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Revisiting economic growth in Colombia. A microeconomic perspective

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  • Marcela Meléndez Arjona

    ()

  • Arturo Harker Roa

    ()

Abstract

This paper revisits economic growth in Colombia using the growth diagnostics methodology proposed by Hausmann, Rodrik and Velasco (2005), with the purpose of identifying the most binding constraints for economic growth and the policies that, if implemented, can have the largest positive impact. To rank public policy priorities the HRV (2005) methodological approach is complemented with an econometric analysis of micro-data, aimed at exploring the impact that the various potential constraints to growth have had on firm-level investment decisions. The data shows economic reactivation in areas with falling violence. Results from analysis at the microeconomic level, however, give a particular spin to this conclusion by showing that investment decisions at the firm level are also explained by the restoration of some form of public order connected to the cessation of paramilitary violence and not only by the reduction of violence. From a public policy perspective, perhaps the most relevant result is the confirmation that in Colombia investment decisions are negatively affected by thecost of financing. Empirical results, robust across model specifications, single out the provision of access to financing at fair prices as a policy priority for economic growth, relevant across country regions and independent of whether uncertainties from poor protection to property rights are resolved.

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Bibliographic Info

Paper provided by FEDESARROLLO in its series WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO with number 009137.

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Length: 37
Date of creation: 30 Jan 2008
Date of revision:
Handle: RePEc:col:000123:009137

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Keywords: Crecimiento económico; Colombia;

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References

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  1. Ricardo Hausmann & Bailey Klinger, 2008. "Growth Diagnostics: Perú," Research Department Publications 2005, Inter-American Development Bank, Research Department.
  2. Carlos Felipe Prada, 2006. "¿Es rentable la decisión de estudiar en Colombia?," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  3. Patrinos, Harry Anthony & Ridao-Cano, Cris & Sakellariou, Chris, 2006. "Estimating the returns to education : accounting for heterogeneity in ability," Policy Research Working Paper Series 4040, The World Bank.
  4. Mahdavi, Saeid, 2004. "Shifts in the Composition of Government Spending in Response to External Debt Burden," World Development, Elsevier, vol. 32(7), pages 1139-1157, July.
  5. Dany Jaimovich & Ugo Panizza, 2010. "Public debt around the world: a new data set of central government debt," Applied Economics Letters, Taylor & Francis Journals, vol. 17(1), pages 19-24.
  6. Eduardo Lora & Mauricio Olivera, 2006. "Public Debt and Social Expenditure: Friends or Foes?," IDB Publications 43578, Inter-American Development Bank.
  7. Carlos Esteban Posada & Miguel Urrutia Montoya, 2004. "Un Siglo de Crecimiento Económico," INVESTIGACIÓN ECONÓMICA EN COLOMBIA 003692, FUNDACIÓN PONDO.
  8. Eduardo Lora, 2007. "La vulnerabilidad fiscal del gasto social: ¿Es Diferente América Latina?," Research Department Publications 4506, Inter-American Development Bank, Research Department.
  9. Dijkstra, Geske & Hermes, Niels, 2001. "The Uncertainty of Debt Service Payments and Economic Growth of HIPCs: Is there a Case for Debt Relief?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
  11. Agenor, Pierre-Richard & Moreno-Dodson, Blanca, 2006. "Public infrastructure and growth : new channels and policy implications," Policy Research Working Paper Series 4064, The World Bank.
  12. Hélène Poirson & Luca Antonio Ricci & Catherine A. Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers 04/15, International Monetary Fund.
  13. Marcela Meléndez Arjona & Arturo Harker, 2008. "Revisiting Economic Growth in Colombia: A Microeconomic Perspective," IDB Publications 45218, Inter-American Development Bank.
  14. Mary Morrison & Marianne Fay, 2005. "Infrastructure in Latin America : Recent Developments and Key Challenges, Volume 1," World Bank Other Operational Studies 8801, The World Bank.
  15. Toan Quoc Nguyen & Benedict J. Clements & Rina Bhattacharya, 2003. "External Debt, Public Investment, and Growth in Low-Income Countries," IMF Working Papers 03/249, International Monetary Fund.
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Cited by:
  1. Marcela Meléndez Arjona & Arturo Harker Roa, 2008. "Revisiting economic growth in Colombia. A microeconomic perspective," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 009137, FEDESARROLLO.
  2. Marcela Meléndez Arjona & Guillermo Perry, 2009. "Industrial policies in Colombia," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 009138, FEDESARROLLO.
  3. Alexander Cotte, Poveda, 2011. "Economic development and growth in Colombia: An empirical analysis with super-efficiency DEA and panel data models," Socio-Economic Planning Sciences, Elsevier, vol. 45(4), pages 154-164, December.
  4. Mauricio SANTAMARIA SALAMANCA & Gabriel PIRAQUIVE GALEANO & Gustavo HERNANDEZ DIAZ & Norberto ROJAS DELGADILLO, 2013. "Crecimiento económico y desempleo: Retos a largo plazo," ARCHIVOS DE ECONOMÍA 011202, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  5. Wald, Nina & Bozzoli, Carlos, 2011. "Bullet Proof? Program Evaluation in Conflict Areas: Evidence from Rural Colombia," Proceedings of the German Development Economics Conference, Berlin 2011 80, Verein für Socialpolitik, Research Committee Development Economics.
  6. Marcela Eslava & Marcela Melendez, 2009. "Politics, Policies and the Dynamics of Aggregate Productivity in Colombia," Research Department Publications 4633, Inter-American Development Bank, Research Department.
  7. Ramón Espinasa, 2008. "Prospects for the Oil-importing Countries of the Caribbean," Research Department Publications 2007, Inter-American Development Bank, Research Department.

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