basic data in poor countries: the bolivian case

BASIC DATA IN POOR COUNTRIES: THE BOLIVIANCASE

By LAURENCE WHITEHEAD1

Nowadays no respectable country, however poor, can do without a system ofnational income accounts. The planners consider it indispensable if they are toanticipate bottlenecks, and select the best allocation of investment. It enablesthe politicians to impress the electorate with their grasp of the mysteries ofmodern government. The pressing problems of the momentfood shortages,unemployment, insecuritycan be compressed into a single slogan, a sloganintended to over-ride national divisions: the demand for a faster rate of growth.International lending agencies require the information if they are to evaluate theeffectiveness of past loans, or justify the allocation of new ones. Finally, researchdepartments of the United Nations are required to estimate the main develop-ments in the world economy, rates of growth for industry and agriculture, andso on. So wherever possible they foster national accounting systems based oninternationally standardised definitions.

The final users of the aggregated data are seldom fully aware either of thesources of the raw data, or of the methods used to collate it. The cautious mayread the explanation of 'sources and methods' attached to the tables, butunfortunately official publications are rarely candid about their own deficiencies.In any case even the national income accountants themselves are often unable toassess much of the raw data they have to work from. If other offices collect theinformation it may be impolitic to debate it. So unless the final users of thenational accounts are prepared to spend considerable time on the tedious task ofchecking up, they simply have to trust the statisticians to do their j ob respon.-sibly. The more sceptical may refuse to use the detailed breakdown of theaccounts, or to attach significance to year-to-year fluctuations in the data, butmost economists assume that the general trend of investment, national incomeper head, etc., which is depicted in the tables must be broadly correct.

This article tests the validity of the basic data provided by one poor countryBolivia. The information was obtained from interviews with the relevantofficials in the Secretaria de Planificación (SEDEPLAN), the Dirección Generalde Estadística, and certain of the ministries. The results provide a warning that,at least in some cases, the available economic indicators may be even less useablethan many economists realize. If many other poor countries have such unreliabledata as the Bolivians produce the global series published by the UN may bebrought into question.

The Naionat AccountsTable 1 gives Gross Domestic Product by sector, 1958-67, at constant 1958

prices. The ten year plan drawn up in 1961, and published in the review Planea-I am grateful to the Overseas Development Institute, London, for financing a year of

research in Bolivia.205

TA

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9

BASIC DATA IN BOLIVIA 207

miento (Nos. 3/4/5), gave estimates of GDP from 1950 to 1958, but these havebeen omitted here, because the two series are not really continuous. The earlierseries was compiled retrospectively, using data which were neither complete norconsistent with the definitions used since 1958.1The Sectors:A. Agriculture

This is the largest single item in the accounts. The whole series is based on asurvey taken in 1958if the survey is defective then almost a third of the GDPtotal lacks any reliable basis.

The survey covered only seven of Bolivia's nine departments, but the twoornittedBeni and Pandocontribute relatively little to total production. Themain activity in Beni is cattle raising on large ranches. Thus even without asurvey reliable information can be obtained from the Ministry of Agriculture'sannual enquiries among the thousand or so largest ranchers. A more seriousomission occurred among the remaining seven departments. Only 44 of their 85provinces were investigated, and only a few cantons were examined in each of theprovinces investigated. Of course this would normally be respectable samplingprocedure, but Bolivia lacks reliable information on the population of eachdepartment and province, let alone each canton,2 and so there is no sound basis forexpanding the results from each unit surveyed, to obtain national totals. Withinthe cantons that were studied, there existed no reliable list of rural properties,from which to draw a random sample. The investigators had to make use of theincomplete property lists available for 1950, modified as best they could to allowfor the effects on tenure patterns of the subsequent agrarian reform. Thefigures for crop production finally obtained by this survey were calculated bymultiplying the very rough estimates of yields per hectare by the very roughestimates of hectares under cropa method likely to magnify any error whichmight have crept in at an earlier stage.3 Thus the senior official in the Ministry ofAgriculture, who guessed that the results were liable to a considerable margin oferror in either direction (he said it might well be 20 per cent), probably was notexaggerating.

In addition to collecting information on yields and area sown to each crop,the survey teams enquired about prices received by the producers for eachcommodity. The figure of value added by agricultural production in 1958, given

Planeancieno No. 2, March 1961, p- 65, includes a table showing GDP by sector, 1950-59at constant 1958 prices (US). No methods are given. Planeamiento No. 314/5, September 1961,facing p. 40, includes an identical table, except that the word 'provisional' is dropped, and allthe numbers are different. No explanation for the change is provided.

2 In theory the government appoints an unpaid officiala 'corregidor'to represent it inevery canton. In practice a province often has more corregidores than cantons. The officialshave only a vague idea of the boundaries of their territory, the inhabitants only know the nameof their pueblo, not of their canton, and the government has no complete register either ofcantons or corregidores. For evidence that even the larger sub-categories of the 1950 Census arethoroughly unreliable see L. Whitehead 'Altitude, Fertility and Mortality in Andean Countries',Populalion Studies, November, 1968.

For the results of the 1958 surveys, and a description of the methodology used (not, ofcourse, very critical), see Ministerio de Agricultura, Servicio Agrícola Interamericana, Divisiónde Economía Agrícola, La Paz: Estadísticas Esiïma1ivas de la Producción Agropecuaria enTanja, . . . en Cochabamba, . - . en Oruro, . . . en Santa Cruz, . . - en Potosí, . . - en La Paz,

en Chuquisaca, published 1958-60. Extra information was obtained from an interview withDr. Piar Sahota, FAO adviser to Bolivia, Cochabamba.

208 BULLETIN

in Table 1, was calculated by multiplying the survey findings on the volume ofeach product, by their findings on the average price received by producers, andthen deducting a magic 14.47 per cent for 'inputs'. No-one knows how thefigure of 14.47 per cent was originally arrived at, but it has been used to convertgross product into value added every year since 1958. It cannot have beenobtained from the 1958 survey, because the gross value figures for 1958 are sub-divided into agriculture, livestock, and natural resourcesand for each of thesethree sectors value added is obtained by subtracting the same mysteriouspercentage.

