ABSTRACT Rich natural resource endowments like minerals often prove to be a curse. This is because they raise over‐optimistic expectations that lead to lax economic policies which in turn retard the competitive diversification needed to sustain rapid economic growth. A clear example is provided by Bolivia during the 1974–78 and 1979–81 mineral booms. But Bolivia also shows a corollary of the resource curse thesis: in adversity (the hyperinflation and mineral price falls of the mid‐19809, tough but necessary reforms may emerge. Bolivia now needs to accelerate the re‐orientation of its economy towards the tropical lowlands.
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