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Revisiting Economic Growth in Colombia: A Microeconomic Perspective

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  • Marcela Meléndez Arjona
  • Arturo Harker

Abstract

This paper revisits economic growth in Colombia using a growth diagnostics methodology to identify the most binding constraints for economic growth and the policies that, if implemented, can have the largest positive impact. 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. From a public policy perspective, perhaps the most relevant result is the confirmation that in Colombia, investment decisions are negatively affected by the cost of financing. Empirical results single out the provision of access to financing at fair prices as a policy priority for economic growth, independent of whether uncertainties from poor protection to property rights are resolved.

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Bibliographic Info

Paper provided by Inter-American Development Bank in its series IDB Publications with number 45218.

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Date of creation: Sep 2008
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Handle: RePEc:idb:brikps:45218

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Keywords: Public Administration & Policy Making; Economic Development & Growth; Investment; Citizen Security & Crime Prevention; growth; investment; public policy; Colombia;

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References

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  1. Arturo Harker & Marcela Melendez, 2008. "Revisiting Economic Growth in Colombia: A Microeconomic Perspective," Research Department Publications, Inter-American Development Bank, Research Department 2006, Inter-American Development Bank, Research Department.
  2. Patrinos, Harry Anthony & Ridao-Cano, Cris & Sakellariou, Chris, 2006. "Estimating the returns to education : accounting for heterogeneity in ability," Policy Research Working Paper Series, The World Bank 4040, The World Bank.
  3. Dany Jaimovich & Ugo Panizza, 2010. "Public debt around the world: a new data set of central government debt," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(1), pages 19-24.
  4. Eduardo Lora, 2007. "La vulnerabilidad fiscal del gasto social: ¿Es Diferente América Latina?," Research Department Publications, Inter-American Development Bank, Research Department 4506, Inter-American Development Bank, Research Department.
  5. Carlos Felipe Prada, 2006. "¿Es rentable la decisión de estudiar en Colombia?," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, BANCO DE LA REPÚBLICA - ESPE.
  6. 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, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  7. Toan Quoc Nguyen & Benedict J. Clements & Rina Bhattacharya, 2003. "External Debt, Public Investment, and Growth in Low-Income Countries," IMF Working Papers, International Monetary Fund 03/249, International Monetary Fund.
  8. Carlos Esteban Posada & Miguel Urrutia Montoya, 2004. "Un Siglo de Crecimiento Económico," INVESTIGACIÓN ECONÓMICA EN COLOMBIA, FUNDACIÓN PONDO 003692, FUNDACIÓN PONDO.
  9. Mahdavi, Saeid, 2004. "Shifts in the Composition of Government Spending in Response to External Debt Burden," World Development, Elsevier, Elsevier, vol. 32(7), pages 1139-1157, July.
  10. Agenor, Pierre-Richard & Moreno-Dodson, Blanca, 2006. "Public infrastructure and growth : new channels and policy implications," Policy Research Working Paper Series, The World Bank 4064, The World Bank.
  11. Lora, Eduardo & Olivera, Mauricio, 2007. "Public debt and social expenditure: Friends or foes?," Emerging Markets Review, Elsevier, Elsevier, vol. 8(4), pages 299-310, December.
  12. Ricardo Hausmann & Bailey Klinger, 2008. "Growth Diagnostics: Perú," Research Department Publications, Inter-American Development Bank, Research Department 2005, Inter-American Development Bank, Research Department.
  13. Hélène Poirson & Luca Antonio Ricci & Catherine A. Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers, International Monetary Fund 04/15, International Monetary Fund.
  14. Mary Morrison & Marianne Fay, 2005. "Infrastructure in Latin America : Recent Developments and Key Challenges, Volume 1," World Bank Other Operational Studies, The World Bank 8801, The World Bank.
  15. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp06-041, Harvard University, John F. Kennedy School of Government.
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Citations

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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, FEDESARROLLO 009137, FEDESARROLLO.
  2. Marcela Melendez & Guillermo Perry, 2010. "Industrial Policies in Colombia," Research Department Publications, Inter-American Development Bank, Research Department 4669, Inter-American Development Bank, Research Department.
  3. Alexander Cotte Poveda, 2011. "Economic development and growth in Colombia: An empirical analysis with super-efficiency DEA and panel data models," SERIE DE DOCUMENTOS EN ECONOMÍA Y VIOLENCIA, CENTRO DE INVESTIGACIONES EN VIOLENCIA, INSTITUCIONES Y DESARROLLO ECONÓMICO (VIDE) 009080, CENTRO DE INVESTIGACIONES EN VIOLENCIA, INSTITUCIONES Y DESARROLLO ECONÓMICO (VIDE).
  4. Marcela Eslava & Marcela Melendez, 2009. "Politics, Policies and the Dynamics of Aggregate Productivity in Colombia," Research Department Publications, Inter-American Development Bank, Research Department 4633, Inter-American Development Bank, Research Department.
  5. Mauricio SANTAMARIA SALAMANCA & Gabriel PIRAQUIVE GALEANO & Gustavo HERNANDEZ DIAZ & Norberto ROJAS DELGADILLO, 2013. "Crecimiento económico y desempleo: Retos a largo plazo," ARCHIVOS DE ECONOMÍA, DEPARTAMENTO NACIONAL DE PLANEACIÓN 011202, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  6. 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, Verein für Socialpolitik, Research Committee Development Economics 80, Verein für Socialpolitik, Research Committee Development Economics.
  7. Ramón Espinasa, 2008. "Prospects for the Oil-importing Countries of the Caribbean," Research Department Publications, Inter-American Development Bank, Research Department 2007, Inter-American Development Bank, Research Department.

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