If the 1958 figure is shaky, the figures for subsequent years are progressivelyworse. In theory the Ministry of Agriculture collects estimates from theirextension agents of the size of each year's harvest, and these figures are thenused by the Secretaria de Planificación to calculate the annual value added byagriculture. In practice, as Table 2 shows, there are big discrepancies betweenthe estimates of crop production made by the Ministry of Agriculture, and thequantities used in SEDEPLAN'S GDP calculations. All the figures tally for 1958because both organizations use the results of the year's survey. This confirms thatthe categories used by the two institutions are identical. However, from 1959 onthe two departments agree only on the series for maize and wheat, presumablybecause SEDEPLAN accepts the Ministry of Agriculture's estimates. SinceSEDEPLAN has no network for collecting data in the field, other than thatprovided by the Ministry of Agriculture, its figures for production of yuca, oca,corn and rice must be some kind of extrapolation, modified by arbitrary adjust-ments in years when the harvest is reportedly very good, or very bad. (Theofficials who compiled SEDEPLAN's figures up to 1964 were sacked after themilitary coup in November of that year, and took their documents with themwhen they left, so it is impossible to prove this assumption). It is less easy toexplain the discrepancies in the case of potatoesmuch the most valuable itembut the figures for 1963 and 1964 strongly suggest that about then the Ministryof Agriculture became tired of collecting output figures which were never used,so in 1964 they switched to using SEDEPLAN's extrapolations. The same seemsto have happened with yuca, corn, and rice. Only the figures for coffee andsugar-cane outputboth very small components of outputremain at variancethroughout the whole period.

The explanation of why SEDEPLAN generally preferred to use extrapolation,rather than the information provided by the Ministry of Agriculture, and whyin the end even the latter seems to have abandoned its own estimates, lies in thenature of the network available for collecting regular crop figures from thecountryside. The extension agents are not primarily employed to collect statisticstheir main job is to instruct the peasantry about improved techniques, and theadvantages of fertiliser and improved seed. They are also required to prepareimmediate reports on any natural disasters which may destroy the crops in theirarea. The average agent has 6,000 sq. km. to look after, with 50,000 inhabitantsin his area, which does not leave much time for low priority tasks. (This calcu-lation omits the 'huge open spaces' of the Oriente, because there are no agents inBeni or Pando, and very few of the provinces of Santa Cruz are served either).


Most of the time the agent is immobilized in one of the urban centres, because histravel allowance itself barely adequate-is only valid for ten days in eachmonth, and normally about half the jeeps available to the service are paralysedby lack of maintenance. In any case it is hard to attract good staff for the job,since the pay (when it comes) is only US$100 a month. Dissatisfaction produces ahigh turnover among the staff, so that for example in November 1967 less than40 per cent had been at the job more than three years. In short, the ministriesin the capital almost totally lack regular contact with large areas of the country-side. This leaves them no choice but to extrapolate from the only concreteevidence available-the 1958 survey.

TABLE 2Production Figures for Selected Bolivian Crops---Two Conflicting Sources

In Thousand Metric Tons

Comparable figures are not available for all the important crops. Ranking the crops hvalue of production in 1965 we get:

1. I'otatoes, 2. Maize, 3. Yuca, 4. Rïce, 5. Tomatoes (not included in the table), 6. Wheat,7. Oca, 8. Barley, 9. Coca (omitted), 10. Peanuts (omitted).

The Planners figures are taken from the calculations of value-added by agriculture used inthe National Accounts. Ministry of Agriculture figures are from the División de EconomíaAgrícola of the Ministry.

Crops, in order oftheir estimatedvalue in 1965

1958 1959 1960 1961 1962 1963 1964 1965

A. Potatoesj) Min. of Ag. 592 665.7 605.2 617.2 567.8 700.0 621.5 650.0

ii) Planners 592 602.0 580.3 617.2 566.6 621.5 621.5 N.A.

B. Maizej) Min. of Ag. 262.6 260.2 247.8 260.1 234.1 260.0 261.0 238.9

ii) Planners 262.6 260.2 247.8 260.1 234.1 260.0 261.0 N.A.

C. Yucai) Min of Ag. 125 130.0 142.4 151.3 160.2 163.7 142.5 145.0

ii) Planners 125 112.5 120.0 127.5 135.0 138.0 142.5 N.A.

1). Ricei) Min. of Ag. 37.21 19.5 23.3 24.0 24.0 40.0 40.5 42.2

ii) Planners 37.21 38.0 39.0 40.1 40.6 42.4 40.5 N.A.

E. Wheati) Min. of Ag. 64.3 71.5 68.1 67.2 60.5 65.0 58.0 42.1ii) Planners 64.3 71.5 68.1 67.2 60.5 55.2 58.0 N.A.

F. Ocai) Min. of Ag. 50 50 50 60 55 56 56 63ii) Planners 50 51.5 52.5 54 55 56 56 N.A.

G. Barleyj) Min. of Ag. 57.1 68.0 73.9 78.8 80.0 77.0 61.6 65.2ii) Planners 57.1 57.8 58.8 60.1 60.3 61.6 61.6 N.A.

H. Sugar Canei) Min. of Ag. 220 412.2 524.7 960.0 1,056.0 1,161.0 936.4 933.0ii) Planners 220 243.4 307.8 551.8 532.5 822.5 832.1 N.A.

1. Coffeej) Min. of Ag. 1.37 3.5 4.3 5.3 6.3 6.7 7.0 8.0ii) Planners 1.37 1.4 1.5 1.6 1.6 1.7 2.1 N.A.

J. Cottoni) Min. of Ag. 0.3 0.1 0.7 0.4 0.8 0.9 1.0 1.3

ii) Planners 0.3 0.1 0.7 0.4 0.9 1.1 1.3 N.A.

210 BULLETIN

Table 2 stops in 1965, because since then the Ministry of Agriculture hasceased producing output estimates of any sort. One explanation is that reorgan-ization of the ministry has caused such insecurity and confusion that little workcan be done there. Another is that the irregular payment of its normal incomefrom the Treasury, and the withdrawal of the USAID contribution to its expenseshad left the Ministry without funds, so that it cannot pay the salaries of itsextension agents. Whatever the cause, SEDEPLAN has not been inhibited bya lack of crop estimates from producing 1966-67 national income figures, asTable 1 shows. The value added by agriculture in 1966 was calculated by fittinga trend to the series for 1960-4, and extrapolating it. But the validity of thiscalculation was challenged in October 1966 when the planners found that theprice of potatoes in urban markets had leapt to above twice the normal level.(Potatoes account for almost 40 per cent of value added by agriculture, accordingto the national accounts. This means they are about 10 per cent of GDP, thelargest single item, considerably exceeding tin production). Famine-level potatoprices must mean a large fall in production, but the planners had no means ofknowing how large a fall. A commission was sent to investigate, and reportedin March 1967 that 30-40 per cent of the crop was destroyed by drought andhail. Since the commission had only visited the worst-affected areas SEDEPLANconcluded that this was an exaggeration. Their 1967 figure uses the assumptionthat only 12.5 per cent of 'normal' production i.e. the quantity indicated bythe extrapolated trend linehad been lost.

