Bolivia

Bolivia is a country in South America that has recently attracted the interest of foreign entrepreneurs. The country near the northern Andes is known for having a huge amount of natural resources, including such important minerals as iron, silver, copper and tin.

The official name of the country is the Plurinational State of Bolivia. The state occupies an area of ​​1,098,581 km2 (29th in the world). The population is about 12,527,687 people (as of the end of 2024).

Ethnic composition: - Indians 55% (mainly Quechua and Aymara), mestizos 30%, whites 15%. Religious composition: Catholics - 59%, Protestants - 11%, Incanists - 15%, atheists and agnostics - 12%, Buddhism and others - 3%.

There are 43 living languages ​​​​in Bolivia; According to the 2009 Constitution, 37 languages ​​have official status: Spanish and 36 Indian languages, of which the most common are Quechua and Aymara. According to the 2009 Constitution, all government agencies are required to choose an Indian language of work in addition to Spanish.

The official currency of the country is the boliviano.

Sucre is the capital of Bolivia and the seat of the Supreme Court. Despite this status, most of the country's government agencies are located in the city of La Paz. La Paz, full name Nuestra Señora de La Paz, is a city that actually serves as the capital of the state (since 1898). The city is home to a number of food, light, and tobacco industry enterprises. Cement, glass, furniture, and other industries are well developed.

Santa Cruz de la Sierra is the largest city in Bolivia and the country's main economic center. The city agglomeration creates about 35% of the country's GDP and attracts 40% of all foreign investment coming into Bolivia. The main sectors of the city's economy are:

• petrochemicals and natural gas production
• processing of agricultural products
• wood processing
• construction
• retail trade

Tourism, healthcare and education are actively developing.

In territorial and administrative terms, Bolivia is divided into 9 departments, each of which is divided into provinces. There are 112 provinces in total, they are divided into cantons.

The region now known as Bolivia was settled by the Aymara Indians more than 2,000 years ago. The Aymara settled in Western Bolivia, southern Peru and northern Chile. They created a huge state called Puquina, the center of which was the city of Tiwanaku. The remains of the city, which already existed in the 12th century BC, are located in Western Bolivia. By the 6th-8th centuries AD, Tiwanaku had become the most important center in the Southern Andes.

From the 11th century, the Incas appeared on the territory of modern Bolivia, whose empire continued to exist here until the 16th century and was subsequently conquered by the Spanish colonizers. This land was known for its mineral resources, which were developed by all representatives of the ancient and medieval empires.

After the Spanish invasion and the conquest of the Inca lands, the indigenous population of Bolivia fell into slavery. But the highlands and remoteness of this corner of South America helped protect the Bolivian Indians from European diseases and extinction. Therefore, the culture and traditions of the Indians, who still make up the majority of the population of Bolivia, have been preserved here to this day. By the end of the 17th century, mineral resources began to deplete.

The country was formed and gained independence in 1825, it was named after General Simon Bolivar - a famous fighter for the liberation of Latin American countries from Spanish colonial rule. Bolivar's army liberated Peru in 1824. As a result of this victory, the Republic of Bolivia was formed on the territory of Upper Peru.

As a result of long internal wars, Bolivia lost large parts of its territory, ceding them to three neighboring countries:

• the lands in the west and the outlet to the Pacific Ocean went to Chile as a result of the Pacific War (1879-1884);
• in 1903, part of the Acre region, rich in rubber, was ceded to Brazil by Bolivia;
• in 1938, after the defeat in the Chaco War with Paraguay, Bolivia lost the vast territory of Gran Chaco.

In 1965, a guerrilla movement began on the territory of Bolivia, organized in Cuba and led by Ernesto Che Guevara. The Bolivian army defeated the guerrilla movement, capturing and killing Che Guevara on October 8, 1967. A series of military coups followed, and it was not until 1982 that Bolivia returned to civilian rule with the help of the armed forces. Hernan Siles Suazo was elected president of Bolivia.

In June 1993, Gonzalo Sanchez de Lozada was elected president of Bolivia, and he attempted to lead the country out of the crisis. But in 1997, former general Hugo Banzer came to power through democratic elections. He began to fight against illegal coca production and drug trafficking. As a result of this policy - the destruction of coca plantations - Bolivian farmers, whose main occupation has historically been growing coca, plunged into poverty and misery. And despite the fact that Bolivia was the second-largest producer of natural gas and had significant oil reserves, it remained one of the poorest in the Americas.

