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Reversal of Fortune

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  • Mauricio Cárdenas

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Abstract

Colombia’s annual GDP growth fell to an average of 3% between 1980 and 2000 from 5% between 1950 and 1980. The sources-of-growth decomposition shows that this reversal can be accounted entirely by changes in productivity. Indeed, between 1960 and 1980 productivity gains increased output per capita by nearly 1% per year. Since 1980, productivity losses have reduced output per capita at about the same rate. The time series analysis suggests that the implosion of productivity is related to the increase in criminality which has diverted capital and labor to unproductive activities. In turn, the rise in crime has been the result of rapid expansion in drug-trafficking activities, which erupted around 1980. This explanation is supported by cross-country evidence that shows that Colombia is clear outlier in terms of conflict and fragmentation, and suggests that high crime is associated with low productivity.

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Bibliographic Info

Paper provided by FUNDACIÓN PONDO in its series INVESTIGACIÓN ECONÓMICA EN COLOMBIA with number 003471.

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Length: 40
Date of creation: 07 Mar 2002
Date of revision:
Handle: RePEc:col:000100:003471

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Keywords: Economic growth;

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References

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  1. Dani Rodrik, 1998. "Where Did All The Growth Go? External Shocks, Social Conflict, and Growth Collapses," NBER Working Papers 6350, National Bureau of Economic Research, Inc.
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  9. Gaviria, Alejandro, 1998. "Increasing Returns and the Evolution of Violent Crime: The Case of Columbia," University of California at San Diego, Economics Working Paper Series qt6x42726z, Department of Economics, UC San Diego.
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Cited by:
  1. Rony Pshisva & Gustavo A. Suarez, 2010. "Capital Crimes: Kidnappings and Corporate Investment in Colombia," NBER Chapters, in: The Economics of Crime: Lessons for and from Latin America, pages 63-97 National Bureau of Economic Research, Inc.

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