Royal Roads University | Bolivia | A true underdog story |

Derek Bolen
3/6/2013
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Contents Introduction 1 Country Specifics 1 Market position 1 Major Economic Opportunities 2 Banking 3 Government and Cultural Harmonization 4 National Competitive Advantage 5 Barriers to Entry 5 Individual Association 6 Conclusion 6 Bibliography 8

Introduction

Bolivia is located in South America and is bordered by Chile, Argentina, Paraguay, Brazil and Peru. The countries gross domestic product has been steady increasing since the early 1960’s, from just under $600 million to nearly 25 billion in 2011. Their healthy GDP is a sign of a growing economy and indicative of a country with good growth potential. With Bolivia posed to become a world leader in the future global lithium market countries such as Russia and China have taken notice; these nations have begun contributing to the Bolivian economy in an effort to secure trade agreements with the South American nation. This country could very well be the savvy entrepreneur’s paradise with emerging opportunities in infrastructure, communications, and tourism.
Country Specifics
Market position
Bolivia is currently reporting a current account surplus of 787.40 USD Million, Which places the country 43rd out of 193 listed in the world fact book. Shortly after the most recent financial crisis in 2008 the countries current account dropped to only 56.4 USD Million in 2010. Alternatively Bolivia’s net capital account was most recently reported at – 7,167,545 USD Millions. Overall the country is in good standing, and posed to well considering the growth of the technology market. The country is in a relatively strong position because of a somewhat small debt load which presently stands at 33% of gross domestic product. Foreign direct investments have been growing at a modest rate of 5.1% per year for the last two years which is a positive sign for SME’s considering business opportunities in Bolivia. A promising sign of growth in Bolivia has been the lack of need to borrow from other countries in the past seven years, however in 2008 and 2011 Bolivia did require more financial support then normal due to the economic crisis and the costs that were associated with the implantation of a natural resources standardisation program.

Right now the countries national currency the Boliviano is currently worth 0.15 cents to each Canadian dollar which is drawing the attention of SME’s that are presumably waiting to see if the world lithium market continues to grow at its current pace.
Major Economic Opportunities
Bolivia has an abundance of natural resources. Frist the Uyuni salt flats which cover a wide range of central Bolivia which is also the largest salt pan in the world. The second resource can be found directly underneath the first, Lithium (or Li, K, Mg, B) and Bolivia is believed to have the world’s most abundant supply of the precious mineral. As many first world and second world nations transition from the end of the industrial revolution into one of technological enlightenment lithium and emerging battery technologies will play an important role in the global economy.

Right now the country currently relies heavily on tourism, natural gas, crude oil, soybeans, tin and zinc as its major exports respectively. It was only six years ago when Bolivia finally nationalized its oil and gas reserves in an effort to become more competitive in the world energy market.
A decree issued by the Bolivian government in 2012 (Supreme Decree 2012) grants the Bolivian National Treasury the right to tax 30 dollars on each barrel of crude oil produced, ten present of the taxation funds are then repaid to foreign energy investors thereby stimulating the Bolivian economy by creating incentive for foreign companies to reinvest. In my opinion this type of taxation system seems very wise for the country and should be considered for future lithium mining