This explanation of how the agricultural value added figures (the largest itemin Table 1) are obtained indicates how little confidence one can attach to thisseries. Certainly the method used in 1958 was sound enough in principle,although there could be some doubt about its application, even then. But therehas been no usable sample survey since the bench-mark year (an attempt in 1963was rejected on technical grounds). Instead the sound method has been replacedby an unsound onethat of extrapolating a dubious trend line and then makingarbitrary piecemeal adjustments to it.

The results are obtained directly at constant pricesi.e. the producer pricesobtained in the 1958 survey are applied to the estimates of volume of output foreach year. Table 3 shows the huge variations in prices received by Bolivianpeasant producers in different areas. No evidence remains of whether the 1958survey succeeded in averaging out such variations satisfactorily. Thus theweights used to combine the physical product series at constant prices aredistinctly arbitrary.

Next, to convert the series to current prices SEDEPLAN inflates it by theLa Paz consumer price index for foods. Later in this article the index will beshown to be hopelessly inadequate. In any case it is unsound practice to inflatea production series for the whole country, valued at producer prices, by a priceindex which refers to prices paid by lower class consumers in one town.

B. MiningBolivia is one of the world's major tin producers, and also mines small

quantities of a great many other metals. Over half the total value of its mineral


TABLE 3Regional Variations in Prices Received by Agricultural Producers, September, 1962

(Pesos per quintal, for crops; per animal, for meat)

Indicates that no price was reported.Source: Reports on prices in fairs and provincial markets in September, 1962, collected by

the División de Economía Agrícola of the Ministry of Agriculture. Producers generally selltheir own produce at these fairs, so these prices normally represent payment for production andtransport to the provincial markets. In some cases, however (e.g. chickens in the Yungas andwheat in Larecaja) high prices reflect the high transport costs of bringing in a commodity fromother regions.

production comes from a single enterprisethe nationalized Corporación Minerade Bolivia (COMIBOL). This concentration of production, and the fact thatpractically all the minerals are exported, means the mining statistics are reason-ably good. Even so there is a noticeable margin of error. Apart from Comibolthere are the medium producers-27 private companies large enough to markettheir own production independently of the state-controlled Banco Minero(BAMIN). Whether direct subsidiaries of foreign concerns, or partly Bolivian-owned, these companies stand the best chance of raising foreign capital fordeveloping promising deposits. They are relatively efficient, and by 1967 wereproducing over 20 per cent of the country's tin, and had overtaken COMIBOLin the production of wolfram, zinc, copper, and antimony. They are obliged toinform BAMIN of their annual production of each metal. These data are thenpassed on to the planners, and incorporated into the national accounts. Forobvious reasons some firms may try to under-report. But the small mines areresponsible for the main omissions in the figures. These operate only inter-mittently, and use very primitive techniques. They are impossible to superviseclosely. In principle they must sell all their output to either BAMIN orCOMIBOL, but in practice they often make more profit by by-passing these twoagencies.

Originally the statisticians assumed that by summing COMIBOL's pro-duction figures, and BAMIN's figures of mineral purchases, they could get aseries for total mineral production. Later they found that production calculated

Province Potatoes Maire Wheat Pigs Chickens

A. La Paz DepartmentN. Yungas ... 35 35 . 35S. Yungas .. 70 40 . . . . 40Larecaja .. ... 48 60 80 55 12

B. Cochabamba DepartmentQuillacollo ... 46 40 55 70 18Punata ... ... ., 55 50 57 80 20Arani .. .., ... 40 42 40 50 14Capinota ... ... 36 46 55 50 15

C. Chuquisaca DepartmentOropeza ... ... .. 40 40 40 40 11Tomina ... .. 20 20 50 30 6Luis Calvo ... ... 40 14 ... 35 8

D. Santa Cruz DepartmentComarapa ... ... 32 32 28 50 15Warnes ... ... . 18 . . . 15Vallegrande ... 40 24 24 50 10

212 BULLETIN

this way is less than the total volume of mineral exports recorded by the BancoCentral after allowing for leads and lags. So the series shown in Table 1 is nowcalculated from the information on exportswhich means that year-to-yearfluctuations in the figures do not accurately reflect changes in production.Instead they may be caused by transport bottlenecks, or by fluctuations instocks. Even the export figures probably omit some of the contraband, soTable 1 is likely to slightly under-estimate the value added by mining.

The output series for mining are equally valid at both constant and currentprices. Since the tonnage of each mineral is available the current value of outputis that quantity valued at current prices, and the constant value is obtained byapplying 1958 prices to the volume figures.

PetrolSince petrol is harder to smuggle than minerals, the production figures

provided by the state corporation Yacimientos Petroliferos Fiscales Bolivianos(YPFB) are reliable. YPFB has a monopoly of domestic petrol marketing, butits own output is no longer enough to meet domestic demand. The main pro-ducer, Bolivian Gulf, is required to sell whatever extra YPFB needs to supplythe home market. In return Gulf controls Bolivia's petrol exports. Petrolproduction is calculated at current prices, by valuing the domestic volume ofconsumption at the artificially low domestic selling price, and the export volumeat the world market price for crude (petrol refining is included in 'manufactures').This gives value added by domestic productionalthough of course nationalincome from this sector is less than domestic income, because Gulf can beexpected to repatriate profits to its parent company in the US. National account-ing conventions require domestic product to be calculated to include any fractionof the product subsequently expatriated.'

To convert current value added by petrol production to the constant priceseries which appears in Table 1, the volume figures are valued at 1958 prices.There are a few minor items, such as liquid gas, which were not produced in 1958.These are valued at the price prevailing in their first year of production. Thedata on mining and petrol are much the most reliable in Table 1.

ManufacturingIn most underdeveloped countries the manufacturing sector only contributes

a small proportion to national product and out of this small proportion traditonalsmall-scale methods of production often supply an important fraction of thetotal demand for manufactured goods. This artisan production is very hard tosupervise, or collect information about.

1 Edith Penrose points out the other consequence of this convention. 'US foreign invest-ment . . . is often spoken of as a contribution of the rich US economy to the rest of the world.But a large part of this investment is undertaken by international firms based in the US andobtaining much of their income from foreign operations and to this extent it is wrong toattribute the earnings and therefore the saving solely to the US economy, although it is correct]yattributable to corporate nationals, so to speak, of the US'. The Large International Firm inDeveloping Counlries, (p. 42). As for Gulf Oil's Bolivian investments, on p. 120 Mrs. Penrosequotes a chairman of Gulf during the 1950's who states that it was profits on the company'sKuwait operations which permitted much of the increased investment undertaken at that time.Most of this investment was in the US itself, of course, but it seems reasonable to regard theBolivian investments as made possible by the profits from Kuwait as well.


