A report from the International Monetary Fund (IMF), excerpts follow:
Bolivia Has World’s Largest Informal Economy
“The shadow economy is, by nature, difficult to measure, as agents engaged in shadow economy activities try to remain undetected. The request for information about the extent of the shadow economy and its developments over time is motivated by its political and economic relevance. Moreover, total economic activity, including official and unofficial production of goods and services is essential in the design of economic policies that respond to fluctuations and economic development over time and across space.”
“Furthermore, the size of the shadow economy is a core input to estimate the extent of tax evasion and thus for decisions on its adequate control. The shadow economy is known by different names, such as the hidden economy, gray economy, black economy or lack economy, cash economy or informal economy. All these synonyms refer to some type of shadow economy activities. We use the following definition: The shadow economy includes all economic activities which are hidden from official authorities for monetary, regulatory, and institutional reasons. Monetary reasons include avoiding paying taxes and all social security contributions, regulatory reasons include avoiding governmental bureaucracy or the burden of regulatory framework, while institutional reasons include corruption law, the quality of political institutions and weak rule of law. For our study, the shadow economy reflects mostly legal economic and productive activities that, if recorded, would contribute to national GDP, therefore the definition of the shadow economy in our study tries to avoid illegal or criminal activities, do-it-yourself, or other household activities.”
Bolivian Thoughts opinion: This study, “cleverly” avoids making references or assigning relevance to narcotrafficking and smuggling which for Bolivia are the largest sources of cash. It is worthy remembering that when a demagogue offers second Christmas bonus to workers, is neglecting the largest portion of Bolivian employees, thus, it is plain demagogue and misleading when the world listens the official reports from this autocratic and ochlocrat government.
“Bolivia has the first largest informal economy as a percentage of its total economy in the world. The IMF studied 158 economies, Bolivia scored 62.3%, followed by Zimbabwe with 60.6%.”
In the meantime, Bolivia and the world continues to be misled by evo who continues to brag about macroeconomic data that does not reflect the real nature of the Bolivian economy: remittances from those of us who had to leave Bolivia since there are no sustainable jobs; narcotrafficking now is not only cocaine but also cannabis which are blooming and now became a very influential lobby in Bolivian politics; the smuggling of goods does not only prevent Bolivian labor to flourish but also destroys industries and as all of the above are large amounts of liquidity into this economy.
evo can hide his wrongdoings along the last twelve years, with the highest revenues ever for the State, this caudillo has managed to waste over $160 billion dollars. evo has also failed in capturing relevant foreign investment. The corruption under this caudillo government, has managed not only to have erased institutionality but has provided major flow of money from paybacks which for example have distorted the real state sector.
Let’s not forget that all the bonuses “created” by this demagogue are not sustainable and we are living a mirage. So, who could open up an industry, a venture if the government is corrupt, if there is too much red tape? When this demagogue populist assigned the Bolivian IRS to exert incredible pressure on the one who are formal, who are legal?! Maybe this ochlocracy should read the book by Hernando de Soto “The other shining path” and understand that the government is to support, to provide assistance, not to choke private initiative!
For the full report, you can look and download this report: wp1817, thank you.