Revitalizando el Crecimiento Potencial de Colombia

Abstract

The recent emphasis on income distribution has obscured the crucial target of maintaining sustainable GPD-growth rate at a minimum of 4% per-year in Latin American countries; a crucial condition for providing ample well-being for their population. In Colombia, there have been official proposals leading to deceleration as a way to contribute to energy-source transition. In tandem, obstacles to public-private partnerships in crucial sectors (health, energy and infrastructure) might lead to disinvestment and undesirable economic retrenching.

This document provides a historical analysis of GPD-per capita real growth rates comparing Asia and Latin America over 1965-2022. In understating the Asian over-performance, the key driver has been the deep world-wide commercial integration. We illustrate the cases of Japan (1950-1965); then South Korea, Taiwan, Singapore, and Hong-Kong; following Indonesia, Malaysia and Thailand (1965-1980); and, finally, China and Vietnam (1979-2022).

While Asia shows indexes of commercial integration above 80%, in Latin America they average half that (with notable exceptions of Mexico and Chile). Due to these differences, real income per-capita has doubled every 15 years in best performers in Asia, while in Latina America is taking 40 years to that effect and productivity is about a third of developed economies.

We explain how FTAs allowed for duplication of Export Value/GDP towards USA in the cases of Mexico and Chile, while in Colombia such value was cut in half from 6% down to 3% of GDP in the last decade, due to high dependency on commodities, lack of adequate infrastructure, and poor procedures in sanitation and customs.

Forward looking, we examine alternative avenues for export diversification related to agro-industrial products, which should be able to replicate the success observed in Chile and Peru (reaching 6% of GDP Vs. 2% observed in Colombia).