In Bolivia the only data available on small-scale industrial production arefrom a survey taken in 1958. The methodology and coverage of the survey areno longer available1 but the national income estimates for industry are still basedon the survey findings. They showed that 52 per cent of the value-added byindustry in 1958 came from the so-called 'unregistered' sector, for which thegovernment has no regular source of information. Since then the nationalaccounts simply assume that the output of this sector lias been growing at asteady 2.5 per cent p.a. The statisticians claim that a partial survey taken in1965 confirms this assumption, but since they do not know how the 1958 surveywas taken they cannot really be sure that the two sets of results are comparable.Intuitively one would expect the modern factories in the 'registered' section to hedisplacing small workshop production, or at least preventing any growth fromthat source. According to the national accounts, however, in 1966 the unregis-tered sector was still producing 48 per cent of the value added by industry.

All firms with more than a certain minimum number of employees, a specifiedamount of fixed capital, and a set value of production are registered at theMinistry of Hacienda (Treasury). The Dirección General de Estadística, whichis a part of the Ministry, sends out an annual questionnaire to all these firms,which includes questions on value of production, costs, etc. Every firm islegally obliged to reply, and is assured that the results are confidentiale.g. willnot be referred to in tax assessments. But since the questionaire has 'Ministeriode Hacienda' printed at the head, many businessmen are likely to be sceptical.Officially the results are considered trustworthy, because intermittent checks aremade to eliminate under-reporting. But unofficially staff responsible for makingthe enquiries in individual factories have told me that the industrialists system-atically understate both the amount they produce, and the prices they charge,and these mis-statements are never adequately corrected. It is said that manyindustrialists give the same falsified replies to enquiries from their own Chamberof Commerce. If so, not only does this cast doubt on the official figures for value-added by registered industry, which appear in the national accounts, it alsobrings into question the findings of independent studies based on survey inform-ation from Bolivian industry (e.g. the World Bank's study of transport needs isbased on an input-output table obtained from a survey of Bolivian firms).

Initially SEDEPLAN obtains industrial value-added at current prices. Toobtain the constant price series shown in Table 1, the current price data aredeflated by a consumer price index of all goods. To make this index nationwide,the price indexes for each city are combined, using the population of each city asweights. Unfortunately, at least half the components in these indexes are non-manufactured itemsrent, fresh foods, etc., so the relevance of this general

'Neither SEDEPLAN nor ECLA headquarters in Santiago retain writ en records of anyof the surveys taken in 1958. However one of the UN experts involved states that the ECLAteam was composed of no more than eight people, some of them part-time, and sorne clerical.Lacking the resources for proper surveys they had to make do with guesses. For example, theyhad a figure for the number of workers employed in shoe-manufacturing. They also knew thevalue added per sorker in one nearby shoe factory. Multiplying the two gave them valueadded for the sector. As for small, unregistered industry, it was impossible to take any sample,so a guess was made based on the numbers believed to be employed in this activity. My inform-ant was alarmed that his guesses were still being used as the basis for extrapolation, ten yearsafter.

214 BULLETIN

index to the constant value of manufactured production is distinctly question-able. Other criticisms of the price index are made in a later section of this paper.

In view of the large element of extrapolation in the figures, the unreliabilityof the annual data which are collected, and the dubious value of the price indexused as a deflator, the figures for industry in Table 1 must be classified as prac-tically unusable.

ConstructionBolivia has abandoned global planning, and now concentrates on planning

the investment sector. SEDEPLAN collects detailed information about sourcesof finance and types of expenditure involved in every major product. In additionto the information on public investment, they take annual surveys of all themajor urban centres to obtain similar information from the private sector.These painstaking enquiries give fairly reliable information on the major invest-ment projects underway, including what proportion of these projects consist ofconstruction. To obtain total value-added in construction the planners add anestimate of urban family construction, based on the findings of surveys taken in1958 and 1966 (methodology unknown). Thus the data for urban constructionare fairly complete.

However, three-quarters of Bolivia's population lives outside the major urbancentres. In the rural areas the Agrarian Reform has led to a very big increase inpeasant constructionboth of schools, etc., for the community, and of improvedaccommodation for the individual families. A recent enquiry among peasantcommunities shows how much of a change there has been in the past decade:'The average number of rooms in the peasant huts I visited had risen from one tothree in Pillapi, from two to three in Yanamani, and from two to three inLecori'.' Almost all this activity is omitted from the accounts, the only exceptionbeing the very small amount of rural construction financed by the Banco Agricola(only 2/3 per cent of the construction total in 1966). It is worth trying to guessthe order of magnitude of these omissions. There may be about half a millionpeasant families involved. If we impute the very modest annual expenditure ofUS$10 per family per year on all types of rural construction, it would signify thatevery year $5 m. worth of invests cnt escapes the national accountsover 1 percent of GDP, or about an additional quarter which should be added to theTable 1 figure for construction.

To deflate the current value of construction to constant prices, the plannersuse a price index of the inputs used in the construction industry. Both domestic-ally produced and imported inputs are included. Even if the weights used in theindex are representative it may not be exact. Labour costs or company profitmargins might rise out of line with raw material costs, in which case this deflatorwould understate the real adjustment required, and vice versa.

ElectricityThis sector presents no difficulties. There is reliable information on output

and prices are centrally determined.Olen Leonard, 'El Cambio Económico y Social en Cuatro Comunidades del Altiplano de

Bolivia', Instituto Indigenista Interamericano, Mexico, 1966, p. 28 Author's translation.


Finance and CommerceIn many underdeveloped countries not only does petty trading provide the

vast bulk of the employment in commerce, it also does for a large proportion ofcommerce in value terms. Bolivia has never had a census of its commerce, aridit is quite unfeasible for the planners to try to collect regular information fromstreet corner traders. (In La Paz, for example, it is estimated there is onetrader for every nine families, compared with one in 700 in the US) 1 The onlysolution has been to borrow the results of an input-output table compiled in1958, and to assume that the relationship between domestic production, andcommerce, which was calculated for that year continues to hold good. Thus inTable 1 the commerce element of 'commerce and finance' is assumed to he 25per cent of the value added by agriculture and industry, each year.

This method gives poor results. It ignores the fact that imported food andmanufactures are an important, and fluctuating, element in total trade. Even ifthe 25 per cent relationship was a faithful reflection of reality in 1958 it may notcontinue to apply a decade later, since the Agrarian Reform may have cut outmiddlemen, and possibly an increased volume of sales may have cut selling costsper unit. We have seen the large scope for error which exists in the figures foragriculture and industry. To add an arbitrary extra 25 per cent is surely tocompound the error.

