the most effective monetary and exchange rate policies to complement these objectives.

Legal team: What legal modifications are necessary to address these economic challenges?

If conflicts or inconsistencies emerge, revisit Step 1 and iterate until a coherent and consistent Strategic Plan is developed.

Step 7: Create a communications strategy

Once the Strategic Plan is finalized, hand it over to your communications team. Ask them to develop a Media Plan that effectively conveys the plan’s objectives and key messages to the public in a clear and relatable manner.

Bolivia’s economic rescue demands a multidisciplinary, methodical, and consensus-driven approach. While individual brilliance is invaluable, what the country needs now are agreements instead of impositions, unity instead of division, and a collective vision of development that shapes a sustainable and inclusive future.

Wishing you all a productive and inspiring weekend,

S. Mauricio Medinaceli Monrroy

Bogotá

January 25, 2025