La Paz brain-drain reflects new
Bolivian economy
By Robert S. Elliott
LA PAZ, Feb 10 (Reuters) - Once centered in the mountain-ringed capital of La Paz, Bolivia's
professionals have been trickling toward the country's eastern flatlands as the economy shifts to
farming and natgas and away from mining.
Santa Cruz, in the country's sub-tropical belt, has seen its economy and population gallop ahead, as
La Paz has begun to stagnate on both accounts.
''There's a displacement of the Bolivian economy from La Paz to Santa Cruz,'' leading economic
and political analyst Carlos Toranzo told Reuters. ''Santa Cruz is now the center of Bolivia's
macroeconomy because of agriculture and the export of gas.''
The government has tagged economic growth in this landlocked Andean nation of eight million
people at 5.2 percent this year after a 4.7 percent advance in 1998, the highest since 1982, with
output of $8.56 billion.
''We're in good shape to confront 1999,'' Treasury Vice Minister Marcelo Montero said recently.
Much of the advance in South America's poorest country will be thanks to Santa Cruz, where
agriculture, natural gas and financing are jelling to form the pillar of the GDP, taking that role from
mining.
''The economy is changing from mining to agriculture and hydrocarbons -- with the absence of a
manufacturing industry,'' Toranzo said in an interview.
As the doorway to the future, Santa Cruz has doubled in size over the last fifteen years to 900,000
people, and continues increasing at an annual nine percent clip.
La Paz -- the world's highest capital city at 11,700 feet (3,600 meters) above sea level -- is seeing
population growth of 1.5 percent a year, well below the national pace of 2.8 percent.
With 1.4 million people, La Paz is still the larger of the two urban centers. But ''all the young
professionals tend to go to Santa Cruz,'' said Toranzo. ''The problem with La Paz is that it never
started a movement for the development of its region.''
Awkwardly built in a lofty canyon after the Spanish found gold in the Choqueyapu river 4-1/2
centuries ago, the capital has always concentrated on central government and little else.
''La Paz should try to turn itself into a communications center encompassing southern Peru and
northern Chile, as well as a service center for banking and finance and a place for small-scale
manufacturing,'' said Toranzo.
Across the country, Santa Cruz is the terminus for the $2 billion Bolivia-Brazil pipeline inaugurated
Tuesday that is expected to fill Bolivian coffers with $47 million this year and $500 million by 2005.
''Bolivia is looking for a way to centralize itself as a distribution center for Peruvian and Argentine
gas going to Brazil, fundamentally to Sao Paulo,'' said Toranzo.
The department of Santa Cruz also produces the vast majority of Bolivia's crops, led by a 1999
soybean load that is nudging the one million tonne mark for the first time.
''Soybeans will be the number one crop here for many years to come,'' Agriculture Vice Minister
Walter Nunez Rodriguez said recently.
Agriculture has become a chief driver of the Bolivian economy, pushing non-traditional goods to
overtake dominant mining exports in 1996. The soybean complex alone accounted for 18 percent of
the country's total shipments abroad in 1997.
Santa Cruz has also made inroads in mining with its promising Don Mario copper-gold find. A
sizable portion of Bolivia's 1999 mining investment will go into that project as a feasibility study is
wrapped up by Canadian junior miner Orvana (Toronto:ORV.TO - news) and Bolivian partner
Emusa SA, said Rolando Jordan Pozo, secretary general of Bolivia's association of medium-sized
miners.
More exploration will be directed at the area's pre-Cambrian hills, Toranzo said.
Always Bolivia's cash cow, mining's lesser role in the economy has changed the sector's modus
operandi, Toranzo said.
Eschewing the shaft mines of old, future mineral operations will be technologically-savvy open pits
boasting high polymetallic tonnage in the style of Battle Mountain Gold Co.'s (NYSE:BMG - news)
local Kori Kollo gold operation, he said.
Metals sought will be silver, gold, tin and zinc.
As Bolivia seeks to further its newfound economic stability while battling Brazil's financial crisis, the
roughly 70 percent of the population in poverty is still out in the cold, Toranzo said.
''Although we've had four percent growth for the past five years, it has not lessened poverty and has
worsened the imbalance in wealth,'' said Toranzo.
As in Brazil and Chile, the elite, public bureaucrats, and high-flying businessmen in Bolivia are
growing richer, while the poor continue to endure hardscrabble conditions, he said.
Fleeing the 95 percent poverty rate in rural areas, more Bolivians are headed for the cities.
According to the 1992 national census, 42 percent of the population lived in rural areas, but
currently ''it's not past 30 percent,'' Toranzo said.
More Quotes
and News:
Battle Mountain Gold Co (NYSE:BMG - news)
Orvana Minerals Corp (Toronto:ORV.TO - news)
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