Bolivia

Through the lens of principal components, spatial dependence, and regionalization methods, the municipalities of Bolivia are endogenously classified according to their similarity in human capital constraints and geographical location.

An increasing tendency toward convergence that is driven by both slower forward mobility of the less developed regions and faster backward mobility of the more developed regions.

Physical capital accumulation has been constrained by high volatility in investment per worker, low marginal product of capital, and high adjustment costs. The cyclical dynamics of TFP are shaped by cyclical variables such as terms of trade and fluctuations in the real exchange. However, economic policy variables (such as macroeconomic stabilization and external debt management), institutional variables (such as democracy and civil rights) and initial conditions also appear to be significant when explaining the behavior of Bolivia’s TFP.