Bolivia: Investment and Complex Tin Ores

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There are a number of factors that have contributed to Bolivia being the poorest of all South American countries. Most of these problems can be traced back to the early 1980's during a time of government mismanagement, high inflation rates, record unemployment, and severe drought. Although this economic crisis hurt Bolivia's industrial and agricultural sectors pretty badly, one industry flourished during this time - the coca trade.

Coca was the only profitable small farmer crop. A high demand for the drug in the U.S. and Europe coupled with a disorganized political state allowed for the "coca boom"of the mid 1980's. Between 1980 and 1986, the production of coca grew by about 35% annually. That is, until the U.S. sponsored the eradication of this illegal narcotic which was used in 80% of the worlds' cocaine production at its peak. This was a huge blow to the Bolivian economy, especially the peasant classes (Wikipedia).

A second major blow to the Bolivian economy was the decline of tin production in the early 1980's. Formerly the backbone of the Bolivian economy, tin production declined by 30 percent between 1980 and 1984 and during this time the world market prices also fell by 27 percent. The mining industry dominated the Bolivian economy from 1557 to 1985. In 1985, however, the international tin market crashed, and in 1987, tin accounted for only 4 percent of GDP, 36 percent of exports, 2.5 percent of government revenues, and 2 percent of the labor force. In addition, there were numerous structural problems faced by the tin industry, including "inaccessibility of the ores because of high altitudes and poor infrastructure; narrow, deep veins found in hard rock; complex tin ores that had to be specially processed to extract tin, antimony, lead, and other ores; depletion of high-grade ores; almost continual labor unrest; deplorable conditions for miners; extensive mineral theft; poor macroeconomic conditions; lack of foreign exchange for...
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