Publication: Colombia : Country Economic Memorandum, The Foundations for Competitiveness
Loading...
Date
2005-11
ISSN
Published
2005-11
Author(s)
Editor(s)
Abstract
Since Colombia's last Country Economic Memorandum (CEM) (1989) the country has endured several years of slow growth, burgeoning fiscal deficits, and high levels of debt. Colombia now is seeking to join a free trade agreement (FTA) with the United States in the hope of stimulating growth and improving living conditions for the country as a whole. In response to the opportunities and challenges presented by the proposed FTA with the United States, the Colombian government has launched an "internal agenda," an action plan that involves major stakeholders -- public sector, private sector, and regional government -- aimed at obtaining greater levels of competitiveness. The government has articulated the need for greater understanding of the impact of the proposed FTA, and a strategy for a reform agenda that would enable the country to capture the potential benefits from freer trade and facilitate the transition to greater openness. This report is produced as an input into Colombia's reform agenda. It starts with an executive summary and policy report which presents the main findings and key policy recommendations of the three chapters comprising the report. Chapter 1 evaluates Colombia's business and growth environment and the likely challenges the manufacturing sector will face in taking advantage of the FTA with the United States. The chapter consists of three sections. Section I uses detailed survey data to identify the top constraints on growth and competitiveness of Colombian firms. Section 2 analyzes key developments in the manufacturing sector following the trade liberalization of 1990-91 using micro-level data, and highlights areas where reforms are needed. Section 3 examines the challenges and opportunities faced by small and medium-sized businesses in confronting a more open trading environment. Chapter 2 builds on the microeconomic issues raised in the first chapter, and follows with an evaluation of macroeconomic and fiscal (tax and expenditure) policies that are important for making the Colombian economy competitive. In this context, the study also evaluates the sustainability and trajectory of public debt. Finally, Chapter 3 examines the likely impact of agricultural liberalization on income distribution in the country under the proposed Colombian-U.S. FTA -- identifying who are the likely gainers and losers -- and assesses its impact on economic growth and poverty in the country.
Link to Data Set
Citation
“World Bank. 2005. Colombia : Country Economic Memorandum, The Foundations for Competitiveness. © World Bank. http://hdl.handle.net/10986/8807 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Dominican Republic, Central American Free Trade Agreement (DR-CAFTA) : Challenges and Opportunities for Central America(Washington, DC, 2005-12)This report provides a preliminary assessment of DR-CAFTA (the , with particular attention to three key themes: (1) expected trade and non-trade benefits, (2) actions that Central American countries need to pursue to capitalize optimally on the new opportunities, and (3) identification of the population groups that may require assistance to adapt to a more competitive environment. The report focuses on the developing countries of Central America, namely Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. The analysis presented in the report shows that the vast majority of the population in Central America is likely to experience welfare gains from implementation of DR-CAFTA, even in the short run. At the same time, the removal of trade barriers in sensitive agricultural crops could adversely affect a small share of the population living in rural areas in Central America. Although provisions in DR-CAFTA will allow for long timetables in reducing tariffs for the most sensitive products, appropriate support programs may need to be designed. In addition, selective investments in education, rural infrastructure, rural finance, and technical assistance will be required to ensure that the rural poor have the means to take full advantage of the new opportunities arising out of DR-CAFTA. Chapter 1 of the report reviews the main findings of the chapters in the order in which they appear. Chapter 2 places DR-CAFTA in the historical context of the economic reforms that Central American countries have been undertaking since the late 1980s. Chapter 3 provides a summary overview of the recently negotiated DR-CAFTA, with special attention on the extent to which the agreement's provisions would significantly change market access for Central American goods and services, and also on how far they could be expected to consolidate prior reforms. Chapter 4 reviews various analyses that assess the potential impacts of DR-CAFTA on the developing countries of Central America. Chapter 5 focuses on the identification and quantification of potentially affected populations from the easing of trade restrictions in sensitive agricultural products, and analyzes policy options to assist vulnerable groups. Chapter 6 reviews evidence related to key macroeconomic implications of DR-CAFTA, namely the potential revenue losses that might be produced by the removal of import taxes and the treaty's potential effect on the patterns of business-cycle synchronization. Chapter 7 reviews evidence from each Central American country in the areas of trade facilitation, institutional and regulatory reforms, and innovation and education, in order to identify key priorities for the complementary agenda for DR-CAFTA.Publication CGE Modeling of Market Access in Services(World Bank, Washington, DC, 2012-06)This paper examines how the applied multi-sector