Strengthening the Understanding of Public Policy Challenges in Bolivia
Funded By
Universidad Católica Boliviana
The Growth Lab and the Master’s Programs for Development (MpD) at Catholic University of Bolivia initiated this engagement to strengthen the teaching and studies of the public policy challenges in Bolivia. Led by HKS Faculty Dan Levy, the engagement incorporates the research of the Growth Lab program and the curriculum and pedagogy of the Harvard Kennedy School as well as the rest of Harvard.
The key areas of focus of the engagement are in:
- incorporating new teaching methodologies and technologies to enhance quality of pedagogy, particularly around course management systems and flexible course formats that support online learning and teaching
- analyzing the Bolivian economy, its economic complexity, and the restrictions it faces, from a growth diagnostics perspective, in order to propose public policies to enhance the country’s development
- understanding entrepreneurship and productivity in Bolivia, and fostering business development to achieve sustainable growth
The engagement operates through adaptive modalities of faculty and student seminars, trainings, co-creation and collaborative research, curriculum development, and two-way visits.
Origin
The origin of the engagement between the Harvard Kennedy School and Catholic University of Bolivia dates back to the early 1990s as the basis for the creation of the Master’s Degree program in Public Policy and Management. Housed within the School of Production and Competitiveness (ePC, Escuela de la Producción y la Competitividad), the program grew and evolved over the years to include Master’s Programs in Public Policy, Business Administration and Finance.
Celebrating 25 years of the MpD, the master’s programs have had an important impact on Bolivian public life. The more than 1,400 graduates of MpD are in significant positions in the government and the private sector, as well as in non-profit organizations and other Bolivian institutions. More than 4,000 Bolivians have been reached through its short courses. Through the MpD curriculum, the ePC has increasingly focused its research, teaching, and outreach efforts on the interrelated themes of local development, entrepreneurship, microfinance, poverty and social development.
Affiliated Publications
Working Papers
The Devil’s in the Dance: Elements of a Growth Diagnostic in Bolivia
Bolivia’s economy stands at a crossroads. Weakened by the fiscal and external imbalances triggered by the 2014 fall in gas prices and exacerbated by the COVID-19 pandemic, the country faces […]
Bolivia’s economy stands at a crossroads. Weakened by the fiscal and external imbalances triggered by the 2014 fall in gas prices and exacerbated by the COVID-19 pandemic, the country faces a complex challenge: how to reignite economic growth while restoring macroeconomic stability. This paper applies the Growth Diagnostic methodology to identify the most binding constraints to growth in Bolivia and proposes pathways forward for policy reform.
The paper presents Bolivia’s growth syndrome as “La Diablada” or the dance of the devil—a dance between opposing priorities. On one side lies the need for fiscal consolidation to address mounting imbalances; on the other, an urgent need to stimulate demand and support recovery after the COVID-19 shock. This collision of policy needs creates a situation where missteps in either direction could be highly disruptive, risking either prolonged stagnation or macroeconomic crisis.
The paper finds that Bolivia’s current growth model—heavily reliant on commodity-led rents and public sector-led investment—has reached its limits. The economic challenge is that the historical engine of growth in Bolivia—net government spending fueled by rising gas prices—cannot drive growth in the current period. Even a short-run recovery in gas prices belies the structural challenges in demand for gas exports in Argentina and Brazil, along with the supply of gas, in the lack of investments in new discovery. Structural weaknesses also include a rising wage bill dominated by public employment, the lack of foreign investment, and a lack of economic diversification into higher complexity sectors. Political uncertainty and institutional inefficiencies, especially among state-owned enterprises (SOEs), further erode the country’s fiscal space and growth potential.
To manage current macroeconomic imbalances and lay the groundwork for inclusive growth, the government must prioritize the sequencing of actions across four key policy fronts:
- Fiscal Response: Focus on increasing fiscal space to allow for stimulus to drive economic recovery, including smart fiscal consolidation, cutting unproductive spending—especially in loss-making SOEs and an inflated wage bill, while guarding against the recessionary pressures of fiscal consolidation.
- External Finance Response: Maximize access to external finance while balancing debt sustainability. Foreign reserves risk not being able to cover medium-term debt obligations, if no action is taken.
- Monetary Response: Restore confidence in monetary policy by preparing for a gradual move toward a more flexible exchange rate regime, supported by stronger institutions and clearer communication. Not addressing the overvalued boliviano risks a currency crisis, a balance of payments crisis, or both.
- Private Sector Response: Shift the growth model by enabling private sector-led diversification, removing investment bottlenecks, and targeting support to export-oriented, higher-complexity sectors.
At stake is whether Bolivia can shift from managing crises to enabling a more resilient, inclusive, and sustainable future.
Last updated on 05/20/2025
Spotlight
Planting the Seeds of Public Policy
This story examines the nearly thirty-year collaboration between Harvard and Bolivia, from its origins in the mid-1990s to the current research and knowledge exchange between the Catholic University of Bolivia and the Growth Lab. Faculty and researchers at both schools explain how the relationship has deepened in recent years, with collaboration on teaching methods, economic research, and online learning tools during the pandemic.
Videos
Development Talks / Interviews
Tools
Atlas of Economic Complexity
Explore Bolivia’s Country Profile
Bolivia is a lower-middle-income country, ranking as the 99th richest economy per capita out of 145 studied. Its 12.1 million inhabitants have a GDP per capita of $3,748 ($11,028 PPP; 2023). GDP per capita growth has averaged -0.1% over the past five years, above regional averages. Bolivia ranks as the 122nd most complex country in the Economic Complexity Index (ECI) ranking.
Team Members
