Bolivia–European Union Trade Agreement: Is It an Option for the Morales Administration?
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In 2008 Bolivia ceased to benefit from US trade preferences, which resulted in thousands of jobs lost thoroughout the country. Without the political will to initiate a trade agreement with the United States, the Morales administration has the opportunity to initiate a trade agreement with the European Union. This study evaluates macro-and microeconomic impacts emerging from a hypothetical trade agreement between Bolivia and the European Union. Our methodology consisted of using a computable general equilibrium model as price generator, and a micro-simulation approach as a bridge to transmit those price changes to the household level under two liberalization scenarios. We conclude that Bolivia could benefit if a trade agreement with the European Union (the second largest importer of goods in the world) is accomplished.