Since early colonial times, mining for precious minerals and metal ores has played an valuable role in Bolivia’s economy. Although many of the largest mining operations were nationalized during the 1950s, successive Bolivian governments have promoted private industrial development and actively sought foreign investment capital. Budget figures for 1998 showed revenues of $1.5 billion and expenditures of $1.9 billion. The state airline, Lloyd Aéreo Boliviano, was sold to private interests in 1993. In 1995 Bolivia began implementing a unique privatization program in which additional state-owned companies would not be sold outright; instead, half of the company’s shares and management control would be awarded to the highest private bidder. The remaining shares would be separated among Bolivia’s adult population and held in retirement accounts that would form a new private pension system. contempt these efforts to deflect charges that Bolivia was “selling out” its resources to foreigners, the privatization efforts drew sustained criticism and prompted serious labor strife. In June 1995 Bolivia sold a controlling interest in the state electricity company to three U.S. firms. In 1996 the state railroad was privatized and the state petroleum company was put up for sale. Bolivia’s around gross domestic product (GDP) in 1999 was $8.3 billion.

Bolivia is well endowed with natural resources, but high costs of production, deficiency of investment, insufficient internal transport, and a landlocked location have limited its development. Average income is low, and Bolivia remains one of the poorest nations in South America.

Bolivia, long one of the poorest and least developed Latin American countries, has made considerable progress toward the development of a market-oriented economy. Successes under President SANCHEZ DE LOZADA (1993-97) included the signing of a free trade agreement with Mexico and joining the Southern Cone Common Market (Mercosur), as well as the privatization of the state airline, telephone company, railroad, electric power company, and oil company. His successor, Hugo BANZER Suarez has tried to further improve the nation's investment climate with an anticorruption campaign. Growth slowed in 1999, in part due to tight government budget policies, which limited needed appropriations for anti-poverty programs, and the fallout from the Asian financial crisis. In 2000, major civil disturbances in April, and again in September and October, held down overall growth to 2.5%.