computable general equilibrium (CGE) literature has moved into quantication of the impacts of greater market access for services. This includes discussion of multi-sector linkages to the service sector, as well both measuring barriers to trade and investment (generally with a mix of firm surveys, price comparisons, and econometrics), and how changes in these barriers, however measured, have been implemented in the CGE literature. Three challenges are highlighted. The first is identification of how trade in services takes place and how market access is therefore affected by policy. The second is to find data sufficiently robust for modeling purposes. The third, linked to the data problem, is to quantify the barriers to be examined. Significant progress has been made in modeling foreign direct investment and linking this to productivity, which turns out to be important. The paper also provides an example of modeling productivity linkages to openness and domestic regulation, with an applied CGE model of Italy. This illustrates cross-sector linkages and the integration of economic data and policy measures to define service sector experiments. Priorities for future research include better modeling of market structure, the linkages between sectors and the complementarities between different modes of supplying services.Publication Argentina : Sources of Growth, Seeking Sustained Economic Growth with Social Equity(Washington, DC, 2005-10)This report attempts to analyze selected topics, chosen in collaboration with the Argentine authorities, regarding the inter-linkages between economic growth, income distribution and poverty, as well as the respective roles of these factors in explaining the historical underperformance of the Argentine economy. The report aims to identify relevant issues for policy formulation and further economic work. Its emphasis is on longer-term structural factors which are thought to determine productivity and income distribution. The report is organized as follows. Chapter 2 briefly reviews the time-dynamics o f economic growth, poverty and inequality in Argentina. Sections of the chapter study the evolution of poverty and inequality. It is noted that inequality has increased dramatically, though not monotonically, since 1990 and, notably, increases in inequality were observed in periods of both growth and recession. Chapter 3 reviews the latest episode o f economic volatility in Argentina, a period that started with the sharp decline o f economic activity in 2002 and continued with a recovery since 2003. Special attention is paid to the impact of this recent volatility on economic growth, poverty and inequality. The sections study the social impact of the recent crisis and recovery; employing different methodologies to test whether the recent recovery was pro-poor. It also analyzes the recession and recovery at the sector level, while identifying the economic sectors that contributed most to poverty reduction during the latest upturn o f the economy. Chapter 4 then turns to a selected set of government policies that could help to deliver high economic growth. The section highlights the idea that macroeconomic stability is crucial to reducing poverty rates since the empirical evidence indicates that economic crises disproportionately affect the poor. Another major lesson from this section is that tax policy is not a good tool for redistribution in developing countries. Further it analyzes the potential impact of various trade initiatives on employment opportunities for relatively unskilled workers in Argentina; and presents the results o f a recent study on the returns to education for workers across income groups. Finally, it reviews some key issues involved in ensuring a favorable environment for private sector development.Publication Belarus - Industrial Performance Before and During the Global Crisis : Belarus Economic Policy Notes : Note No. 2(World Bank, 2010-06-25)This note attempts to analyze and tentatively answer these questions by focusing on the drivers of growth and productivity, labor markets and enterprise restructuring, as well as the state system of enterprise support, which is key to understanding the interplay between the state and the economy in Belarus. The period of analysis covers 2004-08 with appropriate references to the previous periods and comparisons with Russia and/or other Commonwealth of Independent States (CIS) countries. The final section explores the Belarus's industrial performance in the period of the global crisis (late 2008-09) and reviews the government's policies that have been largely responsible for a relatively mild effect of the crisis on economic dynamics in the country. The analysis is based on the official statistics provided to the team by the National Statistics Committee (Belstat), National Bank, and various ministries, as well as statistics from other national and international statistical sources. In addition, the analysis benefited from the data provided by various enterprise surveys undertaken by the Research Institute by the Ministry of Economy (RIME) and from two sector case studies (in machinery and dairy sub-sectors). Belarus has weathered the crisis so far better than most of its neighbors, in part due to the government policies to boost domestic demand in a predominantly state-owned and controlled economy. This was achieved at a considerable macroeconomic cost. The country's ability to sustain possible future shocks declined, and macroeconomic risks increased. The crisis has further exposed risks associated with the Government of Belarus (GOB) practice of heavy reliance on administratively set targets for large and medium-size enterprises, especially targets for output and average wage growth.Publication Aid Is Good for the Poor(World