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Natural Gas and Inequality in Bolivia after Nationalization

Author

Listed:
  • Lykke E. Andersen

    (Institute for Advanced Development Studies)

  • Johann Caro

    (Institute for Advanced Development Studies)

  • Robert Faris

    (Kennedy School of Government, Harvard University)

  • Mauricio Medinaceli

Abstract

The high oil prices and the sharp increases in royalties mean that the natural gas boom in Bolivia has become very important for the economy. This paper uses a Computable General Equilibrium (CGE) model to assess the impacts of this boom on key macroeconomic variables as well as the distribution of incomes in the society. From a macroeconomic perspective, the natural gas boom is a blessing, adding around 1 percentage point to GDP growth rates for at least a decade, and sharply increasing government revenues available for public spending and investment. However, the poorest segments of the population (rural small-holders and urban informals) suffer actual reductions in their real incomes, compared to the counterfactual scenario without the gas boom. This means that the natural gas boom not only causes an increase in inequality but also an increase in poverty. The paper finishes with some policy recommendations on how to counteract the negative side effects of the natural gas boom.

Suggested Citation

  • Lykke E. Andersen & Johann Caro & Robert Faris & Mauricio Medinaceli, 2006. "Natural Gas and Inequality in Bolivia after Nationalization," Development Research Working Paper Series 05/2006, Institute for Advanced Development Studies.
    • Handle: RePEc:adv:wpaper:200605
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    File URL: http://www.inesad.edu.bo/pdf/wp05_2006.pdf
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    References listed on IDEAS

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    1. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Andersen, Lykke Eg & Faris, Robert, 2002. "Natural Gas and Income Distribution in Bolivia," Documentos de trabajo 1/2002, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    3. A. De Santis, Robert, 2000. "The Impact of a Customs Union with the EU on Turkey’s Welfare, Employment and Income Distribution: An AGE Model with Alternative Labour Market Structures," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 195-238.
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    Cited by:

    1. repec:aru:wpaper:201304 is not listed on IDEAS
    2. Johnny Suxo, 2017. "Cuentas Ambientales del Departamento de Pando en Bolivia: Aplicación del Enfoque Insumo Producto a nivel sub-nacional," Development Research Working Paper Series 03/2017, Institute for Advanced Development Studies.
    3. Lykke E. Andersen, 2006. "How Best to Use the Extraordinary Hydrocarbon Revenues in Bolivia: Results from a Computable General Equilibrium Model," Development Research Working Paper Series 14/2006, Institute for Advanced Development Studies.
    4. Christian Velasquez-Donaldson, 2007. "Analysis of the Hydrocarbon Sector in Bolivia: How are the Gas and Oil Revenues Distributed?," Development Research Working Paper Series 06/2007, Institute for Advanced Development Studies.
    5. Carlos Jemio, Luis & E. Andersen, Lykke & Medinaceli, Agnes, 2018. "Bolivia’s Green National Accounts through a Commodity Super Cycle," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", issue 29, pages 52-85, May.

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    More about this item

    Keywords

    Natural Gas; Inequality; CGE model; Bolivia;
    All these keywords.

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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