Economic Development

Shake that money-maker

November 30, 2012

Latin America

November 30, 2012

Latin America
Sara Mosavi

Former editor

Sara is a Policy and Research Manager at UK Commission for Employment and Skills working on issues such as youth unemployment, productivity, apprenticeships and further education. Prior to this, Sara worked as an Editor with The Economist Intelligence Unit's Thought Leadership team for over three years researching projects on educuation, talent, risk management and organisational behaviour. Sara holds a MSc in International Public Policy at UCL and read Italian and Linguistics at St Hugh's College, Oxford.

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Arriving in any town after dark can often make for a bad first impression. But even in the light of day, Uyuni – a small town of about 20,000 in the high Andean plains of Bolivia – has not much to offer.

Arriving in any town after dark can often make for a bad first impression. But even in the light of day, Uyuni – a small town of about 20,000 in the high Andean plains of Bolivia – has not much to offer. Its streets are little more than a battleground for cars, taxis and the local merchants – for every seller shouting, there is a driver senselessly honking his horn. This bustling town's main offering, the Salar de Uyuni, however makes it well worth a visit. 

In the middle of Bolivia lies the world's largest salt flat. At 10,582 km², it's only a tad smaller than Northern Ireland (13,840 km²) – a good way to put it in perspective if you're British! Once aboard a dusty and rattling Jeep, a brief and rocky drive gets you from Uyuni to the edge of the salar. A blindingly white deserted expanse stretches in every direction, unimpeded by man or nature, before seamlessly joining the bright blue sky somewhere in the distance. 

Having somewhat understood the sheer size of the salt flat, I wondered if Bolivia made much out of salt exports. "There are only a handful of families that work the salt flat" explained Juan, our guide. We could see them from the jeep, chipping away at the great surface, covered head to toe despite the heat, their faces wrapped in scarves to hide from the sun's glistening glare. "Bolivia actually imports salt – people prefer to use sea-salt", added Juan. A startling discovery when you're standing in the middle of a salt flat surrounded by the rough, grainy, sparkling mineral for as far as you could see. Rather than importing sea-salt from Argentina, Bolivia would do well to sell salt to its neighbour in copious amounts – juicy steaks and sausages aside, Argentine cuisine could definitely stand to benefit from more of the white stuff. 

And that's just half the story. Right under the thick salt crust we were walking on lies half of the world's lithium reserves – a lightweight metal used in batteries and anti-depression drugs among other things. And if the market for electric cars takes off, lithium exports could be a significant economic boost for Bolivia. 

Already the land-locked south-American country has had plenty of interest from foreign companies to begin exploiting the region's resources. Evo Morales, the country's first indigenous president, however, is playing hardball. Last month his government passed a law giving Pachamama, Mother Earth, the same rights as humans. So Nature's right to live and  exist are now formally protected by law. Morales wants its people to "live in equilibrium and harmony with Mother Earth". Mining companies, especially foreign ones, will not be let loose on the salt flat anytime soon.

While protecting the environment is a noble cause (and perhaps one that should be extended to La Paz and its literally dizzying pollution levels), Bolivia remains one of the poorest countries in Latin America. Extracting lithium will not be the solution to all of the country's problems. But it can play a significant part in the country's development. It can boost manufacturing, increase the share of skilled workers and drive growth – especially as global demand for lithium used in electric and hybrid cars increases. With careful management, sensible government intervention and local support, the salar can continue to dazzle bright-eyed tourists while serving the locals as more than just a postcard subject.  

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.

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