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SCHOOL OF LIBERAL STUDIES

BA / BBA SEMESTER 4
MACROECONOMICS I (17A404)
Project Report

Country Bolivia
Section A & Group Number _____
Submitted to faculty: _____________
Date of Submission: _______________

Student's Details

Roll No Name of the Student

22BABBA047 NISHTHA SHARMA

22BABBA046 SHREY VIMAWALA

22BABBA048 PARAM BHADANI

22BABBA050 LAKSHYA DAXINI

22BABBA051 ANUSHKA KUMBHARE

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Introduction
A landlocked gem in central South America, Bolivia boasts a rich tapestry of history, culture, and geography.
Despite lacking a coastline, it surprises with dramatic variation. The mighty Andes mountains pierce the
western skies, while the vast Amazon rainforest sprawls in the east. Lake Titicaca, the world's highest
navigable lake, rests peacefully on the Altiplano plateau. Steeped in history, Bolivia was once the heart of
empires like Tiwanaku and Inca. Spanish influence is evident in its architecture and language, with Aymara and
Quechua sharing official status alongside Spanish. From the bustling, high-altitude capital of La Paz to the
serene beauty of the lake and the wild Amazon, Bolivia offers a captivating blend of modern and traditional,
natural wonders, and cultural richness.

Geography
Bolivia boasts a remarkably diverse geography. The majestic Andes Mountains, containing some of the world's
highest inhabited areas, dominate the western region. This range gives way to the surreal expanse of the Uyuni
Salt Flat and eventually to the verdant Amazon rainforest in the east. This rich topography is home to a
population with a strong indigenous heritage, reflected in its cultural tapestry and languages.

Political
Bolivia operates under a multi-party democratic system, with a president at the helm of the executive branch. In
recent years, a concerted effort has been to bolster indigenous representation and ensure their inclusion in the
political landscape. This reflects a broader societal acknowledgment of the importance of indigenous rights and
cultural heritage. Additionally, Bolivia has been assertive in asserting control over its rich natural resources,
aiming to maximize their benefits for the nation's development. This emphasis on sovereignty over resources
aligns with a broader trend in Latin America, where many countries seek to manage their natural wealth for the
collective good and economic stability.

Economic
Bolivia is classified as a lower-middle-income country by the World Bank. However, its economic potential is
significant. The nation possesses many mineral resources, including lithium, tin, silver, and copper. While these
resources have historically driven economic growth, they've also exposed Bolivia to the volatility of global
commodity prices. Recognizing this, the government is actively pursuing economic diversification to ensure
sustainable development and improve the lives of its citizens.
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3. GDP GROWTH RATE OF BOLIVIA: The GDP GROWTH RATE, OR GROSS DOMESTIC GROWTH
RATE is the measure of the percentage of a country's GDP from one period to the other. It indicates how fast or
slow a country's economy is expanding or contracting.
A positive rise in GDP GROWTH RATE indicates economic expansion while the negative rate indicates
economic contraction.

We will now be looking at the data available to us about BOLIVIA’S GDP GROWTH RATE from the year
2018 to 2024(current).

YEAR 2018 2019 2020 2021 2022 2023 2024

GDP 4.224 2.217 -8.738 6.106 3.8 3.2 3

GROWTH
RATE

INFERENCE: As we look at the chart we see the GDP GROWTH RATE from the year 2018 till the year 2024
for Bolivia. Now as we look at the graph we can see the dip in the percentage change after the year 2019.
Bolivia's sustained strong economic growth following the 2014 end of the commodity boom was largely
dependent on increased public spending and domestic credit expansion. These actions, in an unfavorable
environment, raised national debt and decreased foreign reserves and fiscal savings accrued during the boom.
This was made worse by the COVID-19 pandemic-related health and economic crises.
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ANALYSIS: Bolivia’s growth rate fluctuated and saw a fall from the year 2019-2020 because of significant
twin deficits and low foreign exchange reserves. The GDP GROWTH RATE as seen in the graph shows us that
the growth rate has fallen to -8.738 in the year 2020. COVID was also one of the factors that was responsible
for the decline seen in the year 2020 which disrupted the economic activities in Bolivia.

CONCLUSION: As far as we saw Bolivia’s growth rate began to slope downwards from the year 2019 to the
year 2020 which gives us an insight about the economic challenges that the country is facing. The decline in
the growth rate reflects the internal and external factors making it challenging for the country to stay stable
economically, politically, and socially as well. The COVID-19 pandemic further increases the economic
challenges for the country. Bolivia’s post-pandemic recovery was possible because the country emphasized
addressing the root causes of economic challenges and promoting economic growth.
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4. POPULATION OF BOLIVIA: Population is one of the most important economic variables for a country
which directly influences the economic well-being and development. Population plays a central role in shaping
the aspects of the economy. It influences labor force participation and also gives us insight into consumption
patterns. It is important to keep the number of the population in mind to formulate the perfect policies for the
citizens and also the economic development strategies.

