What is a fair share of state resources?

by Joseph Stiglitz
A few months ago, Evo Morales became Bolivia’s first democratically elected indigenous head of state. Indigenous groups make up 62% of Bolivia’s population, and those with mixed blood another 30%, but for 500 years Bolivians had been ruled by colonial powers and their descendants. Well into the 20th century, indigenous groups were in effect deprived of a vote and a voice. Aymara and Quechua, their languages, were not even recognised for conducting public business. So Morales’ election was historic, and the excitement in Bolivia is palpable.

But Morales’ nationalisation of Bolivia’s oil and gas fields sent shock waves through the international community. During his campaign, Morales made clear his intention to increase state control over national gas and oil. But he had made it equally clear he did not intend to expropriate the property of energy firms; he wanted foreign investors to stay. (Nationalisation does not necessarily mean expropriation without appropriate compensation.) Perhaps surprising for modern politicians, Morales took his words seriously.

Genuinely concerned about raising the incomes of his desperately poor people, he recognised that Bolivia needed foreigners’ expertise to achieve growth, and that this entailed paying fairly for their services. But are foreign owners getting more than a fair rate of return?
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