In August 2002, Gonzalo Sánchez de Lozada was re-elected and continued economic reforms, creating jobs. In October 2003, Sánchez resigned after months of unrest caused by a plan to nationalize the gas industry. The next president, Carlos Mesa, pushed through a plan for government control of foreign companies that developed and extracted gas in Bolivia. But rising fuel prices in 2005 led to major protests by tens of thousands of impoverished farmers and miners, and Mesa resigned on June 6.

Bolivian Indian activist Evo Morales won the 2005 election with 54% of the vote and became the first president — representative of the local indigenous population. 
On December 9, 2007, Morales presented the new constitution to Congress. Despite widespread protests, he was elected for a second term with 60% of the vote.

The general elections in Bolivia were held on October 18, 2020. The country's president, vice president, and all seats in both the Senate and the Chamber of Deputies were elected at the same time. The election results replaced the disputed results of the 2019 elections, which were annulled after a long political crisis. Luis Arce won the presidential race.

Bolivia is located in central South America. The country has been landlocked since 1879, when it lost the coastal region of Antofagasta to Chile in the War of the Pacific. However, Bolivia does have access to the Atlantic Ocean — on the Paraguay River, and on October 20, 2010, Bolivia and Peru signed a lease agreement under which a small section of the coast was transferred to Bolivia for 99 years to build a port. Bolivia borders Brazil to the north and northeast, Paraguay to the southeast, Argentina to the south, and Peru and Chile to the southwest and west.

The highest point is the extinct volcano Sajama (6,542 m).

Bolivia has large reserves of tin and antimony. The ores of many deposits contain zinc, silver, bismuth, tungsten and indium. More than 50% of South America's tungsten reserves are concentrated here. Gold resources are significant. Deposits are located in the north and northeast of the country. In 2009, the world's first lithium carbonate plant opened in Bolivia. The world's largest iron and manganese ore deposit is located in the east of the country - El Mutun.

There are 7 UNESCO World Heritage Sites in the country: the mining city of Potosi, the Jesuit missions in the lands of the Chiquitos Indians in the department of Santa Cruz, the historic city and constitutional capital of Sucre, the archaeological site of Fuerte de Samaipata, the Noel Kempff Mercado National Park in the department of Santa Cruz, the ancient city of Tiahuanaco - the spiritual and political center of pre-Hispanic Indian culture, Qhapaq Nyan - the road system in the Andes in the department of La Paz.

The majority of the population of Bolivia are Indians and numerous descendants of mixed marriages. Therefore, the traditions and customs of the country, passed down from generation to generation from the most ancient civilizations of America, are extremely carefully protected and, accordingly, influence the public life of Bolivia. At the same time, the country has a rather confusing picture of the residents' affiliation with one or another ethnic group. Some Indians consider themselves direct descendants of the Incas or the Tiwanaku civilization, while others are more inclined to consider themselves Spaniards or emphasize their kinship with the Indian tribes of Brazil or Uruguay, which creates a rather unclear situation with tribal affiliation. This is especially evident in rural areas on the plains of the country, so in the villages and towns of the eastern part of the country it is not worth calling the locals Indians: they identify themselves with "campesinos", that is, simply with peasants.

Indian society is quite clearly differentiated by the status of a person, so when communicating with them, certain social norms should be observed: Indians greatly appreciate signs of attention, but at the same time they are sensitive to falsehood in their manifestation and often withdraw into themselves, sensing some tension in the behavior of a guest.

Most Bolivian families are very sensitive to preserving traditions and observing rituals.

Ignorance of local norms of behavior among foreigners usually does not lead to any conflicts. At the same time, it is not recommended to disregard local customs and established rules of conduct, since most Bolivians have an almost hypertrophied sense of self-worth and such behavior of foreigners can lead to sad consequences.

At the same time, Bolivians are quite simple-minded and not at all vindictive.

In Indian culture, it is customary to express feelings through songs and dances. Each region of Bolivia has its own musical traditions. The most common instruments are traditional local analogues of the flute and flute (kena). Numerous national dances are widely represented. Many of them are a parody of the life of white colonists. The central cultural event of the country is an annual carnival held in all the cities of Bolivia, in which a significant part of the population participates in various stages.

In 2008, UNESCO declared the Diaboliada carnival, held annually in the city of Oruro and symbolizing the struggle between good and evil, an intangible world heritage.

Bolivia is a unitary republic. Executive power is exercised by the president and the government, which he appoints. According to the constitution, the head of state and government is the president, who is elected for 5 years. The candidate who receives an absolute majority of votes (more than 50% of the votes) is considered elected. If the winner is not determined, the parliament, at a joint session of both houses, elects the president from the two candidates who received a simple majority of votes.

