BUSA 356 Lecture Notes - Lecture 16: Corruption, Hyperinflation
6 Mar 2018
School
Department
Course
Professor
Document Summary
La paz, bolivia (before 1985): capital city of about 1 million, country is the poorest in south america, twice the size of france, few paved roads, hyperinflation (26,000%, crisis forces president to cut his term short. Political situation: democratic elections, new civilian president, different party from the president, but lots of international goodwill. First elected mayor in 40 years (2-year term) Economic situation: august 1985, massive shock economic adjustment, the city is broke. Local political autonomy cuts economic subsidy fro the city. Crisis in la paz: new mayor takes office in september, 1985, hyperinflation and collapse of city revenues, city payroll = 120% of the month"s revenues, city is a mien of systemic corruption. Public works: huge construction unit (4,000 workers, machinery, parts and gasoline stolen, poor quality and time delays, huge cost overruns. Location of works is affected by bribes (moonlighting) Taxes and revenues: complexity: more than 100 different taxes, property taxes are meaningless.
