2017 Index of Economic Freedom

Bolivia

overall score47.7
world rank168
Rule of Law

Property Rights25.7

Government Integrity32.6

Judicial Effectiveness15.4

Government Size

Government Spending49.1

Tax Burden86.1

Fiscal Health81.4

Regulatory Efficiency

Business Freedom58.9

Labor Freedom35.8

Monetary Freedom66.4

Open Markets

Trade Freedom76.0

Investment Freedom5.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 11.5 million
  • GDP (PPP):
    • $74.4 billion
    • 4.8% growth
    • 5.5% 5-year compound annual growth
    • $6,465 per capita
  • Unemployment:
    • 3.6%
  • Inflation (CPI):
    • 4.1%
  • FDI Inflow:
    • $503.4 million
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Bolivia’s overall economic development remains severely hampered by structural and institutional problems. Heavily dependent on the hydrocarbon sector, the economy suffers from a lack of dynamism. Poor economic infrastructure and a weak regulatory framework impede diversification of the productive base.

The state’s presence in economic activity is gradually increasing through nationalization, and judicial independence is becoming more vulnerable to political interference. The rule of law is weak in many areas, with government integrity undermined by pervasive corruption. The lack of access to market financing precludes entrepreneurial growth, and the investment regime lacks transparency.

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Background

Landlocked, resource-rich Bolivia is one of the world’s largest producers of coca leaf and a major transit zone for Peruvian cocaine. President Evo Morales began his third consecutive term in 2015. In 2016, voters rejected his plan to run for a fourth term in 2019, but his ruling Movement Toward Socialism (MAS) party is trying to promote another referendum on that question. In a bid to drum up support, Morales has increased nationalistic rhetoric (particularly over Bolivia’s border dispute with Chile) and has sought to silence critical voices in the media and nongovernment organizations. His government also has threatened some opposition politicians. Bolivia maintains strong alliances with Cuba, Venezuela, and Iran. Nearly four out of 10 Bolivians live below the poverty line.

Rule of LawView Methodology

Property Rights 25.7 Create a Graph using this measurement

Government Integrity 32.6 Create a Graph using this measurement

Judicial Effectiveness 15.4 Create a Graph using this measurement

An unreliable dispute resolution process and the lack of adequate land title verification create risk and uncertainty in real property acquisition. Although Bolivia’s highest courts have occasionally asserted some independence from the executive, the ruling MAS party tightly controls all institutions. Moreover, the judicial system remains highly discredited as a result of ongoing scandals, corruption, and influence-peddling.

Government SizeView Methodology

The top income tax rate is 13 percent, and the corporate tax rate is 25 percent. Other taxes include a value-added tax and a transactions tax. The overall tax burden equals 24.4 percent of total domestic income. Government spending has amounted to 41.2 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.1 percent of GDP. Public debt is equivalent to 39.7 percent of GDP.

Regulatory EfficiencyView Methodology

The entrepreneurial environment is burdened by red tape, corruption, and inconsistent enforcement of commercial regulations. Employment regulations are rigid and not conducive to productivity growth. There are government-established minimum wages for the public and private sectors. The cost of state gasoline, diesel, kerosene, natural gas, liquefied petroleum gas, jet fuel, and fuel oil subsidies is nearly 8 percent of GDP.

Open MarketsView Methodology

Trade is important to Bolivia’s economy; the value of exports and imports taken together equals 85 percent of GDP. The average applied tariff rate is 4.5 percent. The government prioritizes domestic investment over foreign investment. The financial sector is vulnerable to state interference and poorly developed. Credit to the private sector has expanded very slowly. Political unrest hinders the development of a modern capital market.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Chile76.5-1.2
2Colombia69.7-1.1
3Uruguay 69.70.9
4Jamaica 69.52.0
5Peru68.91.5
6Panama 66.31.5
7Saint Vincent and the Grenadines65.2-3.6
8Saint Lucia65-5.0
9Costa Rica 65-2.4
10El Salvador 64.1-1.0
11Dominica63.7-3.3
12Guatemala 631.2
13Dominican Republic62.91.9
14Paraguay 62.40.9
15Trinidad and Tobago61.2-1.7
16The Bahamas61.1-9.8
17Nicaragua 59.20.6
18Honduras 58.81.1
19Belize58.61.2
20Guyana58.53.1
21Barbados54.5-13.8
22Brazil52.9-3.6
23Argentina50.46.6
24Haiti49.6-1.7
25Ecuador49.30.7
26Suriname48-5.8
27Bolivia47.70.3
28Cuba33.94.1
29Venezuela 27-6.7
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