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World Bank Document ReportNo. 8643-BO Bolivia PovertyReport Public Disclosure Authorized October3, 1990 LatinAmerica and the CaribbeanRegion CountryOperations Division I CountryDepartment III FOR OFFICIALUSE ONLY Public Disclosure Authorized Public Disclosure Authorized Documentof theWorld Bank Thisdocument has a restricteddistribution and maybe usedby recipients Public Disclosure Authorized only in theperformance of their officialduties. Its contents may nototherwise be disclosedwithout World Bankauthorization. Fiscal Y-ear January 1 to December 31 Curroncy Eauivalents Current Unit: Boliviano (Be) Exchange Rate Effective July 31, 1990 US$1.00 Bs 3.17 B51.00 = US$0.32 ABBREVIATIONS BAB Bolivian Agricultural Bank CEM Country Economic Memorandum CIAT Center for Tropical Agriculture Research COMIBOL Bolivian Mining Corporation CONEPLAN National Economic Planning Council CONES National Council for School Construction CORACA Peasant Agricultural Development Corporation DHS Demographic and Health Surveys EIH Integrated Household Survey ENSO Economic Management Strengthening Operation ENPV National Survey on Population and Housing EPH Permanent Household uurveys ESF Emergency Social Fund FDC Peasant Development Fund FDR Regional Development Fund GDP Gross Domestic Product HD Pealth District IBTA Bolivian Institute for Agricultural Technology INAN National Institute of Nutrition INC National Colonization Institute INE National Institute of Statistics MACA Ministry of Campesino and Agricultural Affairs NEC Ministry of Education and Culture MHCSP National Maternal Health and Child Survival Program HINPLAN Ministry of Planning and Coordination MPSSP Ministry of Health MTC Ministry of Transport and Communications NGO Non-Governmental Organization PDIs Private Development Institutions PSM Public Sector Management Program PVOs Private Voluntary Organizations RDCs Regional Development Corporations SENALEP National Service for Alphabetization and Popular Education SENAC National Road Service SENET National Technical Education Service SIF Social Investment Fund SNDC National Service for Community Development SU Sanitary Unit SVEN National Nutritional Surveillance System TGN National Treasury UDAPSO Social Policy Analysis Unit UN United Nations UNICEF United Nations' International Children's Emergency Fund VAT Value Added Tax FOR OMCIALUSE ONLY This report is based on the findingsof variousmissions to Bolivia between June 1589 and March 1990. The report was discussedwith the Bolivian Governmentin June 1990. Bank participantsin the missionswere: Steen Lau Jorgensen (CountryOfficer, Task k,ager)Izumi Ohno (Economist),Linda McGinnis (Consultant,Nconomist), Julie VanDomelen (Consultant,Economist), Juan Carlos Aguilar (Economist),and William Shaw (CountryEconomist). The following background papers were written for the report: "Poverty Report: Agriculture" James Cock and Douglas Forno; "Poor Rural Women in Bolivia" Ann. Webb; "The Importance of Rural Infrastructure for Poverty Alleviation"(in Spanish) RodrigoCisnerosl "Non-GovernmentalInstitutions in Core PovertyAreas of Bolivia" (in Spanish)Christina Mejia, et. al.; "Poverty in the Lowlands of Bolivia" Cowi Consult; "InstitutionalAspects of Poverty Alleviation"Linda McGinnis; "The Government'sStrategy and InvestmentProgram and Poverty Alleviation"Izumi Ohno; "Donor Activitiesin Poverty Alleviation" Izumi Ohno; "Education Reform and Poverty"Dan Newlon; "Annotated Bibliography on Poverty in Bolivia" Malene Hedlund. The report was written by the task manager with substantial inputs from: Izumi Ohno (strategies and investment), William Shaw (macroeconomics), Linda McGinnis (institutionalissues), and Julie VanDomelen(efficiency issues). The preparation team is especially indebted to Emergency Social Fund staff, CEDRAGROand PROANDESin Cochabamba, and IPTK in Ocuri for arranging field trips. Several background papers were financed by trust funds including the consultant trust funds of Denmark, the Netherlands and Norway. Diana Cortijo did the typing and formatting and provided research assistance. This documenthas a restricteddistribution and may be used by recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosedwithout World Bank authorization. TABI or CONTENTS SUNHARYAND CONCLUSIONS.. .. l-vii CHAPTER1: INTRODUCTION AND AACKGROUND . .. ....... 1 INTRODUCTION . * . .. 1 Ratlonale for the study . ......... .1 . OUTLINE OF THE REPORT . .... .. 1 BACKGROUND ... ... .* . * 3 Geography .. 3 Hlstory . ...............................................4 CHAPTER 2s DI4ENSIONS OF POVE RTY . .. .. .. ............... 6 INTRODUCTION . ..... ....... .. 6 The Data .... * * * * . .*..... *.... 6 DESCRIPTION OF POVERTY ... 7 Poverty in General ... 7 Poverty Over Time - A Paradox.. .. 8 Poverty in Rural and Urban Areas . ..... 