The paradox of the success of the socialist economy of Evo Morales in Bolivia

The iconic fast-food chain said goodbye to Bolivian land just five years after landing and failed to achieve the desired results.

Bolivia at that time had more than 15 years of liberal, market-oriented governments open to international capitals.

However, its economy was so contracted that the purchase of a menu of this international chain was very expensive for most Bolivians, including those of the middle class.

Thus, this country became the first in Latin America where McDonald's crashed and closed down.

Seventeen years later, a lot has changed in Bolivia. Moreover, the ideological shift in the country from presidents aligned to market mandates to one that, in his speeches, ruthlessly whipped international and transnational capital.

And it also sent a clear message to the world during its first year of mandate by decreeing the nationalization of hydrocarbons.

The paradox is that, according to analysts and investors, today, McDonald's would succeed without a problem, with several hundred franchises and international companies having landed in the country over the last decade.

Socialist Bolivia's Evo Morales (who is seeking a fourth presidential term in the parliamentary elections on 20 October) has become fertile ground for food, clothing, foreign home appliances as well as transnational corporations dedicated to areas such as oil, mines. or agro-food.

A decade late

It is estimated that Bolivia has reached the era of global consumption with at least a decade of delay.

Between the end of the last century and the beginning of the present century, shopping centers were barely visible in this country, as were the international food chains that have already multiplied in many Latin American cities. .

Only a handful of multinationals were likely to invest in a Bolivia in crisis and poor. According to the World Bank, in 2002, 63% of its inhabitants lived below the poverty line, whereas in 2018 this figure was reduced to 35%.

In addition, foreign direct investment in the country reached $ 250 million in 2005, up from $ 1,750 in recent years, according to the Economic Commission for Latin America (ECLAC).

"This big change is what helped us a lot," said Alfredo Troche, former president of the Bolivia Chamber of the franchise and a market analyst.

Troche explains to BBC Mundo that more than 300 international channels have decided to enter Bolivia in the last decade, mainly in the sectors of food, fashion, entertainment and services, not to mention the multi-million dollar investments made by oil and mining companies. Arrivals from abroad ..

"Previously, the market was very small, nothing attractive, but since 2010, brands have started to enter much more strongly, especially because of the opening of shopping centers," says Troche.

The analyst points out that "favorable macroeconomic indicators and sustained growth are a good sign for foreign investment" and this is one of the determining factors.

He adds that the revenue growth of international channels in the country is around 11% per year.

Santa Cruz de la Sierra, Bolivia's most populous city and home to most domestic and foreign industries, is the main host of transnational international chains, oil and agri-food companies.

It is followed by La Paz, the seat of the country's powers.

Socialism for some, capitalism for others

Samuel Doria Medina was second in the 2014 presidential election and his seat in Congress is the largest of the opposition.

In addition, he is the businessman who brought Burger King to Bolivia at the turn of the century and kept the franchise afloat during the years of recession in the country. Now he operates in the fields of tourism and food.

The politician, in an interview with BBC Mundo, says that the rise of transnational corporations in Bolivia is explained by the fact that Morales reigns over "capitalism for his friends and socialism for his enemies".

"Morales is trying to attract foreign investment to try to replace public investment and that is why it has a dual discourse totally out of touch with reality," said Doria Medina.

According to Doria Medina, the Bolivian president "says one thing and makes another" when he clashes with international capitalism and is at the same time a friend of the big capitalists.

"There are very big contradictions: sectors such as coca growers, who do not pay taxes, are allowed to practice government-run wild capitalism, as are big entrepreneurs in the sector. are also very close to Evo Morales, "he said. .

Doria Medina reports that Bolivia is a country characterized by legal uncertainty and a weak separation of powers. It is difficult to invest if you are not part of the system of "friend capitalism" which brings together very powerful companies from different regions.

Paradoxically, added the interviewee, it is now the Bolivians who have the most difficulty in carrying out economic projects because of bureaucracy and fiscal policies.

"Many multinational oil companies have received many favors and obtained very favorable conditions thanks to the government, even if the official speech speaks of a nationalization of hydrocarbons," he concludes.

Profits

Transnationals in the oil and mining sectors, for example, are the main beneficiaries of the exploitation of Bolivian natural resources, said experts from the Center for Labor and Agrarian Development (CEDLA), based in La Paz.

"The cycle of high commodity prices has encouraged accelerated exploitation and, in many cases, the overexploitation of hydrocarbons and minerals, resulting in an absolute increase in the profits of transnational corporations and, at the same time, an increase in profits. lack of mandatory exploration (of the dangerous reduction of reserves (of Bolivia), "says analyst Carlos Arze at BBC Mundo.

The expert points out that the privileges that oil companies have access to range from incentives to production and to taking into account the costs of "opening protected areas and national parks to the exploitation of hydrocarbons".

According to CEDLA data, transnational corporations control 80% of Bolivia's hydrocarbon production and, after what they have exploited all these years, have not invested in exploration or the development of new fields.

"Over the nearly 14 years of government, no new major fields have been discovered," Arze said.

In the case of mining, the expert points out that the most illustrative case is that of the multinational San Cristóbal, which manages the mine that produces the largest amount of the main metallic minerals destined for mining. ;export.

"It pays the state less than 10% of the value of its exports in fees and taxes," says the researcher CEDLA.

"The secret of Bolivian success"

For the Evo Morales government, the "secret of their economic and social growth" is what they called the socio-economic model of community production.

This was stated by the Minister of Economy, Luis Arce Catacora, considered one of the architects of the so-called "Bolivian miracle" that has placed the country's economy among the most dynamic of the country. 39 Latin America in recent years.

Arce Catacora does not coincide with those who consider transnational corporations as the major beneficiaries of the exploitation of natural resources.

The minister assured that the nationalization of hydrocarbons was one of the three pillars of Bolivia's economic transformation, with the redistribution of income and the active participation of the state in the economy.

"Nationalization has determined that resources previously transferred abroad by transnational corporations operating in our country remain reserved for Bolivians," said Arce Catacora.

The minister maintains that the policy of links and redistribution initiated in the Morales government is the reason why Bolivia has extended its consumption capacity.

"(Bonds) have had a dynamic effect on domestic demand, benefiting not only Bolivian consumers, but also large, medium, small and even microenterprises, who have seen their sales increase unprecedented." he concludes.

A country that spends

Arce Catacora does not mention it, but market analyst Alfredo Troche acknowledges that the increase in spending capacity in Bolivia has not only benefited the domestic industry but also the transnational.

"People have changed, for example, as the distances are getting longer and shorter, at noon, they prefer to eat a fried chicken or a burger instead of going home. that's why franchises continue to grow, "he says.

But it is not just about food, the relatively new consumerism in Bolivia has already alerted local manufacturers who are seeing a growing preference for foreign products.

This alerts the National Confederation of Small and Medium Enterprises of Bolivia in recent years.

"There is a consumer culture from abroad, they are looking for brand-name products and not quality," said the entity concerned about the decline in sales due to the massive influx of goods into from abroad.

This concern has already prompted the government to establish that a percentage of the premiums paid to workers for Christmas and the end of the year must be spent on domestic products.

A measure that shows that among the many changes (good, regular or bad) occurred in the three mandates entrusted to Evo Morales, are the habits of consumption and consumption of Bolivians.

Therefore, in Alfredo Troche's opinion, if McDonald's wants to return to Bolivia, it's time.

BBC