We will now look at the data to see the population growth in Bolivia.

YEAR 2018 2019 2020 2021 2022 2023 2024

POPULATION 11.31 11.47 11.63 11.8 11.96 12.13 12.29

INFERENCE: From the chart, we can see that there is a stable rise in the population of Bolivia. The growth
may be attributed to factors like improved health care, increased birth rate, and decline in death rate.

ANALYSIS: The stable rise in Bolivia’s population reflects consistent growth. The larger population can
contribute to the economic development of the country, there will also be an increase in consumer demand but
this growth can be a challenge as well because there will be pressure on the higher consumption of resources
and social services. There will also be an expansion in urbanization which also needs huge management to
promote sustainable development and address the needs of the urban population.
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CONCLUSION: The rise in Bolivia’s population underscores its demographic transition which is responsible
for direct implications on the country’s economic development. With population growth the opportunities for
economic expansion increase. By leveraging its growth and effectively managing it, Bolivia can pave the way
for sustainable and economic development opportunities.
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5. GDP OF BOLIVIA: GDP is the monetary value of a country where all the market value of goods and
services are noted and GDP is often used by a country's government to measure its health. The indicator is
altered to consider it reliable. Several factors affect it.We will now be looking at the data available to us about
BOLIVIA’S GDP from the year 2018 to 2024(current).

YEAR 2018 2019 2020 2021 2022 2023 2024

GDP in 402876479 408953228 366298438 404061116 440082828 454165479 467790443

US$ 3 5 0 9 7 2 5

INFERENCE: Looking at the graph we can observe the GDP rise and fall of the nation called Bolivia. Several
factors are responsible for the movement in the graph.

ANALYSIS: The GDP was on an upgoing graph for a long time, but a sudden dip in the year 2020 was seen
due to a major reason of COVID. It affected the GDP very badly. Pre-Covid, the nation was doing well, but due
to COVID, a dip was seen. But Post COVID, a major jump in GDP was seen in 2021-2022-2023-2024. The
nation's economy observed a boom in the graph. The IMF executive board approved US$327 million for
emergency support to Bolivia. The nation also changed its tax structure and improved its methods. The Central
Bank of Bolivia uses Pegged nominal exchange rate as nominal Anchor & net domestic credit rate as its
operational target. Bolivia follows a mixed Economy System.
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CONCLUSION: The current status of the Bolivian Economy is very stable and on a constant growth. Bolivian
Govt observed the crisis and so they took a great lesson from it and are becoming stronger, year by year.
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6. INFLATION RATE OF BOLIVIA: A rise in price level or goods and services of a nation is known as
Inflation.
We will now be looking at the data available to us about BOLIVIA’S INFLATION RATE from the year 2018 to
2024(current).

YEAR 2018 2019 2020 2021 2022 2023 2024

INFLATIO 2.27 1.84 0.94 0.74 1.75 3.03 2.52

N RATE

INFERENCE:
A great dip was seen in the year 2020 and 2021. It started to dip from 2018. Inflation rate has been decent over
all the years in BOLIVIA.

ANALYSIS: The annual approx growth rate was 4.4% in 2018. Even by the end of 2019 the COVID crisis was
seen due to which every financial aid was given to the health sector and not the industrial sector due to which
the fall in the graph can be seen in 2019 & 2020. After 2020 a slow rise was seen in 2021 due to fall in COVID
cases and so the country focused on the economy and had a rise in every sector. The largest fall was seen with
an 8.9% decrease. The Bolivian Govt, also introduced public policies for internal wellbeing. They do take
priority on Bolivian Investment rather than on foreign Investment.
The exchange rate is kept decently low due to the economy favoring imports. Bolivia’s chamber of commerce
estimates $3.6 Billion of smuggled goods a year, which is 9% of its GDP
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CONCLUSION:
The main reason for the low inflation rate of Bolivia is also a major one to subsidies by the government to
every sector.
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7. REVENUE OF BOLIVIA: The yield of sources of income (such as taxes) that a political unit (such as a
nation or state) collects and receives into the treasury for public use.

From this data, it appears that Bolivia's revenue experienced fluctuations over these years, with a slight
decrease in 2020 and 2021 followed by some recovery in the subsequent years.

Year 2018 2019 2020 2021 2022 2023 2024

26.8408192
Revenue 28.95110066 28.84492736 25.25406201 25.06994583 28.375218 27.25676502 2

INFERENCE:
By looking at the chart, we can see the fall of revenue of bolivia in year 2020 and 2021.