According to the constitution, the head of state is elected by secret ballot for a term of 5 years and cannot be elected for more than two consecutive terms.

The highest body of executive power is the Plurinational Legislative Assembly, consisting of two chambers: the upper - the Senate (36 people) and the lower - the Chamber of Deputies (130 seats).

Bolivia has a mixed economy. The state has traditionally played a significant role in it, still controlling a significant share of mining enterprises.

Energy is one of the leading sectors in Bolivia (mainly fossil fuels) and the country's main source of income in recent decades. Bolivia occupies a leading position in the world in reserves of tin, zinc, silver, tungsten, lead, lithium (Lithium Triangle), antimony and gold. The country also has significant reserves of oil, gas and iron ore. Mining has long occupied an important place in the country's economy, but its influence has begun to decline over the years.

The main type of ore mined in Bolivia is tin. Tin mining was controlled by private companies until 1952, when the largest mining companies were nationalized and the state mining company Corporación Minera de Bolivia (COMIBOL) was created. In the 1980s, there was a sharp decline in tin production in the country, due to a decrease in ore prices on world markets. At the beginning of the 21st century, more than half of the tin in the country is mined by medium-sized private companies, prospectors' artels and cooperatives.

The valleys of the eastern Andes form a transitional region from the Altiplano to the vast eastern plains. Here, on steep slopes where it is usually necessary to create terraces, cash crops are grown - coca, coffee, bananas, oranges and cocoa, as well as food crops such as rice, tropical fruits and cassava. The most fertile soils suitable for various crops are found in the department of Cochabamba. Wheat, corn, barley, vegetables, tropical fruits and dairy products are produced here; agricultural products are partly consumed locally and partly exported to the large cities of the Altiplano. On the cultivated lands of the Altiplano (150 thousand hectares) subsistence farming is also carried out, potatoes (the main food crop), barley, quinoa, cassava and others are grown.

Wheat, alfalfa, beans and vegetables are grown near Lakes Titicaca and Poopó. In addition to pigs, cattle and sheep, endemic llamas and alpacas are bred among domestic animals. In livestock farming, llama breeding is of significant importance. To this day, there are ethnic groups in the Andes mountains, where llama and alpaca breeding plays a major role in their economy.

Import structure:

• industrial products (29.5%);
• capital (23.8%);
• fuel and lubricants (13.3%);
• vehicles and spare parts for them (14.8%);
• food products (6.8%);
• consumer goods (11.7%);
• other products (0.2%).

 The main supplier countries of Bolivia were:

• China (delivered goods worth 2.1 billion US dollars or 20.7% of total Bolivian imports);
• Brazil - US$1.6 billion (6.1%);
• Argentina - US$1.2 billion (11.6%);
• Peru - US$0.7 billion (6.7%);
• USA - 0.6 billion US dollars (6.3%). 

Export structure:

• industrial products (54.2%);
• fuel and lubricants (34.7%);
• food products (8.5%).

The main destinations for Bolivian supplies were:

• Brazil (purchased goods worth 1.7 billion US dollars or 19.0% of the total volume of Bolivian exports);
• Argentina - 1.4 billion US dollars (15.8%);
• India - 0.72 billion US dollars (8.0%);
• Japan - 0.67 billion US dollars (7.4%);
• South Korea - 0.58 billion US dollars (6.4%);
• USA - 0.5 billion US dollars (5.5%).

Hydrocarbons, primarily gas, are an important position in the structure of Bolivian exports.

Russia and Bolivia

The key area of economic cooperation between Russia and Bolivia is interaction in the fuel and energy sector. On April 14, 2015, a Memorandum of Understanding was signed between Gazprom International and the State Oil and Gas Company of Bolivia YPFB on updating the general plan for the development of the gas industry in Bolivia until 2030.

In 2013, Gazprom International received the right to participate, together with the French Total, in the development of the Ipati, Aquio and Acero gas fields in the Subandino oil and gas region in southern Bolivia. Two joint projects (at the Ipati and Akio fields) have already entered the implementation phase.

On March 6, 2016, during a visit to Bolivia by Rosatom State Corporation Director General S.V. Kiriyenko, intergovernmental agreements were signed on cooperation in the peaceful use of atomic energy and on cooperation in the construction of the Bolivian Nuclear Research Center. In 2017, the general contract for the construction of the center was signed. Practical work on the construction of the center began in the fall of 2019.

Currently, the volume of bilateral trade between Russia and Bolivia is about 120 million US dollars per year, with Russia exporting most of this amount. Another key area of trade that is likely to receive an impetus for development is lithium carbonate, a key component in the growing electric vehicle and renewable energy sectors. 

Russia's main exports to Bolivia are vaccines, blood, antisera, toxins and cultures, refined petroleum, and packaged medicines. Bolivia's traditional main exports to Russia are carbonates, inorganic salts, coconuts, Brazil nuts, and cashews.

Bolivia’s proximity to the major South American markets of Brazil, Paraguay, Chile, and Peru makes incorporating a company in Bolivia a good platform for trading with these four countries. Foreign investors can easily access these countries for trading purposes from Bolivia by road or air.

The country has no restrictions on foreign investment, foreign exchange controls, or capital import/export.

Bolivia is a member of the World Trade Organization and joins BRICS as a partner state. The country also seeks to develop markets through its participation in the Bolivarian Alliance for the Americas (ALBA) with Venezuela, Nicaragua, and Cuba. Trade in Bolivia has also been improved by eliminating double taxation through double taxation agreements with several South American and European countries such as the United Kingdom, France, and Germany.

The country is rich in mineral wealth, including metals such as tin, copper, silver, and iron. Bolivia also has the second largest natural gas reserves in South America and the world's largest lithium reserves. Bolivian companies are entitled to a number of important trade advantages due to their alliance with other South American countries.

Bolivia is a member of the Andean Community of Nations (CAN) along with Colombia, Ecuador and Peru. As a result, all Bolivian trading companies benefit from the elimination of internal trade barriers between these countries. The country is also an associate member of the Southern Cone Common Market (MERCOSUR) group. This allows all Bolivian companies to benefit from the virtual elimination of tariff and non-tariff barriers in most intra-regional trade transactions conducted between Mercosur member countries.

Bolivia's many natural resources offer investment opportunities (hydrocarbons, mining), as well as the transportation and communications sectors. The country's wealth of natural resources has attracted significant investment. Recently, most of the significant foreign projects in Bolivia have come from China. In 2023, a consortium led by China's Contemporary Amperex Technology signed an agreement with the government to invest more than US$1 billion in infrastructure construction, lithium mining, refining, processing and sales. According to the Central Bank of Bolivia, the country received US$60 million in net foreign direct investment in the first three months of 2023.

The 2014 Investment Law guarantees equal treatment for both national and foreign companies. However, public investment has priority over private investment, as defined by the Bolivian government, which determines the sectors open to private investment.

Government policy is aimed at stimulating domestic consumption of locally produced goods, and foreign investment is limited in matters directly related to national security. Both foreign and domestic private entities have the right to establish and own businesses and engage in profitable activities, although investments are subject to monitoring by the relevant ministry overseeing each sector. However, government decisions, controls, and prioritization of key strategic sectors, such as natural resources and broadcasting licenses, may restrict private companies, both foreign and domestic, from investing.

Bolivia’s natural resources, including fossil fuels and mining, are under the full control of the state. Although temporary permits to exploit resources may be granted, ownership cannot be transferred to private entities through concessions or contracts. Bolivia ranks 133rd out of 180 economies on the 2023 Corruption Perceptions Index and 165th out of 184 countries on the most recent Index of Economic Freedom.

Bolivia has various business and investment support structures that provide entrepreneurs and investors with resources to develop projects, attract investment and stimulate economic growth. Here are the main ones:

• Ministry of Development Planning (Ministerio de Planificación del Desarrollo). The main body coordinating economic policy and attracting investment.
• Ministry of Industry and Commerce (Ministerio de Desarrollo Productivo y Economía Plural). Provides support to small and medium-sized enterprises (SMEs). Provides financing, subsidies and access to business development programs.
• Bolivia Development Bank (Banco de Desarrollo Productivo, BDP). Provides support to enterprises by providing preferential financing, loans for small and medium-sized businesses.
• Vice Ministry of Investment and Foreign Trade (Viceministerio de Inversiones y Comercio Exterior). Promotes foreign investment, supports trade and protects the interests of investors.
• National Agency for Foreign Investment (Invest Bolivia). The main organization for attracting foreign direct investment. Provides information on investment opportunities and accompanies investors in Bolivia.
• State Bank (Banco de Desarrollo Productivo). Provides loans and support to entrepreneurs, especially in the agricultural and manufacturing sectors.
• Business Development Fund (Fondo de Desarrollo Empresarial). Offers microfinance and support programs for start-ups and SMEs.
• Chambers of Commerce and Industry (Cámaras de Comercio y Industria). Represent the interests of businesses and organize events such as exhibitions, forums and business meetings. The main chambers are located in La Paz, Santa Cruz and Cochabamba.