A Conversation with Marcelo Zabalaga

Bolivia’s success as one of the fastest growing economies in the past decade stems from its unique economic model, argued Central Bank president Marcelo Zabalaga at the Inter-American Dialogue on September 23, 2011. Under President Evo Morales, Bolivia has strived to increase state involvement, redistribute wealth, and distance itself from North American financial influence.

The Central Bank is focused on expanding the internal Bolivian market and decreasing external expenditures. “We need to promote consumption in order to maintain jobs and keep the internal economy moving,” Zabalaga remarked. He sees this as a way to isolate Bolivia from future shocks to the global economy. Zabalaga did not express concern that natural gas exports account for one third of Bolivia’s GDP. He instead argued that rising internal demand would overcome any deficit as Bolivia’s primary trading partners, Argentina and Brazil, become more energy independent.

The nationalization of natural resources, especially petroleum, is crucial to Bolivia’s economic model. Addressing the 82 percent tax increase on the oil industry since 2006, Zabalaga argued that only two of 60 oil companies have discontinued services. Although some participants expressed concern about Bolivia’s weak private sector, the Central Bank sees no need to stimulate private investment. According to Zabalaga, private investment has increased since 2009, signaling greater private sector confidence in the Morales government. Still, the Central Bank maintains that the public sector is strong without private investment, having created ten new nationalized companies in the past year, including a new national airline.

To sustain the current level of growth in Bolivia, Zabalaga will continue to focus on internal investment, particularly in industrial sectors. He expressed a grand vision for Bolivia’s future role in global development, insisting that “the actions taken by emerging economies, such as Bolivia, are the central locomotive power that moves the global economy,” creating balance and stability in the international system.

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