'Finance' refers exclusively to banks, since insurance companies are of verylittle significance to the country. The same method is used as in compiling avalue added series for 'government'see on. Finance is of small importance,contributing only a small fraction to the 'finance and commerce' total in 1966.

TransportA visitor to Bolivia would get the impression that the most important

vehicle of transport is human, often carrying huge loads. No attempt can bemade to assess the 'value added' by this activity. Neither is there any evidenceabout the contribution of motor transport. The only reliable figures refer totransport by rail and airnot a large enough proportion of the total to be useful.

Here too the only solution has been to use the findings of the 1958 input-output table. This showed that transport was 16 per cent of the combined valueof domestic agricultural, mineral, and manufacturing production. The samerelationship is assumed to hold throughout Table 1.2 This assumption would beinvalid if the amount of transport fluctuated with the amount of imports or ifthere had been a shift in the composition of tradefor example from manufac-turing heavy goods to manufacturing lighter goods of the same value, or fromselling only in the home city to selling in remoter parts of the country. Further-more 1958 was a year of deep depression, but the transport industryespeciallythe railwayscould not cut back its activities to the same extent as the goods-producing sectors of the economy, so 16 per cent may have been an abnormallyhigh figure. The assumption of a fixed relationship between transport and domes-

The Market Processes of La Paz, Bolivia, Chapter IIIa report by the Market PlanningCentre of Michigan State University, 1967.

2At least in theory. In practice, for reasons no doubt long since forgotten, the proportiondrops to 15.2 per cent in 1959, and 15.5 per cent in 1961.

216 BULLETIN

tic production may involve a further magnification of any errors in the figuresfor value added by agriculture and industry.

I. GovernmentThe national accounting convention in Western countries is that since the

product of the government sector is intangible it must be equated with theincome of government employees (by contrast, socialist countries omit most'services' from their accounts). In many underdeveloped countries this conventionis likely to produce anomalous results. One might argue that the social productcontributed by the government sector is often less than the official wage bill,because government employment is partly a sponge for disguised unemployment.This would imply that the wage bill method over-estimated the contribution ofthe government sector to national income. On the other hand there might alsobe some under-estimate heresome government functions, especially localgovernment, would collapse altogether, if public officials were required to livesolely on their official salaries. Therefore some 'unofficial' sources of income forpublic employees could be said to have a social product, in which case theynhould, in theory, be included in the production boundary. In practice, of course,seither of these sources of distortion is easily quantified, so if the Westernconcept is to be used at all, one has to make do with the wage bill figures. Altern-atively one could either exclude the government sector from the accounts, orpossibly assume that the value added by the government sector is some fixedproportion of GDP. I have criticised the use of this second method, in the case ofcommerce, and it is certainly far from ideal for the government sector. But itmight be slightly preferable to the present wage bill method.

In Bolivia about 90 per cent of the 'value-added' by the government sectoris attributable to the wage bill of central government employees. This inform-ation is reliable, because all government expenditure is fully accounted. Beforethe military coup of November 1964 figures were available disaggregating thewage bill into civil and military components. Since that date it has become anoffence to publish the disaggregated data, but we can be sure that the rapidexpansion of government 'product' shown in Table I is partly caused by highermilitary pay. It seems that the salaries of higher officers have trebled, and theyare now encouraged to draw double payi.e. to continue drawing their armysalaries while taking on another jobin top administration, ministers, mayors ofthe major cities, and so on. Local government contributes very little to thetotal, because official salaries are very low. But this probably means that un-official sources of income are a larger element in the total.

To convert the value added by government into constant prices the wage billis deflated by an index of the bonus component of total pay. The rationale forthis is that rising bonuses are an indication of rising quality of the staff, sodeflating by the bonus index converts the measurement to one of constantquality per employee. In real life, of course, the bonus element in pay is theproduct of many pressures, most of them irrelevant to 'work quality'. Withwage rates rather than earnings as the basis for income comparison in collectivebargaining, the government may prefer to grant a pay rise in the form of bonusesrather than basic pay.


RentThis concept is intended to include both the rent paid by those living in

rented accommodation, and the rent imputable to owner-occupiers, representingthe value of the 'service' they receive from living in their own houses.

The 1958 figures were obtained by taking the number of houses in eachmunicipality, and multiplying by the average rent paid in 1958. Data on thenumber of houses even if properly collected (which is doubtful) are liable towide margins of error, depending on how tenements and the jumble of sharedwalls, etc., typical of Bolivian slum housing are classified. Housing outside themunicipio boundaries was presumably excluded. The average rent is almostcertainly not based on a representative sample of all rented accommodation;property-owners conceal from the government the amount they really chargetheir tenants; and it is extremely dubious whether rents move closely in linewith the price of houses for sale to new owners. At best this is a shaky concept,and in the Bolivian case it positively totters.

To calculate the series at constant prices the 1958 figure is assumed to rise inline with population growth, adjusted upwards by an index of the increased rateof house-building shown in municipal registers. These registers are not reliable;there is no measure of the rate of deterioration or demolition of existing houses;and it is far from certain that net housing amenity moves in line with populationgrowth. It could well be that increased construction of 'middle class' housingin the capital has displaced lower class housing on to steeper or more insalubrioussites, where their makeshift accommodation may even be worse than before.

An index of rental rates is used to convert the series into current prices. Therapid rise shown by this index seems credible, but while the broad direction isright it is unlikely to be an accurate indicator of the exact rate of change. Inany case it is doubtful that house prices have risen as fast as rents.

Other ServicesThis category is intended for the ragbag of items which do not fit elsewhere.

Unfortunately this means that it aggregates data of good quality and simpleextrapolations, producing an unreliable total. The largest single component isprofessional servicesabout 20 per cent of the total. These are under closegovernment supervision, so the information on them is fairly reliable. Nextcomes a much more inaccurate series on domestic service (about 15 per cent).This is calculated by applying an assumed growth rate of the survey findings of1958. Then come hotels and restaurantsanother 15 per centwhich areclosely supervised by the government, and provide reliable information. Thesame applies to radio and cinema (about 10 per cent), private education (about5 per cent) and telegraph services (5 per cent). But the data for laundries andhaircuts (10 per cent) and other miscellaneous items of which burials are thelargest component (20 per cent), are based on extrapolation. So in summarycomponents adding to 55 per cent of the total are based on sound data, but theremaining components, are calculated by extrapolation from base data ofuncertain quality. This makes the final series, shown in Table I, of dubious value.

