Reform of the Economic Design in the Bolivian Constitution: Limits on Power for Prosperity

Abstract

Bolivia is undergoing an economic crisis marked by severe fiscal imbalances, inflationary pressures unseen in two decades, foreign-currency scarcity, output contraction, and declining productive dynamism. This article examines the relationship between constitutional economic design and the institutional conditions shaping economic performance, without attributing the crisis to a single cause. It argues that the 2009 Constitution established a framework expanding the State’s powers of planning, direction, regulation, and direct participation in the economy, generating, alongside regulatory and institutional factors, incentives that discourage private initiative. Drawing on classical economics, monetarism, institutional economics, and constitutional economics, the article proposes a reform of Bolivia’s economic constitutionalism aimed at strengthening economic freedom, private property, legal certainty, competition, and monetary autonomy. The proposal distinguishes constitutional, legislative, institutional, and administrative reforms, replacing state-led economic direction with effective limits on public power, equality before the law, and a subsidiary, guarantor State. The article concludes that prosperity depends on institutions enabling individuals to coordinate decisions, invest, undertake, and innovate within stable rules.