IDEAS home Printed from
   My bibliography  Save this paper

Revisiting Economic Growth in Colombia: A Microeconomic Perspective


  • Arturo Harker
  • Marcela Melendez


This paper revisits economic growth in Colombia using the growth diagnostics methodology proposed by Hausmann, Rodrik and Velasco (2005), to identify 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 the cost 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.

Suggested Citation

  • Arturo Harker & Marcela Melendez, 2008. "Revisiting Economic Growth in Colombia: A Microeconomic Perspective," Research Department Publications 2006, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:2006

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Dijkstra, Geske & Hermes, Niels, 2001. "The Uncertainty of Debt Service Payments and Economic Growth of HIPCs: Is there a Case for Debt Relief?," WIDER Working Paper Series 122, World Institute for Development Economic Research (UNU-WIDER).
    2. 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.
    3. Marcela Meléndez Arjona & Arturo Harker Roa, 2008. "Revisiting economic growth in Colombia. A microeconomic perspective," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 009137, FEDESARROLLO.
    4. 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, January.
    5. Carlos Felipe Prada, 2006. "¿Es rentable la decisión de estudiar en Colombia?," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 24(51), pages 226-323, June.
    6. Eduardo Lora, 2009. "La Vulnerabilidad Fiscal del Gasto Social: ¿Es diferente América Latina?," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 24(1), pages 3-20, Junio.
    7. Carlos Esteban Posada & Miguel Urrutia Montoya, 2004. "Un Siglo de Crecimiento Económico," INVESTIGACIÓN ECONÓMICA EN COLOMBIA 003692, FUNDACIÓN PONDO.
    8. 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.
    9. 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.
    10. Helene Poirson Ward & Luca A Ricci & Catherine A Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers 04/15, International Monetary Fund.
    11. Mauricio Cárdenas, 2007. "Economic Growth In Colombia: A Reversal Of ‘Fortune’?," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 25(53), pages 220-259, January.
    12. Lora, Eduardo & Olivera, Mauricio, 2007. "Public debt and social expenditure: Friends or foes?," Emerging Markets Review, Elsevier, vol. 8(4), pages 299-310, December.
    13. Ricardo Hausmann & Bailey Klinger, 2008. "Growth Diagnostics: Perú," Research Department Publications 2005, Inter-American Development Bank, Research Department.
    14. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    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.
    16. 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.
    17. 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.
    18. repec:bdr:ensayo:v::y:2006:i:51:p:226-323 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    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. Idrees Khawaja & Sajawal Khan, 2016. "Growth Diagnostics: Pakistan," PIDE-Working Papers 2016:143, Pakistan Institute of Development Economics.
    3. 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.
    4. 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.
    5. Marcela Meléndez Arjona & Guillermo Perry, 2009. "Industrial policies in Colombia," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 009138, FEDESARROLLO.
    6. Dragan TEVDOVSKI & Vladimir FILIPOVSKI & Igor IVANOVSKI, 2014. "A Diagnostics Approach To Economic Growth In Small Open Economies: The Case Of The Republic Of Macedonia," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 13, pages 47-68, June.
    7. 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.
    8. Ramón Espinasa, 2008. "Prospects for the Oil-importing Countries of the Caribbean," Research Department Publications 2007, Inter-American Development Bank, Research Department.
    9. Maria Victoria Murillo & Carlos Scartascini & Mariano Tommasi, 2008. "The Political Economy of Productivity: Actors, Arenas, and Policies. A Framework of Analysis," IDB Publications (Working Papers) 1642, Inter-American Development Bank.
    10. Carlos Ludena, 2010. "Agricultural Productivity Growth, Efficiency Change and Technical Progress in Latin America and the Caribbean," Research Department Publications 4675, Inter-American Development Bank, Research Department.
    11. 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.

    More about this item

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idb:wpaper:2006. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Felipe Herrera Library). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.