E

218 BULLETIN

Fixed Capital FormationWe have already seen that a large proportion of SEDEPLAN'S resources are

devoted to collecting information on investment projects. At the end of eachyear they review the plans schedule for that year to see how far they wereimplemented. The achievement often falls considerably short of the intentions--for example oniy 58 per cent of planned investment was actually undertakenin 1965-66. This should be borne in mind when reading any of the Bolivian in-vestment plans.

About 70 per cent of fixed capital formation is in the form of construction.Thus if the construction estimates are a severe under-estimate, as we haveargued, the investment figures must be too. In fact, it may be an even greaterunder-statement of reality, because the remaining 30 per cent of the total consistsof machinery and equipment, a substantial proportion of which may be requiredby unregistered enterprises.

SavingsIn addition to the information on total savings in Table I, the national

accounts include a breakdown of saving. This shows saving by government, andpublic enterprises, saving by private corporations, and 'other' saving. The firsttwo categories refer to definite enquiries made among a limited number of largeenterprises, and are presumably fairly good indicators, although we have seenthat the answers from registered private industries should be treated with care.

Unfortunately there is no evidence of the saving undertaken by the rest ofthe economyurban small saving, peasant saving/investment in rural improve-ments, etc. So the figures for 'other' saving are obtained in a very dubiousmanneras the residual of a residual. The planners use the formula:

total savings =fixed capital formationnet foreign investmentdepreciation of national capital.Then 'other' savings =total savingssavings by government and public enterprisessavings by private corpora-tions. Unfortunately there are so many sources of error in this method that thefigure for 'other' savings is worthless, and the figure for total savings is highlyuntrustworthy.

If it is true that the fixed capital formation figure is an underestimate,because it omits rural investment, and a great deal of the investment in machin-ery and equipment for small firms, then the calculation of total saving will tendto be an under-estimate. To offset this, the estimate of 'depreciation of nationalcapital' is probably too low, so the total saving figure is probably inflated fromthis source. The national stock of capital is always a hard concept to measure.In the Bolivian case the planners use an estimate of capital stock made in 1958,of uncertain reliability. To bring the total up to date, they add their estimate offixed capital formation each year (probably too low, as we have seen), andsubtract an assumed 3 per cent depreciation on the previous year's total. In afragmentary way we can produce evidence that 3 per cent is too low a figure fordepreciation in Bolivia, even if it is a serviceable assumption in some developedcountries. Consider, for example, Bolivian internal airlines. This capital-


intensive activity is characterised by ease of entry. Any entrepreneur withenough money to buy a cast-off plane can participate. Unfortunately thoughold planes of this sort may require only a low initial purchasing price subsequentmaintenance costs are very hightoo high for most Bolivian entrepreneurs. Torecover the initial outlay, the plane must be operated continuously, withoutmaintenance, until it ceases to function. Thus the current stock of planes isapproximately equalled by the cumulative total of crashes over the past fiveyears. Calculating it very crudely, this would mean an annual depreciation' ofcapital invested in aircraft of 20 per cent per annum.1 Of course one cannotgeneralize from such an extreme case. In other sectors of the economy the effectsmay be less dramatic, but lack of maintenance is widespread. If, for the sake ofargument, we put overall depreciation at 5 per cent instead of 3 per cent, thiswould cut the figure obtained for total saving in 1966 by about 20 per cent.Since it would also mean that the capital stock had been growing at a slower ratesince 1958, than that assumed by the 3 per cent figure, it would also mean thatdepreciation had been growing slower, although its absolute level was higher.Thus it would mean that saving had been smaller, but had been growing faster.

Commentators on the Bolivian economy have been very struck by the rapidgrowth in savings, as shown by the national accounts, since the end of the hyper-inflation.2 This description of how the figures are obtained indicates that theyonly provide weak evidence of this development. Qualitative evidence from therural areas indicate that peasant saving has indeed risen considerably. Apartfrom all the other objections to these figures, they simply are not comparableover the period. Until 1962, depreciation included a 3 per cent deduction on thenominal value of abandoned petrol holes owned by private companies. In 1963the accountants decided that since the holes were really valueless they could notdepreciate. This cut the estimate of depreciation of 60 m. pesos ($5m. US) andcorrespondingly boosted the apparent level of saving, as measured by theresidual method, by more than an eighth. So although we may accept thatsaving has risen considerably, we really cannot use the official figures as anindicator of how much.

N. Errors and OmissionsEven in developed countries this item may be a signicant percentage of total

GDP, and may make it unwise to attach significance to year-to-year fluctuations1 In Dec. 1967 there were 125 civil planes registered with the Departmento de Aeronavega-

hilidad in La Paz. Seventy-five of these were single engine planes. The incidence of crasheswas as follows:

The great majority of crashes were of single engine planeseither cargo carriers or air taxis----and the most common cause was inadequate maintenance.

Hirschman (in The Straiegy of Ecosornic i)eveloprnent, p. 142) stated that aviation was themost reliable means of transport in under-developed countries, and argued that entrepreneurswould he forced to act efficiently if the costs of negligence were sufficiently high. The Boliviandata support a counter-hypothesisin some underdeveloped countries the costs of efficiencymay sometimes be too high for the entrepreneur to pay.

See, for example, the speech by the President of the Inter-American Committee for theAlliance for Progress, Carlos San de Santa Maria, 17th August, 1967.

E.1

1958 17 1962 15 1965 341959 13 1963 20 1966 241960 16 1964 18 1967 321961 18

220 BULLETIN

in growth rates. Errors and omissions can only be estimated if national product,and national expenditure, are calculated independently, and the two totals arethen compared.

In Latin America only a few small countries claim to make two independentcalculations. The Bolivian practice of calculating private consumption as aresidual is much more typical.' So those countries where there is most scope forerror in a single calculation of the national income are precisely the ones whichlack a second calculation, capable of providing an independent check on the first.

The Consumer Price IndexAll the figures in Table I are at constant prices, but in some cases, as we have

seen, they were first calculated at current prices, and then deflated using theofficial price index. Thus even if all the previous stages of calculation weresound, the results at constant prices could be ruined if the price index wasinadequate.

