Bolivia’s Economic Pivot: A Growth Diagnostics of the Tourism Sector

Abstract

Tourism represents a strategic opportunity for Bolivia to generate foreign exchange and support more inclusive growth. This report aims to quantify the opportunity, identify binding constraints and propose solutions. Using a gravity model of international tourism, we find that Bolivia performs significantly below its potential with an unrealized gap of more than USD 370 million. Applying Growth Diagnostics heuristics, we identify two constraints and suggest policy responses. At the national level, weak international air connectivity limits Bolivia’s access from key source markets. Accordingly, the report recommends a package of reforms to improve aviation competitiveness and air access. At the local level, coordination failures and governance issues hinder the emergence of strong tourism ecosystems, particularly in the Salar de Uyuni circuit. We propose a new destination-level governance architecture to facilitate coordination, align incentives, and deliver stronger benefits for local communities.