A Large State or Strong Institutions? | ¿Un Estado grande o una institucionalidad sólida?

By German Huanca, El Deber:

This article is a reply to Elizabeth Jiménez Zamora’s article published on brujuladigital.net, which presents an interesting reflection on the role of institutions in the Bolivian economy, inspired by the contributions of the 2024 Nobel Prize winners in Economics. However, the interpretation of these ideas invites a critical analysis, particularly regarding the concept of a “strong state.” While it is true that institutional strength is key to economic development, this does not necessarily imply a large state, as the article seems to suggest.

According to laureates Acemoglu, Johnson, and Robinson, economic success lies in a solid institutional framework that ensures clear laws and their enforcement, regardless of the size of the state. In Bolivia’s case, the problem is not the absence of rules but their vulnerability to the interests of economic and political groups. Corruption, patronage, and rent-seeking cannot be resolved with more state intervention but rather with functioning institutions, particularly in essential areas such as justice and public resource management.

One example of this dysfunction is the management of public companies under the current administration. Although regulations governing these entities are mentioned, in practice, their structure reflects a distorted vision of institutional strength. The Office of Strengthening Public Companies (OFEP), which depends on the Ministry of the Presidency, was not designed to optimize economic management but rather as a mechanism for political control. This politicization explains why deficit-ridden public companies continue to operate despite being a burden on state finances.

Furthermore, the dispersion of responsibilities across various entities, such as the Ministry of Economy, the Ministry of Planning, and other sectoral departments, leads to duplication of functions and a lack of coordination. This demonstrates that the problem does not lie in the number of rules or entities but in their design and purpose. Far from promoting strong institutions, this model generates confusion and opens the door to political interference in decisions that should be technical.

Regarding the examples of collective action mentioned, such as the “Water War” or the “Gas War,” while they represent historic moments of social mobilization, they also highlight the breakdown of institutional frameworks. Celebrating these actions without acknowledging their impact on the country’s legal and economic stability contradicts the idea of building strong institutions. Institutions cannot rely on the pressure capacity of certain groups but rather on an equitable legal framework respected by all.

Finally, excessive public spending and subsidies, particularly for gasoline and diesel, are clear examples of institutional weakness in Bolivia. These policies respond more to political calculations than to economic criteria, perpetuating an unsustainable system. Reducing public spending and rationalizing inefficient public companies does not mean abandoning social protection but rather prioritizing it in areas where it is truly needed, with clear rules and transparent mechanisms.

In conclusion, Bolivia does not need a large state but an efficient one, supported by strong institutions that prevent the capture of laws and norms by private and corporate interests. Building a country with opportunities for all will not be achieved through more bureaucracy but through strong, independent institutions that guarantee justice, equality, and an environment conducive to economic development.

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