translated from Spanish: Evo seeks re-election: paradox of multinational slam in Bolivia’s president’s “plural economy”

The iconic fast food chain was saying goodbye to Bolivian lands just five years after its landing after failing to achieve the expected results.
Bolivia at the time had more than 15 years of liberal governments, with a market vocation and openness to international capitals.
However, its economy was so contracted that buying a menu from that international chain was very expensive for most Bolivians, including those in the middle class.
Thus, that country became the first in Latin America in which McDonald’s came to crash and close its doors.
Now, 17 years later, much has changed in Bolivia. What’s more, the ideological shift of the country that went from presidents aligned to market mandates to one that in its speeches fustitiates without mercy to international and transnational capital.
And that it also sent a clear message to the world in its first year of office in decreeing the nationalization of hydrocarbons.
The paradox is that – according to analysts and investors – McDonald’s today would triumph smoothly, as several hundred franchises and international companies that landed in the country over the past decade already do.
The socialist Bolivia of Evo Morales (who seeks a fourth presidential term in the elections of October 20) became fertile ground for foreign chains of food, clothing, appliances and also for transnationals dedicated to such as oil, mining or agribusiness.
A decade late
Bolivia is estimated to have reached the era of global consumption at least a decade late.
Between the end of the last century and the beginning of the present century, there were almost no shopping malls, and the international food chains that were already multiplying across many Latin American cities were not present.
Only a handful of multinationals risked investing in a crisis and poor Bolivia. According to the World Bank, in 2002 63% of its inhabitants lived below the poverty line, while by 2018 that figure was reduced to 35%.
In addition, foreign direct investment in the country reached US$250 million in 2005, while in more recent years it reached US$1,750, according to the Economic Commission for Latin America (Cepal).
“That big change is the one that has favored us a lot,” explains Alfredo Troche, former president of the Bolivian Franchise Chamber and market analyst.
Troche explains to BBC Mundo that, in the last decade, there are more than 300 international networks that decided to enter Bolivia, mainly in the areas of food, fashion, entertainment and services, not counting the multimillion-dollar investments made by the oil and mining companies arriving from abroad.
“Before the market was very small, unattractive, but since 2010 brands began to enter much more strongly especially because of the opening of shopping centers,” says Troche.
The analyst notes that “favourable macroeconomic indicators and sustained growth are a good sign for foreign investment” and that was one of the determining factors.
It adds that the growth in the country’s entry into the country is around 11% per year.
Santa Cruz de la Sierra, the Bolivian city with the largest population and where most of the national and foreign industries are based, is the main host of international chains and transnational oil and agribusiness.
It is followed by La Paz, the headquarters of the country’s powers.
Socialism for some, capitalism for others
Samuel Doria Medina came in second in the 2014 presidential election and his congressional bench is the largest in the opposition.
In addition, he is the entrepreneur who brought Burger King to Bolivia at the turn of the century and kept the franchise afloat during the years of recession in the country. It now has operations in the areas of tourism and food.
The politician, in an interview with BBC Mundo, argues that the rise of transnationals in Bolivia is explained by why Morales rules with “capitalism for his friends and socialism for his enemies.”
“Morales tries to attract foreign investment to try to replace public investment with it and so has a double speech that is totally divorced from reality,” says Doria Medina.
According to the Doria Medina, the Bolivian president “says one thing and does another” when he crashes into international capitalism and is at the same time a friend of great capitalists.
“There are very great contradictions. Sectors like coca producers, who do not pay taxes, are licensed to practice government-led savage capitalism. The same is true of large agro-industrial entrepreneurs who are also very close to Evo Morales,” he says.
Doria Medina points out that Bolivia is a country with legal uncertainty and low incidence of separation of powers, which makes it difficult to invest unless you are part of the “friends capitalism” scheme where very powerful companies of different items.
Paradoxically, the interviewee adds, it is now the Bolivians who have the greatest difficulty in carrying out economic endeavors because of bureaucracy and tax policies.
“There are many multinational oil companies that have received many favors and obtained very favorable conditions thanks to the government, even though official discourse speaks of a nationalization of hydrocarbons,” he concludes.
The benefits
Transnationals in the areas of hydrocarbons and mining, for example, are the great beneficiaries of the exploitation of Bolivian natural resources, argue experts from the Center for Studies for Labour and Agricultural Development (CEDLA), based in La Paz.
“The cycle of high commodity prices has encouraged accelerated and, in many cases, excessive exploitation of hydrocarbons and minerals. The result has been the absolute increase in profits for transnationals and, in the absence of obligatory exploration (of new veins or fields), the dangerous reduction of reserves (in Bolivia),” analyst Carlos Arze told BBC Mundo.
The expert notes that the privileges accessed by oil companies range from production incentives and cost recognition to “opening protected areas and national parks to hydrocarbon exploitation.”
According to CEDLA data, transnationals control 80% of Bolivia’s hydrocarbon production and, after what they have exploited all these years, have not invested in exploration or development of new fields.
“In the nearly 14 years of government, no major new field has been discovered,” Arze says.
In the case of mining, the expert points out that the most illustrative case is that of the transnational San Cristobal, which manages the mine that produces the most major metal minerals for export.
“It pays the state less than 10% of the value of its exports in royalties and taxes,” says the CEDLA researcher.
“The Secret of Bolivian Success”
For the government of Evo Morales, the “secret of their economic and social growth” is what they called the Community Productive Social Economic Model
This is indicated by the Minister of Economy, Luis Arce Catacora, noted of being one of the architects of the so-called “Bolivian miracle” that placed the country’s economy among those that grew the most in Latin America in recent years.
Arce Catacora does not coincide with those that point to transnationals as the great beneficiaries of the exploitation of natural resources.
The Minister says that the nationalization of hydrocarbons was one of the three pillars of Bolivia’s economic transformation along with revenue redistribution and active state participation in the economy.
“Nationalization determined that resources that previously went abroad were conmitted by transnational corporations operating in our country to stay for the enjoyment of Bolivians,” says Arce Catacora.
The minister argues that the bonds and redistributive policy initiated in Morales’ government is why Bolivia expanded its consumption capacity.
” (The bonds) had a boosting effect on domestic demand that benefited not only Bolivian consumers, but also the large, medium, small and even micro-enterprise business sector, which saw their sales increase as in any period of the history of the country,” he concludes.
A country that spends
Arce Catacora does not mention it, but market analyst Alfredo Troche does recognize that the increase in spending capacity in Bolivia has benefited not only the national industry but also the transnational one.
“People have changed. For example, as there are longer and shorter distances, at noon they prefer to eat a fried chicken or a burger rather than go home. That’s why franchises keep growing,” he says.
But it’s not just about food, Bolivia’s relatively new consumerism has already alerted local industrialists who see the preference for foreign products increasing.
This has been alerted by Bolivia’s National Confederation of Medium and Small Business for some years.
“There is a culture of consuming the foreign, they are looking for branded and non-quality products,” said the entity concerned about the decline in its sales in the face of the massive arrival of merchandise from abroad.
This concern has already prompted the government to establish that a percentage of the bonds that workers receive for Christmas and the end of the year have to be spent on domestic products.
A measure that shows that, among the many changes (buenos, regular or bad) that occurred in the three mandates that Evo Morales carries, are the habits of spending and consumption of Bolivians.
Therefore, in the judgment of Alfredo Troche, if McDonald’s wants to return to Bolivia, now is the time.

Original source in Spanish