ANALYSIS:
Bolivia's income from 2018 to 2024 shows a pattern of change for the country's economy during that period.
Revenues first fell in 2018 and 2019, then fell again in 2020, with further declines. But there is a slight
recovery in 2021 and there is some increase in revenues. Another change occurred in 2022, but after that date,
revenues gradually decreased until 2024. In addition, foreign trade, domestic policies and political stability may
also be greatly affected. Bolivia's ability to finance healthcare, infrastructure, and public services is affected by
revenue fluctuations, which can affect the country's economy as a whole. To better understand Bolivia's
economy in past years, future research should include various economic variables, including GDP growth,
inflation, and unemployment rate.
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CONCLUSION:
Over the previous seven years, Bolivia's revenue has varied, with peaks and troughs that have reflected the
nation's economic fluctuations. Revenue had a minor dip in 2019 following a peak of 28.95 in 2018, and then a
more notable reduction in 2020 and 2021. There was a significant uptick in 2022, but in 2023 and 2024 there
was yet another decrease. These variations underscore the necessity of a comprehensive examination of
economic variables in order to foster sustainable expansion.
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Bolivia’s Government Expenditure

Government Expenditure refers to the money spent by the government on the acquisition of
goods and provision of services such as education, healthcare, social protection, and defense.

Year 2018 2019 2020 2021 2022 2023 2024

Government
expenditure, percent
of GDP (% of GDP) 37.09449656 36.06584907 37.976146 34.39820421 35.49866725 32.99 32.51
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Expenditure on GDP is the total value of spending on goods and services produced within the
borders of a country.

Inference
-As the graph shows higher expenditure in the year 2018 than in 2017 then it falls which shows low
Expenditure of government and again in 2022 it spiked and continued with growth.
ANALYSIS AND CONCLUSION
- The general government expenditure in Bolivia continuously increases between 2017 - 2024 Except
for the years 2020 and 2021. In the year 2020-21, the COVID-19 pandemic hit due to which a
lockdown was imposed and the country spending was less, affecting government spending. Bolivia
spendings consist of military expenditure, Education, and country development budget.
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BALANCE OF PAYMENT

The balance of payment is the statement that files all the transactions between the entities,
government anatomies, or individuals of one country to another for a given period.

Balance of payment Bolivia

year Current account balance (BoP, current US$)

2016 -1.91 billion

2017 -1.9 billion

2018 -1.72 billion

2019 -1.37 billion

2020 -0.02 billion

2021 0.87 billion

2022 -0.18 billion

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INFERENCE
The graph here shows a stable line except for the year 2020 where it increased a bit after which it
spiked in the year 2021 and again in the year 2022 it started to decline

Analysis and conclusion

There was an increase in Bolivia's balance of payments (BoP) in 2021 which could be influenced by
various factors such as Export Performance: Bolivia experienced an increase in exports during 2021.
Remittances: Remittances from Bolivians living abroad could have increased in 2021 Foreign Direct
Investment (FDI): Higher levels of FDI can also contribute to an increase in the Balance of Payment.
Government policies - it aims at promoting exports and increasing foreign direct investment which
influences balance of payment.
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INTEREST RATE
The interest rate represents the cost of borrowing money or the yield on a loan. Typically, it is stated as
a percentage of the principal—that is, the initial loan or investment amount. Interest rates have a
significant impact on investment, borrowing and saving decisions, and total economic activity.

Interest rates can vary significantly from country to country and can change over time due to various
economic factors and decisions made by central banks.

Here is the data of Bolivia’s Interest Rate from 2018 to 2022:

2018 2019 2020 2021 2022

Interest Rate 4.8 9.2 9.6 3.9 2.5

Bolivia's central bank, the Banco Central de Bolivia (BCB), is typically in charge of overseeing the
country's monetary policy. To affect lending and borrowing rates in the economy, the BCB sets the
benchmark interest rate, also referred to as the Monetary Policy Rate (Tasa de Política Monetaria, or
TPM). Other interest rates in Bolivia are then compared to this rate.

INFERENCE:
ANALYSIS:
CONCLUSION:
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MONEY SUPPLY
The money supply of a country refers to the total amount of money circulating in the economy at a
given time. It includes all forms of money that are widely accepted for transactions within an economy,
such as physical currency (coins and banknotes) and various types of deposits held by individuals,
businesses, and financial institutions.

Here is the data of Bolivia’s Money Supply from 2018 to 2022:

2018 2019 2020 2021

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Money Supply 249.73 245.83 268.65 285.73
(billion)

INFERENCE:
ANALYSIS:
CONCLUSION: