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Bolivia: Poverty, Equity and Income - Selected Policies for Expanding Earning Opportunities for the Poor

Bolivia FY96 PA

Main Report (3.9Mb PDF)

Background Papers (17.4Mb PDF)

Poverty Profile

The updated Bolivia Poverty Report1 found that there has been some progress toward reducing urban poverty between 1976 and 1992. However, there has been little progress toward reducing rural poverty in Bolivia. Poverty is directly associated with a low level of education and is more common among the indigenous population. In rural areas—where it is estimated that about 95 percent of the population is poor—the poor are generally agricultural peasants or wage-earners who have limited landholdings and who lack access to credit and basic infrastructure. In urban areas, the poor are concentrated in the informal sector, particularly among domestics and nonremunerated family workers.

Incentive and Regulatory Framework

The report examines the level and allocation of social expenditures by the public sector and the resulting provision to the poor of social services and key safety net programs. It also analyzes some ways to expand the income earning opportunities of the poor through increasing productivity—more specifically, through increasing labor productivity and increasing the access of the poor to formal credit and land. The results of the report indicate that productivity is the major source of earnings differentials between genders and ethnic groups in all labor markets; hence, the recommendation is to invest in human development, especially for rural indigenous girls. The report also recommends modifications to specific legal and regulatory constraints in the credit and land markets that are currently limiting the earning opportunities of the poor.

Public Expenditures

The report finds that although there has been some improvement in social indicators over the last few years, the coverage and quality of key public services—education, health, and water and sanitation—remain inadequate as a result of both insufficient and inefficient allocation of public resources. Furthermore, it is found that public resources have usually not been directed toward the poor, with the rural population, indigenous peoples, and females suffering the most.

Safety Net

While Bolivia lacks a comprehensive social safety net program, there are a number of programs to reach the most vulnerable poor, including programs designed to address the specific needs of indigenous people and health and nutrition. Programs for women and children include the Plan Nacional para la Reducción Acelerada de la Mortalidad Materna, Perinatal y del Menor de Cinco Años (PLAN VIDA) and the Proyecto Integral de Desarrollo Infantil (PIDI). Established in 1990, the Fondo de Inversión Social (FIS) replaced the Fondo de Emergencia Social (ESF—created as a mechanism for cushioning the impact of the stabilization policies on the employment and income of the poorer groups of the population). Targeting the neediest communities in 80 priority provinces, the FIS focuses extensively on poverty alleviation through the development of education, health, and water supply and sanitation services.

Poverty Strategy

To accelerate poverty reduction, as part of the government's comprehensive strategy that includes sustainable rural development, the report recommends that there should be further emphasis on human development, specifically through: (i) continuing to reallocate more resources to primary education within the framework of the on-going education reform, giving particular attention to rural areas, and enrollment and attendance of girls; and (ii) finalizing a comprehensive basic health care strategy and then reallocating resources accordingly. In order to complement these efforts and further expand earning opportunities for the poor, the report recommends that the government also: (i) expand the types of properties, especially movables, that can be used as collateral for secured transactions; (ii) regularize the land property rights regime, within a reformed land policy framework; and (iii) improve key registries for property rights and credit.

Statistical System

While still weak, poverty data in Bolivia have improved since the time of the previous poverty report.2An updated poverty map was generated from the information collected in the national census carried out in 1992; hence, allowing for a comparison with the poverty map generated from the 1976 census. Bank support to the Instituto Nacional de Estadísticas (INE) has resulted in the carrying out of a Living Standards Measurement Survey (Encuesta Integrada de Hogares) on a fairly routine basis since 1989. Nevertheless, the information on rural areas—where the majority of the population is estimated to be in extreme poverty—is still limited in coverage. Building on complementary rural surveys carried out in recent years—including a limited rural household survey carried out in La Paz, Potosí, Cochabamba, and Oruro for this report—the characteristics of the rural poor—indigenous, smallholder farmers, agricultural workers, and limited education—have not changed.


1. Bolivia: Poverty, Equity and Income—Selected Policies for Expanding Earning Opportunities of the Poor, Report No. 15272-BO, February 1996.
2. Bolivia: Poverty Report, Report No. 8643-BO, October 1990.

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