Seminar Scrutinising Success and Failure in Development

A short story about how to create a broad based rural development (una economia de base ancha) in Bolivia

Koos Michel, OxfamnovibDecember 2007

Bolivia, a mega diverse country

Bolivia: Tenencia de la tierra por actor

Fuente: Matsuzaki (2005) y Pacheco (2006

En el campo existen economías comunitarias, campesinas y empresariales

Las economías comunitarias y campesinas son productoras de alimentos

La economía empresarial ha crecido pero vinculada a los mercados externos

Las tierras y bosques más productivos de las tierras bajas están en las manos de las elites agrarias

BOLIVIA TIENE UNA ECONOMÍA RURAL DIVERSA

Short history Rural Development Bolivia1

• From 1985, Tin crisis, complete reversal of government policies:– Adoption of Washington consensus– Liberalisation of imports– Privatization of state enterprises– Ending subsidies for inputs, production– Ending State Agricultural banks and subsidized credits– No more Technical Assistance Production– No more State financing technical research, plant breeding– Withdrawal State from production sphere.– Promoting private investments– Complete market driven development

• 1991 Recognition in Constitution of Bolivia as multi-ethnic state (but without measures for better integration).

• 1995 Law for popular participation, strong decentralisation with formation of 214 municipalities with 20% of government revenues

• 1995 Law INRA for land reform, in fact a law for land registration, but in the following 10 years bad execution and growing conflicts.

Short History Rural Development Bolivia2Highlights from 1985-2005

Short History Rural Development Bolivia3• 1990-2004:

- Strong private investment oil and gas exploration

– Stagnating agricultural production in highlands– Growth of medium/large agricultural enterprises lowlands Santa

Cruz (1000-50.000ha), mainly based on land elite and soya cultivation and cattle ranches

– Growth poverty and strong urbanisation (El Alto-poor rural migrants)

– Chronic indebtment, unsustainable debts– Informalization of the economy (18% formal labour contracts)– Bolivia – donor darling (~ US$ 800 million/year)– 1999-2003 economic crisis, popular uprisings (water war, gas

war, government crisis, malfunctioning parliament)

Oxfamnovib rural support Boliva

Support in the ninetees:

mainly support to large established NGOs (~ 4 million Euro/year)

support beginning producers organisations

focus rural integrated development, local and regional level

capacity building, investment production means, irrigation, technical assistance production, empowerment peasants and indigenous population for basic rights and land rights

strong support micro-finance institutions

Evaluation 2002 (Bebbington report Andes, effects Dutch CFOs):

limited effects, no replication, failure in development !?

changing livelihood stratregies, 40% non-agricultural rural incomes through migration, commerce, off-farm labour income, urban connection

no attention for marketing, demand driven production, access markets

adverse macro-policies, contracting internal market, lack agric.policies

Oxfamnovib rural support Boliva2

• 2002-2007 OxfamNovib (and other CFAs) changed policies:– Much more emphasis on policy influencing and campaigning: Make Trade

Fair, develop counterparts lobby capacity, look at national rural policies – More importance markets and demand driven production as starting point,

take value chains and creation of added value for producers.– More research livelihoods, income sources, gendered analysis, labour

rights, migration, urban-rural linkages. – More support producers organizations– Continuous support micro-credit institutions

• Some Results Rural Development Bolivia last years:– Growth soy production by large and small producers lowlands– Continuous stagnation production/incomes highlands+ valleys – some successes – quinoa chain (support Dutch governm.+CFAs), milk

production, castaña (brasil nuts), oregano– Government procurement: decentralised subsidized buying from small

peasants, for schoolbreakfast program vulnerable groups – Continuing migration (Argentina, Brasil, others)

Exemple research:Composition of Income Peasants various regions Bolivia

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La Paz Cochabam ba Coordillera santa Cruz Norte Moxos

Otros Ingresos

Venta de Fuerza deTrabajo

Artesanía yTransformación

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Forestal no Maderable

Forestal Maderable

Pecuaria

Agrícola

Source: Cipca 2005

Bolivia, government Evo Morales,2006-07

• Symbolic significance indigenous majority in power, (absolute majority vote MAS)

• Economic boom, high prices petroleum/gas, and minerals.

• Renegotiation oil and gas contracts, recognition rights indigenous people, massive increase government income.

• Surplus on balance of payments• Modification of law land reform (INRA), reinforcing

indigenous rights on land, and better procedures• Stagnation new Constitution and Constitutional

Assembly.

Analysis rural development new government Bolivia:

EL MODELO DE DESARROLLO RURAL ESTÁ EN CRISIS

Las capacidades del Estado se han debilitado

La inversión pública ha acentuado las desigualdades regionales (infraestructura y servicios)

La apertura de mercados ha beneficiado a la agricultura empresarial y ha desprotegido a la agricultura familiar

Una mala distribución del ingreso entre grupos que logran acumular y una gran mayoría que vive en la “pobreza”

Los sistemas productivos andinos enfrentan una crisis de productividad por el deterioro de los recursos

La agricultura empresarial tiende a concentrar la tierra, tiene baja demanda de mano de obra y su inserción en los mercados externos es bastante frágil

Los ecosistemas, biodiversidad, bosques y suelos están siendo amenazados por una lógica económica extractivista

Bolivia 2006-07:Complete reversal government policiesUna visión integral del desarrollo rural

Desarrollo del papel protagónico del Estado

Promoción de la participación y la autogestión social

Gestión sustentable de la tierra, bosques y biodiversidad

Potenciamiento del rol recursos naturales para el desarrollo rural

Reversión de la baja inversión pública rural

Revalorización de los cultivos estratégicos

Meaning: Strong government intervention: state bank productive development, state companies, importance basic food crops

Oxfamdebate:The theoretical debate, New Institutionalists vs the Liberalisers

State FunctionNew Institutionalists Current Liberalisation

Model

Providing macro-economicstability

Yes Yes

Providing public goods:infrastructure (e.g. roads,communications)

Yes Yes

Research & Extensionservices

Yes Theoretically some role, where research is perceived as a public good. In practice, increasinglycommercialised and state funding has declined.

Input markets Government may need to intervene, even if does not participate directly, to reduce transaction costs

No, unless to avert food crises (as in the Malawi case)

Output markets andprocessing

Government may need to intervene, even if does not participate directly, to reduce transaction costs, and may need to support prices in rain-fed areas where there are morefundamental problems.

Information and regulation:Provides market and priceinformation, legalframework, quality control

Credit provision Government may need to intervene, even if does not participate directly, to reduce transaction costs

Support to institutionalinnovations, e.g. contractfarming

Source: based on Dorward, Kidd, Morrison & Urey (2004)

1. What are the key informal and formal institutions influencing the situation (in the case study)?

• It seems to me that capacity building by civil society organisations in the past 20 years (in the sense of a “complex, human process”, that “involves shifts in power and identity” and is “endogenous”), in short empowerment of indigenous and peasant organisations, and the building of informal “institutions” between them has been crucial in the transcendental changes occurring now in Bolivia.

2. How could using a Theory Change (making the underlying assumptions about the logic of change explicit) help the change process?

3. How can Capacity Development better integrate institutional analysis and theories of change?

• Difficult to say. We (as donors) have underestimated the deep discrimination and exclusion mechanisms embedded in the institutions in Bolivian society, and now we witness changes that are out of our control. We could not foresee these effects of our capacity building. We want to help the change process, we hope for a peaceful change process, but it can easily turn into a bloody conflict between groups.

• I don’t believe in Theories of Change as approach for planning of change. Change processes as multi-layered, non-linear deep change of power-relations cannot be planned.

Relevance key questions seminar