Harvard’s Growth Lab Releases Comprehensive Economic Reform Roadmap for Bolivia
April 23, 2026
New research identifies structural drivers of the crisis and outlines a five-pillar plan to stabilize the economy and unlock Bolivia’s long-term potential.
MEDIA RELEASE
CAMBRIDGE, MA – The Growth Lab at Harvard Kennedy School has released a new series of reports that assess Bolivia’s deep economic challenges and provide a detailed recovery plan. These reports are the result of a 15-month applied research project that involved intensive consultations with government officials, international organizations, business and community leaders, and academic experts in Bolivia.
The reports show that Bolivia’s macroeconomic collapse is the most visible symptom of a much deeper crisis. The country’s challenges stem from a broader institutional breakdown that weakened private investment, export capacity, and productivity growth across the economy. As a result, natural gas production collapsed, no new large-scale mines have opened since 2014, agricultural yields remain among the region’s lowest, and exceptional tourism destinations lack basic infrastructure.
The consequences are clear. Beyond the signs of macroeconomic distress, Bolivia’s Economic Complexity ranking fell from 106th in 2000 to 123rd in 2024, showing limited diversification and difficulty attracting sustained private investment.
“Bolivia has many assets it can build on to return to a path of economic prosperity. But realizing that potential will require addressing head-on the country’s deep-rooted challenges,” said Ricardo Hausmann, director of the Growth Lab and Rafik Hariri Professor of the Practice of International Political Economy at Harvard Kennedy School. “A successful reform agenda will need to include fiscal consolidation that supports growth and protects the poor, the restoration of external and monetary credibility with IMF support, and a regulatory framework that enables strategic industries to thrive.”
The reports acknowledge initial steps taken by President Rodrigo Paz’s administration since November 2025, including improving fuel availability, reducing energy subsidies, strengthening social transfers for vulnerable households, and securing significant financing commitments from the IDB, CAF, World Bank, and FONPLATA. However, the researchers caution that stabilizing the economy will require further reforms and that restoring investment conditions and productive capabilities in the medium term is also essential.
The reports present a five-pillar framework for recovery:
1. Growth-supporting Fiscal Consolidation: Complete the reform of energy subsidies, currently estimated to cost as much as 14.5% of GDP when implicit costs are included, and establish a transparent, market-based fuel pricing mechanism. Bolivia’s energy subsidies have historically been regressive, with the wealthiest households capturing a disproportionate share of their benefits.
2. Social Protection: Redirect resources from broad subsidies toward well-targeted cash transfers and vouchers for low-income households, protecting the most vulnerable Bolivians from the impact of price adjustments. A comprehensive overhaul of Bolivia’s social protection architecture will improve coverage, targeting, and the adequacy of transfers.
3. Monetary and External Stability with IMF Support: Secure a formal IMF program to rebuild foreign currency reserves, anchor the boliviano, and restore monetary credibility, while maintaining appropriate capital controls during the transition period.
4. Sectoral Reform: Modernize the regulatory frameworks governing hydrocarbons, mining, lithium, agriculture, and tourism to attract private investment and expand export capacity. Bolivia holds some of the world’s largest lithium reserves and ranks among the top countries globally in solar and hydropower potential per capita, resources that remain significantly underdeveloped.
5. New Productive Capabilities: Build the institutions, infrastructure, human capital, and knowledge networks needed to diversify Bolivia’s economy over time, including through a dedicated investment promotion agency, a structured diaspora engagement strategy, a national productive infrastructure plan, and demand-driven education and training reform.
The reports conclude that Bolivia’s underlying assets remain largely intact and that the current moment represents a genuine opportunity for transformation, provided decisive action is taken.
