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Monday Morning Development Newsletter:  

Social mobility in Bolivia is finally improving!
By Lykke E. Andersen, La Paz, 19 June 2006

There is arguably nothing worse for long run growth prospects in an economy than low social mobility. Without the possibility of advancing upwards in society, poor people have little incentive to work hard and invest in human and physical capital. Conversely, without investment and hard work, there is little chance of improving. Thus, the poverty trap.

Maybe the only thing worse than low social mobility, is low social mobility AND high inequality. This situation reflects a country with a large gap between the rich and the poor, and little chance of ever crossing that gap – a situation which by any standards must be considered unfair. Outcomes are mostly determined from birth, by factors entirely outside the control of each individual, whereas subsequent effort and investments make little difference.

Bolivia has until now been a classic example of low social mobility and high inequality, a fact that may help explain why labor productivity and wages have not improved in real terms over the last 50 years (1).

Figure 1: Social Mobility and Inequality in Latin America

Source: Andersen, L.E. (2001) “Low Social Mobility in Bolivia: Causes and Consequences for Development.” IISEC Working Paper No. 03/2001.

But finally things seem to be changing. The rise of a poor peasant boy to become the President of the Republic of Bolivia is a sign for all that upward mobility is no longer impossible. Many of his ministers and executive also come from very humble beginnings.

I would imagine that such examples of upward mobility gives hope and encourages initiative in many young poor Bolivians, just as the examples of Theodore Roosevelt, Henry Ford, John D. Rockefeller, Thomas A. Edison, Andrew Carnegie, Bill Gates and countless other self-made millionaires inspires the Americans to work hard, be creative, and take risks for the benefit of themselves and their country.

Bolivia needs to see many more examples of upward social mobility – preferably not only in politics but also in business – in order to give people hope and role models. Examples of downward social mobility are also important, in order to show people that there is fairness in Bolivia, that those who are rich and powerful, but corrupt, are getting punished. 

The aid community, which did little to help the rise of Evo Morales (2), could very well sponsor a book on social mobility in Bolivia. Not a theoretical, academic piece, but a book full of biographies of Bolivians that have started from scratch but become highly successful, who have done a lot of good for the country and for themselves at the same time.

Bolivia is badly in need of good role models, and such a book could give them some. The individual biographies in the book could be published in a national newspaper or read over the radio, week by week, to make sure that people get to know these stories and get to see that anybody can do well in Bolivia, as long as they do not give up before even trying.

(1) See “Macroeconomic Policies to Increase Social Mobility and Growth in Bolivia”.
(2) With one notable exception: The Danish NGO, IBIS, actually trained and supported Evo Morales, noticing his great potential as a leader for the Indigenous movement.

Ó Institute for Advanced Development Studies 2006.

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