If we show that the La Paz price index for foods is useless, that will besufficient to discredit the general index for all goods, since food makes up abouthalf the total index. The weights used in the index were obtained from a surveyof 50 middle and lower income families in La Paz, taken in 1931. Only 54 itemswere considered. Even if the survey was an accurate mirror of consumptionpatterns before the Chaco War, it is unlikely to be useable 35 years later, simplybecause of increased urbanization, introduction of new products, and changes intastes. Apart from these general objections Table 4 indicates a more preciseproblemthe probable effects on consumption patterns of the hyper-inflation of1952-6. Column 2 of the table gives an indication of the dramatic shift in relativeprices which accompanied the over-all inflation. Column 3 gives the figureswhich were used to calculate the index in July 1956, five months before the endof the inflation. These were calculated on the assumption (Assumption A) thatdespite the great shifts in relative prices shown in Column 2, the monthlyexpenditure pattern of the average family of five was still as shown in Column Ii.e. in accordance with the 1931 survey findings. Column 4 shows the per-centage distribution of food expenditure on this assumption. The most startlinganomaly this reveals is that 25.5 per cent of all food expenditure is assumed to bedevoted to chuño and tunta. These are two types of dried potato, which keep foran indefinite period. Tri years of good harvest a certain proportion of the potatocrop is put aside in this form as a reserve against future hardship. The priceincreases shown in Column 2 simply indicate that urban stocks of this type ofpotato must have been practically exhausted, since chuflo and tunta prices hadrisen more than four times faster than the prices of ordinary potatoes. In these

'A recent ECLA survey of national accounting practices in Latin America shows thatprivate consumption is obtained as a residual in Argentina, Brazil, Colombia, Mexico, theDominican Republic, and Uruguay. See Características Generales y Disponibilidad de Inform-ación en Materia de Cuentas Nacionales en América Latina, Grupo de Trabajo sobre CuentasNacionales ST/ECLA/Conf. 28/L/. October, 1967, p. 26. However since this list omits Bolivia,it may also omit other countries as well. The only nations listed as having a breakdown ofprivate consumption, and therefore an independent check on their product estimates, are ElSalvador, Honduras, Panama, Guyana, Jamaica, Trinidad and Tobago and Venezuelapp.39-40 and 60-61. Some of these may use suspect procedures, and all the remaining countriespresumably have no check whatsoever.

Com

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(VI)

(VII

)(V

III)

222 BULLETIN

price conditions it is inconceivable that the normal consumer did not reduce hisconsumption of chuño and tunta, and raise the proportion of his consumptiondevoted to ordinary potato.

Columns 5 and 6 try to indicate what the composition of food expendituremight really have been in view of the new relative price structure. It demon-strates the results of assuming consumers had a price elasticity of demand,among alternative food goods, of unity(Assumption B). Chuño and tuntawould fall to only 8.2 per cent of total consumption (still almost certainly toohigh a figure) and potato would rise to 11 per cent. Column 8 shows how muchthis second assumption would change the percentage distribution of familyexpenditure on the different foods listed. In summary 23.9 per cent of the totalexpenditure implied by Assumption A would not in fact be undertaken, andinstead would be transferred to other commodities in the list, whose importancewas under-estimated by Assumption A. Unfortunately Table 4 cannot be used torecalculate the whole index on improved assumptions because so many otherfactors remain uncorrected, and a great many foods which are now significantitems of consumptione.g. oranges, tomatoes, and onionsare not in the indexat all. In any case assumption B is itself inadequate, because in reality some ofthe goods listed are items of luxury consumption, to which poor families could nottransfer their expenditure even if the relative price became much more favour-able. Thus in practice it is unthinkable that chicken could be 7.9 per cent oftotal family outlay, as Column 6 suggests. All that Table 4 can show is that theindex for 1958-66 used to deflate value added by industry in Table 1, is basedon a system of weights which was possibly relevant to pre-1952 relative prices,but certainly outmoded after the hyper-inflation had broken old consumptionhabits.

The Implications for the Product TotalTable 5 summarises the conclusions of the previous discussion, by giving a

subjective assessment of the sectoral figures in Table 1. A glance down Column 1shows that even the GDP total for the bench mark year of 1958 is liable to alarge margin of error. Column 2 shows that the 1967 total is a great deal moreunreliable. At a stretch the series could be used to indicate, in a very approximateway, the trend of development in the economy, as Column 3 shows. Even here,however, there is the possibility of considerable error, since the largest componentis agriculture, which influences the figures for commerce and transport as welland we cannot really be sure of even the broad trend of development in thissector. Needless to say, if the global figures can barely be trusted to indicate thedirection of movement, they cannot provide a usable figure of the underlyingrate of growth, averaged over the past nine years, as Column 4 shows. Still lesscan one believe year-to-year fluctuations which may appear in the figures, asColumn 5 indicates. Columns 6 and 7 show that it is impossible to obtain theGDP total, at either constant or current prices, without using the consumerprice index. At current prices one must use the agricultural output seriesinflated by the La Paz price index for foods, and at constant prices one must usethe series on industrial output, deflated by a general consumer price index.

J,R

ent

1958

20%

Err

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Und

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Use

less

1967

1958

-67

1958

-67

Fluc

tuat

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Use

less

Unr

elia

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Use

less

Use

less

Slig

htR

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elia

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less

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less

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less

Unc

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inc

25%

too

low

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less

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tabl

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224 BULLETIN

Griffin has expressed doubts about the rates of growth shown in LatinAmerican GNP series, on the grounds that a large proportion of this growthtakes place in the service sector, which he regards as merely a sponge for con-cealed unemployment.' This may be true of the accounts available for otherLatin American countries, but it does not appear to apply to Bolivia, whereservices only rose from 31.1 per cent of the total in 1958 to 31.7 per cent in 1966.2The Bolivian growth rate can however, as we have seen, be criticised for otherreasonsboth because a considerable proportion of the measured growth ratecan be traced to extrapolation, and because there is no useable price deflator toconvert the product total to constant prices. Scepticism at Latin Americangrowth rates may therefore be prompted as much by worries about the methodsof collecting and assembling the statistics as by consideration of how agreedfigures should be interpreted.

One further objection can be raised against the GDP series in Table 1-there are reasons for doubting the level of GDP, expressed in dollars, as well asthe rate of growth. The method used was to convert the series in constant pesosto dollars, using the official exchange rate. In fact the exchange rate fell so lowin 1958 because the world tin market was in an unusually depressed state, andthe country had no reserves or foreign credit to tide it over this period. Americanaid was conditional on the mantenance of a unified exchange rate adjusted to theforces of supply and demanda system which, coupled with an insecure revolu-tionary regime, provides an ideal formula for capital flight. Thus the officialexchange rate probably undervalued the Bolivian peso. Table 6 provides some

TABLE 6Bolivia's GDP per Head in Dollars, 7960

A t the official Exchange Rate andUsing Real Price Comparisons

Source: UN Economic Bulletin for Latin America, October, 1967, p. 233.

evidence for this conclusion, showing that GDP per head in 1960 rises from 102dollars at the official exchange rate to 165 dollars if a different conversion factoris used. Obviously the results of real price comparisons depend on whether theprices compared are representative of US consumption patterns (in which caseBolivia's GDP per head would have been 135 dollars) or of Latin American

1 Keith Griffin 'Reflections on Latin American Development', Oxford Economic Papers,March. 1966, pp. 2-3.

I Bolivia differs from other Latin American countries in this respect because its populationis growing relatively slowly, and because the agrarian reform has postponed any major exodusfrom the countryside.

