Back from the Brink: Economic and Financial Reform in Colombia

Despite the challenging domestic security environment Colombia's program of economic and financial reform is continuing. As will be argued below the egregious level of civil strife that has saturated the country over the last five decades has adversely affected all the major components of the national economy including the construction of infrastructure, the demographic profile of the population, the formation of human capital, not to mention the general business environment. Consequently, the growth in living standards lagged those of the continent at large during the 1990s despite the favorable ingredients for growth that Colombia is endowed with i.e., mineral resources, access to both the Atlantic and Pacific Oceans, modest population growth rates, etc. The paper uses a well-known framework to describe and assess Colombia's ongoing reform program. The Uribe Administration, in office since 2002, has successfully lowered the level of violence in the country, improved public safety, and restored economic confidence, all of which are enhancing the performance of the economy and the prospects for improving living standards.This paper was presented May 22, 2008, at the 18th International Conference of the International Trade and Finance Association, Universidade Nova de Lisboa, Lisbon, Portugal.