Bank Group, Washington, DC, 2014-08)Aid is good for the poor. This paper uses detailed aid data spanning 60 developing countries over the past two decades to show that social aid significantly and directly benefits the poorest in society, while economic aid increases the income of the poor through growth. This new and unequivocal finding distinguishes the current study from past studies that only utilized aggregate aid data and returned ambiguous results. The paper also confirms that none of the elements of globalization (trade, foreign direct investment, remittances), policies (government expenditure, inflation management), institutional quality, nor other plausibly pro-poor factors have systematic effects on the poor or any other income group, beyond their effects on average incomes. The paper finds that trade and foreign direct investment tend to benefit the richest segments of society more than other income groups. Therefore, the presented evidence suggests that aid can play a crucial role in enabling the poor to benefit more from globalization. These discoveries underscore the need to assist developing countries to find the mix of economic and social aid that jointly promotes the participation of the poor in the development process under globalization. In this manner, aid can make greater strides in spurring development.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2017(Washington, DC: World Bank, 2017-01-30)Why are carefully designed, sensible policies too often not adopted or implemented? When they are, why do they often fail to generate development outcomes such as security, growth, and equity? And why do some bad policies endure? This book addresses these fundamental questions, which are at the heart of development. Policy making and policy implementation do not occur in a vacuum. Rather, they take place in complex political and social settings, in which individuals and groups with unequal power interact within changing rules as they pursue conflicting interests. The process of these interactions is what this Report calls governance, and the space in which these interactions take place, the policy arena. The capacity of actors to commit and their willingness to cooperate and coordinate to achieve socially desirable goals are what matter for effectiveness. However, who bargains, who is excluded, and what barriers block entry to the policy arena determine the selection and implementation of policies and, consequently, their impact on development outcomes. Exclusion, capture, and clientelism are manifestations of power asymmetries that lead to failures to achieve security, growth, and equity. The distribution of power in society is partly determined by history. Yet, there is room for positive change. This Report reveals that governance can mitigate, even overcome, power asymmetries to bring about more effective policy interventions that achieve sustainable improvements in security, growth, and equity. This happens by shifting the incentives of those with power, reshaping their preferences in favor of good outcomes, and taking into account the interests of previously excluded participants. These changes can come about through bargains among elites and greater citizen engagement, as well as by international actors supporting rules that strengthen coalitions for reform.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Supporting Youth at Risk(World Bank, Washington, DC, 2008)The World Bank has produced this policy Toolkit in response to a growing demand from our government clients and partners for advice on how to create and implement effective policies for at-risk youth. The author has highlighted 22 policies (six core policies, nine promising policies, and seven general policies) that have been effective in addressing the following five key risk areas for young people around the world: (i) youth unemployment, underemployment, and lack of formal sector employment; (ii) early school leaving; (iii) risky sexual behavior leading to early childbearing and HIV/AIDS; (iv) crime and violence; and (v) substance abuse. The objective of this Toolkit is to serve as a practical guide for policy makers in middle-income countries as well as professionals working within the area of youth development on how to develop and implement an effective policy portfolio to foster healthy and positive youth development.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication World Development Report 2023: Migrants, Refugees, and Societies(Washington, DC : World Bank, 2023-04-25)Migration is a development challenge. About 184 million people—2.3 percent of the world’s population—live outside of their country of nationality. Almost half of them are in low- and middle-income countries. But what lies ahead? As the world struggles to cope with global economic imbalances, diverging demographic trends, and climate change, migration will become a necessity in the decades to come for countries at all levels of income. If managed well, migration can be a force for prosperity and can help achieve the United Nations’ Sustainable Development Goals. World Development Report 2023 proposes an innovative approach to maximize the development impacts of cross-border movements on both destination and origin countries and on migrants and refugees themselves. The framework it offers, drawn from labor economics and international law, rests on a “Match and Motive Matrix” that focuses on two factors: how closely migrants’ skills and attributes match the needs of destination countries and what motives underlie their movements. This approach enables policy makers to distinguish between different types of movements and to design migration policies for each. International cooperation will be critical to the effective management of migration.