Mini Case.

Cocotoni (a small town) is located in the surroundings of Titicaca Lake, between Bolivia and Peru, covering approximately 250 hectares and is inhabited by about 330 families composed of more than 1200 people, many of whom live in ranches. It can be reached by boats that take approximately 30 minutes from Copacabana (Bolivian side).

Until now, the main activity is artisanal fishing, even some time ago also produced coper. They have a small hospital, a church and a ground school attended by 122 children. The villagers obtain water from the lake and energy from several solar panels and a small generator that works with diesel. Currently, it is said that the population lives "between poverty and tranquility"

Some of the island's inhabitants believe that the time has come to change the islanders' style of life and have discussed about some possible projects that could be carried out on the island. The main alternatives are the following: i. Develop the coper industry on a larger scale. It is considered that this mineral exists in sufficient quantity on the region, and that it can generate employment and wealth for the local inhabitants. One company has shown interest in the business. However, some families are opposed because they consider that it would have a significant environmental impact. ii. Create a tourism project that would cover approximately three quarters of the place. Some companies have shown interest in the project, and it is believed that they could build between four and five hotels with an average of 50 rooms each, as well as a commercial area and an animal refuge. Proponents of the project foresee a very beneficial residential development for the town, but some families are opposed considering some problems regarding the relocation of all the families. The realization of this project requires the installation of an energy cable, the cost of which exceeds $1 million.

iii. A third option consists of strongly promoting fishing, for which the construction of the necessary basic infrastructure and the acquisition of the necessary equipment to develop this activity would be financed. The credits would be granted to the island's inhabitants under very favorable conditions. One point in favor is that the income would not depend on companies, but on the inhabitants of Cocotoni. But some people are suspicious of this initiative because the prices of these products are often very unstable, and others do not believe that the inhabitants of the town have sufficient capacity to manage the project.

The entire region is property of the government, and therefore the only thing that can be acquired is the right of possession, which could be given in concession for a long period of time. Based on the information given elaborate the following: a. (2 points) Identify the basic problem (the main one in your opinion) that is present in Totora. Determine which are the main actors around this problem. Explain. b. (2 points) Select one of the three alternatives, the one that best fits your objective. Justify your choice. c. (2 points) When making the above selection, whom should you consult? Why? d. (2 points) Do the measures you have proposed require the approval of any government entity? Which ones? e. (2 points) Analyse the three projects and determine how they contribute to address the problem of unemployment in Cocotoni. Please, sustain all your answers with the knowledge of the International Finance.