12 Poverty by Region ..... .. .. .. 13 Poverty by Sector and Occupatlon . 18 Poverty by Gender. ... 18 Ethnic Groups and Poverty . 20 POVERTY PROFILES . 21 CAUSES OF POVERTY ...... .. .. .. 22 CHAPTER 3: MACROECONOMIC POLICIES AND THE POOR. 25 INTRODUCTION . 25 IPACT OF THE 1980-85 ECONOMIC CRISIS . ..... 25 Government Policies and the Poor. .. ......... 26 Impact on Agriculture ... ...................... 27 IMPACT OF THE STABILIZATION IN AUGUST 1985 . 28 IMPACT OF ADJUSTMENT POLICIES . 29 Public Sector Employment .. nt................... 30 External Sector Policies . 31 Impact on Agriculture ..... 32 Labor Markets .. 34 Tax Reform ....... .. .......... .. 34 CONCLUSIONS AND RECOMMENDATIONS. 36 CHAPTER 4. INSTITUTIONS AND THE POOR . 39 INTRODUCTION . ... 39 GLOBAL INSTITUTIONAL FRANEWORK . 40 COMMON INSTITUTIONAL CONSTRAINTS . 43 Centralization and Urban Blas . 44 Lack of Demand-Driven Orientation . 46 Poor Planning and Policy Making . 47 Patronage, Poor Salaries and Poor Training . 48 Donor Dependence . 50 2 CONCLUSIONS AND RECOHNXIENTION . ... 51 The Demand-Driven Approach . ....... 52 Decentralization ... ....... .. .... ..... 55 Improved Policy Making, Planning and Coordination . * . 56 Donor Coordination . .. so CHAPTER S: HEALTH . .. 59 INTRODUCTION . 59 INSTITUTIONAL FRAMEWORK . 60 GOVERNMENTPOLICIES AND INVESTMENTS . 61 Sector Strategy and Expenditures . 61 Nutrition Pclicies .c.i ................... 63 Water Supply .. .. .... .. ..... 65 Investment . .. .. .. 66 SECTOR CONSTRAINTS . 67 Centralization and Inadequate Coordination . 67 Low Salaries and Poor Personnel Management . 68 Poor Financial Management . .... 69 InappropriateTraining . 69 Lack of Beneficiary Participation . 69 Insufficient Use of Non-Governmental Institutions. 70 Women'sIssues . 72 RECONMENDATIONS..... .. .. .. 73 ImplementExisting Policies . 73 Shift Expenditures . .*. 73 InstitutionalRecommendations . 73 Coordinate NGOs . 74 EncourageBeneficiary Participation . 74 Upgrade and Reorient Training . 75 IntegrateTraditional and Xodern Medicine . 75 Nutrition . 76 Women'sIssues . 76 CHAPTER6: EDUCATION . 77 INTRODUCTION . ... 77 INSTITUTIONAL FRAMEWORK . 78 EXPENDITURES AND GOVERNMENTPOLICIES . 79 Expenditures . 79 Reform Plans . I . s0 Public Investment . ... ... 81 SECTOR CONSTRAINTS .... * . 82 Inflated School Staffing . ... 82 Low Salaries . .. 83 Weak Planning and Policy-Making Capacity . 83 Inadequate School Administration . ... 84 Legal Impediments to EducationSector Efficiency . 85 Inadequate Non-Formal Education . 8S Under-Utilization of the NGO Option . 8S 3 RZCCOOENDATIONS . .. * . #.* . * * * . * 87 Expenditures. ..... .. ... 87 Improving Teachere'Salaries . 87 Limit Rural/Urban Differences . 89 EfficientAllocation of Resources .. ... 90 Decentralization . 91 The Role of NGOs . * . 92 Community Participation ......... 92 Women' Issues .. .. 93 Phasing ... ...... 94 CNRITER 7a AGRICULTURE. * . .* 95 IWTRODUCTION . ............. .. ............... 95 INSTITUTIONAL RMWEORK . .. 97 GOVERNMENT POLICIES AND INVESTMENTS 98 Sector Strategy .. 98 Sector Investment . 99 SECTOR OONSTRAINTS AND ISSUES. 101 Land Use .... ....... 101 Land Titling .... ...... 102 Food Donations .. 105 Lack of Research and Extension . .108 Women' Issues .*.*.108 MACA Institutional Issues . 109 Politicization . .. ... .... .. 119 Week Human Res ources . ...... 110 Poor Central/Regional Coordination . .110 Weak Information . .............. lll Lack of Beneficiary Participation . .111 ECOWNENDATIONS. ... 112 Subsidize Poor Communities through Infrastructure . 112 Land Reform and Community Laws . .113 Appropriate Technology Development and Transfer . 114 ImproveAgricultural Credit .*. .. .*.. * 115 ImproveSmall-scale Irrigation . 116 Linking the Poor to the Market Economy . .116 Migration . .. 117 Women'QIssues . 117 Strengthen National Policy and Planning . .118 CMAT8R 8t !RAXSPORTATION. * * . * 119 NTRODUCTION . .. .119 INSTITUTIONALFRAMEWORK ................ 119 GOVERNMENTPOLICIES AND INVESTMENTS . ..... 120 Sector Str-ategy .. .. 120 SectorInvestment ....... .. 120 SECTORONSTRAINTS 8. 122 Rural Roads . .. 122 Weak Planning and Coordination . ... 122 Scarcity of Operations & Maintenance Resources. .123 Low Salaries . 124 4 3ECOOM)NDATIONS. 124 Seotor Priorities and Expenditures . 124 InstitutionalRecommendations . 125 CHUPTER 9s EFFICIENCYISSUES . 126 INTRODUCTION* * * .* .* . ... 126 CoSTS OF INVETENTS IN POOR AREAS . .. 126 EFICIENCY AND IMPACT OF INVESTMENTS IN POOR AltES ... 129 Roadt .S.up . 129 errlgatCon. 130 Water SupplyIVETNT . .. .. ... 131 Health Care .. ........................................ ..... 132 Education . .............................................. .. 133 IUMMINO INVE8 XNTS8 . o-*-*. ..............................134
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