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Economic Growth In Colombia: A Reversal Of ‘Fortune’?

  • MAURICIO CÁRDENAS

    ()

Since 1979, Colombia´s annual GDP growth has been on average two percentage points lower than what was observed between 1950 and 1980. The sources-of-growth decomposition shows that this deceleration can be accounted entirely by changes in productivity. Indeed, between 1960 and 1980 productivity gains increased output per worker by nearly 1% per year. Since 1980, productivity losses have reduced output per worker at about the same rate. The time series analysis suggests that the im-plosion of productivity was caused by the increase in criminality which diverted capital and labor to unproductive activities. In turn, the rise in crime was the result of rapid expansion in drug-traffi ck-ing activities, which erupted around 1980. Conse-quently, the fortunes associated with the emergence of Colombia as the world largest producer of co-caine had a signifi cantly negative effect on growth and productivity. This explanation is supported by cross-country evidence that shows that Colombia´s underperformance, especially in the 1990s, is ex-plained by its high homicide rate.

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File URL: http://www.banrep.gov.co/docum/Lectura_finanzas/pdf/resu_053-5.pdf
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Article provided by BANCO DE LA REPÚBLICA - ESPE in its journal ENSAYOS SOBRE POLÍTICA ECONÓMICA.

Volume (Year): 25 (2007)
Issue (Month): 53 (January)
Pages: 220-259

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Handle: RePEc:col:000107:004635
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  1. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
  2. Carlos Arango A. & Martha Misas & Enrique López, . "Economía Subterránea en Colombia 1976-2003: Una medición a partir de la Demanda de Efectivo," Borradores de Economia 335, Banco de la Republica de Colombia.
  3. Charles Oman & Christiane Arndt, 2006. "Governance Indicators for Development," OECD Development Centre Policy Insights 33, OECD Publishing.
  4. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
  5. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  6. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
  7. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
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