How did falling tin prices contribute to Bolivia’s economic crisis in the 1980s?

In the 1980s, Bolivia’s economy was heavily dependent on tin exports, making the country exceptionally vulnerable to fluctuations in the global market. When world tin prices collapsed during that decade, the impact on the national economy was severe.123

The crisis manifested in several ways:

• Corporate Collapse: The state-owned mining corporation, Corporación Minera de Bolivia (COMIBOL), faced enormous financial deficits as a result of the price drop.4
• Mass Unemployment: To address these losses, the government was forced to drastically cut production and lay off approximately four-fifths of the mining workforce.24
• Economic Instability: The decline in export earnings contributed to a broader economic crisis characterized by stagnant businesses, a collapse of the industrial sector, and unprecedented hyperinflation.14

In response to this upheaval, the government of President Víctor Paz Estenssoro implemented rigorous austerity measures in 1985, which included shutting down most state-run tin mines and opening the economy to foreign investment to stabilize the nation.14