Poverty and Inequality Reduction in the Case of Bolivia: What Has Impacted the Reduction during Evo Morales's Administration Period?

Abstract: Bolivia has experienced a drastic decline in inequality and poverty since 2000. It coincided with the administrative period of Evo Morales between 2006 and 2019. Hence, it is debated whether poverty reduction was mainly driven by economic growth alongside the commodity boom in the 2000s or by policy implementations during Morales’s presidency. This study addresses the research question: “How and why has the economic growth process in Bolivia from 2006 to 2019 benefitted the poor?” In this context, it is discussed which factors have contributed the most to the recent decline in inequality and poverty: economic growth in times of favorable terms of trade, public investments, conditional transfer schemes, or changes in salaries. The findings suggest that economic growth alongside favorable terms of trade have built the foundation for the pro-poor growth process. Higher revenues from natural resources made it possible to expand social spending. Apart from that, pro-poor growth was mainly driven by higher labor income at the lower end of the income distribution due to a rise in the minimum wage. To a smaller extent, the implementation of three distinct cash transfer schemes has contributed to a higher non-labor income. At last, a new land reform contributed as a minor factor to poverty reduction.