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So Close Yet So Far: Contrasting Andean Attitudes toward Foreign Direct Investment

  • Author(s): Peinado, Daniela
  • et al.
Abstract

Should a developing nation embrace foreign direct investment, or are such decisions more likely to result in a dependency that inhibits growth in the long run? The recently elected presidents of neighboring countries Bolivia and Peru have opposing attitudes in this regard, despite their analogous reliance on mineral exports and predominantly indigenous populations. I closely examine the impact of two lucrative mines—both in production for over one hundred years, privatized around the turn of the last century, and most recently owned by Swiss company Glencore. I find that Morales’s choice to renationalize the mine in Bolivia is justified based on the perceived impact of foreign involvement, the desires of his constituents, and his overwhelming concern for the environment. However, though the country has made significant financial gains thus far, it is still too soon to fully realize the repercussions of his decision. On the other hand, as Peru enjoys a relatively prosperous economy, even a narrowly focused case study illustrates the merits and downfalls of neoliberal policies in Latin America.

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