Bolivia Is Using Directed Credit To Reduce Poverty, Achieve Real Economic Growth
July 23, 2019 (EIRNS)—Bolivia’s Vice President Alvaro Garcia Linera, while visiting Mexico last week, spoke with a reporter for CNN Mexico, who asked him how Bolivia had achieved the highest rate of economic growth in South America in recent years, under the Evo Morales presidency:
“It has been done by fusing financial capital with productive capital, by requiring the private banking sector to channel 60% of its money to productive investment and construction. Likewise, it was decided that 50% of the private bank sector’s earnings would go to the State. Since this money is returned to society and that invigorates the economy, that then returns to the banks.... What the banks lost with one hand, at the end they recover with the other.”
The approach is working—as it has whenever Hamiltonian credit policies have been applied around the world. If one looks at indices of physical production (i.e., not GDP or other monetary measures), manufacturing in Bolivia grew at an average annual rate of 2.5% in the 11 years between 1994 and 2005, and after Morales came into office in January 2006, over the next 11 years (2005-2016) the average annual growth rate jumped to 4.3%. Electricity generation grew by 3.7% per year in the first period, and by 5.3% per year under Morales. Cement production rose by 5.8% per year in the first period, and by 8.7% in the second one.
Such physical indices give a much more scientific reading of the country’s real economy than the standard GDP figures, which showing an even more dramatic shift, growing at an average annual rate of 5.3% from 1994-2005, and by 12.2% from 2005-2016.