Nationalization today: Private investment up in Bolivia

This is part of my ongoing attempt to remind this site’s readers that private entrepreneurs often don’t care about the nationalization of oil and gas companies and other such strategic industries. Here’s Reuters on private investment in Bolivia. And before you get started, do note: there are few hard numbers in this piece, and lots of “to be sure” — but this excerpt gives the flavor:

Entrepreneurs are even waking up to El Alto’s potential.

Its first supermarkets, shopping centers and cinemas are planned — multimillion-dollar private sector investments that would have been unthinkable almost anywhere in Bolivia a decade ago.

Banks and pizza delivery stores have set up shop in the city’s stark, traffic-choked streets and its bare brick buildings are climbing higher into the thin air as local commerce thrives 4,050 meters (13,300 feet) above sea level.

“People hardly bought anything in the past. With this government there’s business,” said Alicia Villalba, 33, selling Brazilian-made aluminum pans at a twice-weekly market where everything from livestock to second-hand cars is on sale.

Go read the rest if you like to know what’s going on in Bolivia or if, more generally, you need a case study to show:

1. Aggregate demand = consumption + investment + government + net exports
2. No risk, no reward

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5 thoughts on “Nationalization today: Private investment up in Bolivia

  1. Dr. Faustus

    Yes, if you are a ‘Bolivian’ entrepreneur and there is increased economic activity taking place in the country because of higher metal prices, you would surely be inclined to take some ‘risk.’ And I’m sure there are some private entrpreneurs, and small/medium sized companies, outside of Bolivia who would be inclined to take risks there as well. That’s not the question however. Multinational corporations who are best equipped to exploit mineral/gas resources in places like Bolivia will avoid such countries if there is not a ‘fair’ court available for settlements of investment disputes. Nobody is arguing that entrpreneurial investments won’t take place. As noted by the Reuters article there has indeed been limited economic growth taking place in the gas/mining areas of Bolivia. But that’s not as a result of any ‘big’ mutlitnationals taking any economic risks in Bolivia. That ain’t happenin. For one thing metal prices, and cocoa prices, are skyrocketing in Bolivia. That same Reuters article notes:

    “Critics say a disproportionate amount of public money has been poured into the steamy Chapare region that is home to much of Bolivia’s illegal coca crops and a stronghold of Morales support.

    Mining cooperatives have won significant political concessions from Morales and a few have grown rich due to soaring global metals prices.

    In mining cities like Oruro and Potosi, famous for the Cerro Rico (Rich Mountain) of colonial times, newspapers carry stories of miners-turned-millionaires and fantastic earnings luring fortune seekers from other parts of the country.”

  2. sapitosetty Post author

    I was just about to agree with you when I saw this, from Correo del Caroní today:

    Grupo japonés Shinsho evalúa inversión en industrias básicas
    Lunes, 19 de Noviembre de 2012

    Una delegación de la trasnacional realizará visitas técnicas a varias estatales de Ciudad Guayana.

    El grupo japonés Shinsho, del grupo Kobe Steel, estima invertir 300 millones de dólares en industrias locales, entre las cuales estarían Sidor y las briqueteras Orinoco Iron, Comsigua y Venprecar.

    El director general de la transnacional de acero, Horitaka Morita, estará hoy en visitas técnicas en las industrias locales para formalizar la propuesta de inversión “a los fines de incrementar la producción de estas empresas con miras a la colocación de estos productos en el mercado mundial”, informó a través de una nota de prensa.

    Morita destacó que Guayana representa una verdadera opción de inversión, “hemos evaluado otros países pero las ventajas comparativas de Venezuela son superiores, por ello traemos esta propuesta que consideramos debe ser analizada en profundidad por los directivos de Sidor, Orinoco Iron, Venprecar y Comsigua a los fines de arrancar los trenes de producción e iniciar el proceso de exportaciones”.

    Shinsho American Corporation fue establecida en los Estados Unidos en 1966. Hoy, cinco sucursales y dos filiales se encuentran en dicha nación y reportan ventas anuales que alcanzan a los $190 millones.

    =====

    So, yeah, you’re basically right, but we’ll see what happens longer term.

  3. Gringo

    “This is part of my ongoing attempt to remind this site’s readers that private entrepreneurs often don’t care about the nationalization of oil and gas companies and other such strategic industries” when they are considering building a supermarket or a movie theater.

  4. Boli-Nica

    What I find interesting is that the article doesn’t mention what a lot of Bolivians believe also contributes to this boom: cocaine dollars, flooding into the country. This starts at the cocalero selling his crop and/or dabbling in the first stages of refining which is as simple as making a crude paste with coca leaves and kerosene. These dollars need to go somewhere, and that means investment in legitimate businesses, real estate as well as just plain surge of demand for consumer goods. That creates jobs, increases spending power around. When the government in the late 90’s seriously made gains in coca erradication economists estimated it affected GDP and added to the recession in the early 2000’s. This is just the other side. .
    The economy is doing ok, and would be without coca/cocaine, the coca dollars just add to it.

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