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The Political Economy of Fuel Subsidies in Colombia

Author

Listed:
  • Helena Garcia Romero

    (Fedesarrollo)

  • Laura Calderon Etter

    (Fedesarrollo)

Abstract

Colombia has made progress towards eliminating fuel and diesel subsidies and reducing discretionary spaces allowing for artificially low fuel prices, but challenges remain. Colombia has provided explicit and implicit subsidies to gasoline and diesel since 1983, costing the government up to 1.6% of GDP. This paper discusses the political economy of fuel subsidies in the country to understand why reform has been so slow. It focuses on the groups benefitting from the subsidies and their political participation, as well as other economic impacts that have limited the political will to eliminate them. The Colombian case serves as an example of the difficulty of fully eliminating fuel subsidies once they are already established. La Colombie a fait des progrès pour éliminer les subventions accordées aux carburants et au gazole et réduire les possibilités de faire baisser artificiellement les prix des carburants, mais certaines difficultés demeurent. La Colombie applique depuis 1983 des subventions explicites et implicites à l’essence et au gazole, représentant jusqu’à 1.6 % de son PIB. On trouvera dans le présent rapport une analyse de l’économie politique des subventions aux carburants qui permettra de mieux comprendre la lenteur de la réforme dans ce pays. Le rapport s’intéresse aux groupes qui bénéficient de ces subventions et à leur participation politique, ainsi qu’aux autres impacts économiques qui ont entamé la volonté politique de les supprimer. L’exemple de la Colombie illustre la difficulté d’éliminer complètement les subventions aux carburants une fois établies.

Suggested Citation

  • Helena Garcia Romero & Laura Calderon Etter, 2013. "The Political Economy of Fuel Subsidies in Colombia," OECD Environment Working Papers 61, OECD Publishing.
  • Handle: RePEc:oec:envaaa:61-en
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    File URL: http://dx.doi.org/10.1787/5k3twr8v5428-en
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    Cited by:

    1. Gabriel Di Bella & Lawrence Norton & Joseph Ntamatungiro & Sumiko Ogawa & Issouf Samaké & Marika Santoro, 2015. "Energy Subsidies in Latin America and the Caribbean; Stocktaking and Policy Challenges," IMF Working Papers 15/30, International Monetary Fund.

    More about this item

    Keywords

    Colombia; Colombie; fossil-fuel subsidies; political economy; économie politique;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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