A productive labour force working under decent conditions in well-diversified activities is another fundamental building block for sustainable and resilient development.
Unfortunately, despite steadily increasing education levels and steadily increasing energy consumption, Bolivia has barely seen any improvements in labour productivity over the last 25 years1. This is a critical problem, since increasing labour productivity is the only way to improve standards of living in the long run.
The low level of productivity is related to a difficult business environment in Bolivia2, which encourages most business to stay small, informal and hidden from official authorities. According to a new IMF Working Paper3, Bolivia stands out by having the second largest informal economy, out of 158 countries analysed, amounting to 62.3% of GDP (average over the period 1991-2015). The average size of the informal economy in these 158 countries is 31.9%.
Identifying and removing the barriers that are preventing Bolivian workers from productively contributing to the country’s development should be a high priority in Bolivia.