Private Consumption ... ... 86 123Public consumption ... ... ... 9 31Fixed investment .. ... .. 14 18Stocks ... ... .. 1 1Trade Balance ... Ç - 8 8GDi Per Head 102 165

b) Real Price Comparison,using geometric weighting

a) Official Exchange Rate of Latin American andUSA expenditure patterns


consumption patterns (in which case GDP per head would rise to 201 dollars).'In Table 6 this familiar problem has been resolved by using the geometricaverage of the two results. Evidently the undervaluation of the exchange rateproduces quite a significant underestimate of Bolivian income levels comparedto the USA. The contrast becomes even more marked if we compare inconielevels in Bolivia with those of Venezuela, where oil revenue permits an over-valuation of the exchange rate. Whereas Venezuela's income per head was tentimes as large as that of Bolivia on the exchange rate comparison (1,043 dollarsin 1960, compared to 102 dollars) it was only five times as large on the realincome comparison (809 dollars per head in Venezuela, compared to 165 dollarsin Bolivia) 2

The Population Growth RateOne final objection to the statistics remains. Even if the series for GDP in

dollars at constant prices were entirely reliable, the last row of Table 1, showingGDP per head, would be very inexact owing to the poorness of the populationdata.

These data are based on the census of 1950, which gave a total population of3,019,000. I have analysed this census in detail elsewhere,3 so suffice it to saythat a reasonable guess would put the real figure at about 3.5 million.

There are six different estimates of the rate at which population has beengrowing since 1950, ranging from 1.3 per cent per annum to 2.6 per cent perannum. The rate used by SEDEPLAN, and implicit in the figures for Table 1,is the highest of them all. A recent report for the ILO pointed out that historicallythe Bolivians have always tended to over-estimate their rate of populationincrease. International organizations have recently become more cautious ofthese high rates. For example, ECLA has just abandoned its high growth rateseries, and started using the lower figures provided by IASI, a the very momentwhen lAST has switched from using its own figures to using the even lowerseries provided by the Dirección General de Estadística. The ILO representativeconsiders that even the last set of figures is too high,4 but since none of the differ-ent sources state the assumptions on which their estimates are based, it is liard tomake a fair assessment of them.

Instead of juggling with these figures it niay be better to make one's owntentative estimates, this time stating the assumptions and giving upper and lowerlimits.

There is fairly reliable information available on the urban population ofBolivia. It appears to have grown from about 0.6 m. in 1950 to 0.95 m. in 1965.Since about half this increase can be attributed to the natural increase of thepre-existing urban population, migration from the rural areas must have been

'Ibid.UN, Economic Bulletin for Latin America, October 1967, p. 227.'Altitude, Fertility and Mortality,' op. cit.Professor Popescu 'Los Recursos Humanos en Bolivia', an ILO report to the Bolivian

government, March, 1967, La Paz.'Urban' refers to the capital of each department, except Trinidad and Cobija but including

Camiri. This information was collected by the Ohio State University Manpower Project, whichhas been operating in Bolivia since 1966.

226 BULLETIN

surprisingly small during this period. There also exists a careful study of thecensus information provided by Bolivia's neighbours, which shows the consider-able scale of emigration from the country, chiefly emigration from Bolivia'smore overcrowded rural areas. This study puts the number of Bolivians livingabroad at 0.3 m.probably a conservative estimate.'

So all we need to obtain fairly reliable figures for the overall growth rate ofthe population is a reasonable estimate of the natural rate of increase of the ruralpopulation. The birth rate in rural areas is often put as high as 50 per thousand,but to offset this infant, child and maternal mortality is also extremely high.It therefore seems plausible to put the natural rate of population growth in therural areas at between ij- per cent and 2 per cent per annum. If one thensubtracts a reasonable estimate of net migration to the cities, and emigration theresults are as follows:

TABLx 7Estimates of Population Size, Composition, and Growth Rates

1950 Annual % Increase 1950-65 1965Urban 06m. 3.0% 0.95m.Rural High2 9m 2.0% 3.9Orn.Rural Low f 0.5% 3.13m.Total High '.35m 2.2% 4.85m.Total Low f 1.0% 408m.

Note: 'Rural High' is 21 per cent less 0.5 per cent for annual effects of rural-urban migrationand emigration of rural workers. 'Rural Low' is a natural growth rate of 11 per cent, less adeduction of 1 per cent for the same factors.

Of course these results must be very tentative, but they suggest that thegrowth rates used to obtain GDP per head in Table 1 are too high. If so, theofficial figures, in addition to all their other errors, tend to under-estimate therate of growth of GDP per head from the population side.

CoNcLusIoNMany economists working on Bolivia have quoted the national income figures

as though they were reliable.3 In summary form the figures have appeared inUN publications, and have been included in estimates of the over-all performanceof the 'world economy'. This would be unimportant if the Bolivian figures wereuniquely bad, but unfortunately, although Bolivia is probably worse off than mostLatin American countries she may not differ much from many African countrieswhich are also included in the UN's compilations. If so, we may have to admitthat up to now we really are not in a position to tell how the main economic vari-ables are changing in large areas of the Third World'. The UN's aggregate datacan be no better than the sources from which their components are drawn. Ifthe UN wish to continue using the national accounts from every country wherethey are produced, it would be helpful if they would rate these results accordingto a few simple tests of validity, rather as the UN Population Division classifiescensus results.4

There is no point in purely destructive attacks on the work of official agenciesFrancisco Aquilo, S. J., in Presencia, La Paz, 18th-23rd Dec., 1967.

2Altitude, Fertility and Mortality, op. cit.3For example The Bolivian Economy 1952-65 by Cornelius Zondag, Praeger 1966, and

David Greene 'Revolution and the Rationalization of Reform in Bolivia' Inter-American Econ-omic Affairs, Winter 1965.

See the UN Demographic Yearbook, 1955, p. 19.


who are trying hard to produce usable information in conditions of considerablehardship. My purpose has been to separate the Valid statistics from the nonsense,in the belief that rather than working with phoney data it is better to recognizeone's real ignorance.

Institute of Economics and Statistics,Oxford

basic data in poor countries: the bolivian case

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