Booms and Collapses of the Hydro Carbons Sector in Bolivia

This paper analyses the performance of the hydrocarbons sector in Bolivia over the last 46 years. The analysis focuses on the factors that have determined the sector’s behavior overtime. First, there is the institutional framework that regulates the sector’s activities, which can play an important role in promoting investment flows, and thus endorse a much faster sector development. Second, favorable market conditions and the existence of export markets are also crucial factors in order to promote investment and the sector development. Third, the geology of Bolivia´s territory has demonstrated to have an important potential to produce hydrocarbons, thus it has historically been the focus of attention for potential investors. Fourth, domestic market conditions can also promote or discourage investment flows. Bolivia´s energy market however is relatively small, thus the main incentive for foreign oil companies to invest in the hydrocarbons sector in Bolivia has been the potential to access to foreign markets. This paper analyses the role played by these factors in determining Bolivia's hydrocarbons sector development overtime.