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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.

Suggested Citation

  • Mauricio Cárdenas, 2002. "Reversal of Fortune," INVESTIGACIÓN ECONÓMICA EN COLOMBIA 003471, FUNDACIÓN PONDO.
  • Handle: RePEc:col:000100:003471
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    References listed on IDEAS

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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.

    More about this item

    Keywords

    Economic growth;

    JEL classification:

    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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