CHINESE LOANS AND THE RESOURCE CURSE IN ECUADOR AND BOLIVIA

Abstract

This thesis seeks to determine the cause of the different economic outcomes in Ecuador and Bolivia after the drop in hydrocarbon prices in 2014. Why was Bolivia, under the administration of Evo Morales, seemingly able to escape the resource curse in recent years, while under Correa, Ecuador’s economy collapsed when confronted with a bust in commodity prices? Using five characteristics of the resource curse from existing literature, this thesis examines the policies of Correa and Morales to determine whether the leaders avoided the pitfalls of resource wealth while attempting to achieve sustained socioeconomic growth in their respective countries. This thesis hypothesizes that the Correa administration’s heavy use of Chinese loans exacerbated the resource curse in Ecuador, while the Morales administration executed conservative macroeconomic policies to partially mitigate the resource curse in Bolivia.