Bolivia: the NeXT India
If you have followed my blog, you surely have
noticed that I am obsessed with ECONOMIC DEVELOPMENT. In my 4 books, I have
challenged 150 years of modern economic history by including the impact of CULTURE on
PRODUCTIVITY. Once again, the South American experience seems interesting to
discuss. The regions' ethnical diversity comes from 3 main groups: Europeans
(which were not all the same), Africans (which were brought as slaves to work
the land, like in the US), and several different indigenous tribes (of which
the largest and strongest were the Incas). Ethnical diversity did not work out
properly in South America, were the people of Africa have never received equal
opportunities. A good example would be Brasil, who received more European
migration in the South, and Africans in the North. Today, the South is known as
the rich region, whereas the North is the poor.
In my post "4 Worlds", I divided the
world in 4 by using the HDI Index. I then showed you how Argentina and Chile
were the 2 most developed countries in South America, considered "Very
Highly Developed". In that division, Bolivia appeared as a Third World
country, at the same level of India. More reactive than the Inca tribes, the
Bolivians of indigenous origins (reactive culture) have never been able to
display any entrepreneurial spirit, or add value to the economy. This is the
same for Bolivians established in Argentina and their children, who live in
slums (but still have a better situation than in Bolivia, due to free access to
education, healthcare and facilities).
However, not EVERYONE in Bolivia is poor. The
population presents 62% of indigenous people, 24% mestizo and 14% white. Poverty
affects more rural areas and people of indigenous backgrounds. The same in
Argentina, were the Bolivians represent the poorest scale in society. Politics
does play a role as well: since Evo Morales took office in 2006, Bolivia
entered a pseudo-communist phase by nationalizing it's natural gas reserves and
being unfriendly to foreign business. The communist regime has made sure that the
people would see some of the benefits of owning South America's 2nd largest gas
reserves after Venezuela. Poverty which before represented 60% of the
population (surely the indigenous people), is today 45%. Extreme poverty has
fallen from 38% to 17%. GDP has grown at an average rate of 5%, and GDP x
capita from 1000 USD to USD 3000, as a new indigenous bourgeoisie was
born.[1] [2]
Impressive results for South America's poorest country. Protectionism can play
in favor, if a country is in early stages of development. However, in the long
term growth stagnates.
A country of beautiful landscapes, Bolivia has
leveraged growth through developing it's natural resources. Natural gas, but also
salts for tomorrow's oil that have not yet even began development: LITHIUM. Between
Argentina, Chile and Bolivia they control 80% of lithium's world reserves. But
as always, the key is to master the technology AROUND the natural resource.
Bolivia has achieved great results, but has not developed technologically. Mark
Zuckerberg has taken note, and has included Bolivia in the Internet.org[3] program,
which aims at increasing Internet coverage for people with limited resources to
reach rural areas. Today 47 percent of the Bolivian population does not have
internet access, and his company wanted to contribute towards democratizing
technology use through this project to "help improve the quality of life
of the people".
But in a country that is not technologically
developed, and that does not thrive on innovation, where is the potential for
the Tech industry? Bolivia is today the most underdeveloped economy in the
region. Argentina, with a similar cost level as Spain, is outsourcing it's low end
jobs to India as most developed countries. However, long distances, time zone
and cultural differences make it inconvenient. The potential is to establish
Bolivia as the chosen outsourcing destination for South American countries. Remember
the global tendency: low end jobs are outsourced to least developed economies,
whereas the high end are kept in developed nations. More investment in
communications, education and healthcare, but very specifically in the
production of a competitive engineering workforce that can take those jobs that
will be moved abroad anyway from the most expensive and developed South American
economies is the key. By REPLACING India for Bolivia, the nearby economies
"help themselves" by contributing to Bolivia's development and moving towards REGIONAL INTEGRATION.
If you have read my releases: "Revolution
4.0 and the Man of Tomorrow: Inequality, Post-industrialism and the Knowledge
Based Economy - Parts 1 & 2", I have approached Argentina's poverty
issue as a migration issue. Migration from nearby countries is not productively
integrated to the workforce due to the low level of education and skillsets.
The solution is to attack the problem at it's root: to provide for Bolivia all
that they need in order to increase the level of education. Thanks to
Revolution 4.0, education can now reach rural areas that were hidden before.
With a comprehensive plan and the collaboration of all the other South American
countries, low end jobs should be moved to Bolivia in order to keep the high
end jobs in the high-income economies. After continuous and sustainable
technological development, Bolivia will eventually create it's own outsourcing
culture in the same fashion India has. Compared to India however, the case of
Bolivia is much easier to solve: it is a country of only 10 million people.
In a period of 20 years, Bolivia can easily
leave it's position in the Third World to join Second World countries. It will
still be less developed than the rest of the South American countries, but with
the right skill-set and education the Bolivians that move abroad will
contribute positively to productivity. In that sense, nearby countries such as
Argentina and Chile will be able to use them as cheap but EDUCATED workforce,
solving it's own (inproductive) migration issue, and poverty as we know it
today.
Cristian Bøhnsdalen
CMO/CFO and Co-Founder @ITRevolusjonen
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