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Globalization, Economy and Territory in Colombia

Luis Mauricio Cuervo G.

CIDER, Universidad de los Andes

August 2001[1]

The aim of this study is to observe the general sense of globalization in Colombia and its more specific impact on the country’s economy and territory. This analysis highlights the similarities and differences of the Colombian experience and serves as a general framework to a more detailed view of what happened in Bogotá, Colombia’s capital and economic center.

The constraints of the import-substitution model began to be felt in Colombia -as in the rest of Latin America- as of the end of the 1960s. In response to this, exchange rate systems were modified and gradual devaluation was introduced, commercial integration of the Andean countries was promoted, growth geared to the domestic market was made to look abroad into diversified and expanded exports. Later, as of the 1970s, profound economic management liberalization and deregulation reforms were implemented. Finally, from the beginning of the 1980s, decentralization became the byword and has become rooted ever since. Thus, opening markets, liberalization, as well as decentralization are the axis of a profound social and economic transformation in Colombia in the course of the past 30 years. Even though these transformations have not been linear nor harmonious, they have marked the country’s action plans and changes, as portrayed in this article. Consequently -much like globalization at a worldwide level- globalization at a domestic level is reflected by the emergence of radically different rules of the game as compared to those which prevailed previously; they have been put forward in the midst of contradictions and cyclical advances and backslides. The guidelines which regulated Colombia’s economic relationship with the rest of the world (open market strategies), domestic economic management (liberalization-deregulation), and corresponding responsibilities and competence between the divers territorial government and state entities (decentralization) were thereby modified.

As refers to open markets, foreign trade has become a larger portion of Colombia’s GDP; not only as a result of expanding exports but also as of growing imports. One-crop export dependence on products such as coffee opened the way for the emergence of a variety of services and goods exports, namely, manufactured products; minerals (carbon, oil, nickeled-iron and emeralds); agrobusiness products (flowers, sugar and bananas); and diverse illicit products such as marihuana, cocaine and heroine. Producer and consumer markets also became more diversified, particularly as the Andean -specially Venezuela and Ecuador- market became more significant..

Liberalization has opened Colombia’s foreign trade sector and made it much less regulated while economic management does not now require the complex incentives and fines which had hitherto been applied. Economic management seeks to deal equitably with the different sectors and to keep financial, monetary and foreign exchange rates stable so that the more competitive activities will progress without the need for public aid. There is, however, an attempt at implementing active social policies which would address the more vulnerable sectors and allocate subsidies on demand.

Decentralization has implied greater political autonomy for the country’s municipalities and mayoralties; both, now, popularly elect their officials. Additionally, in the case of the municipalities, expenditures and social investment -now mainly in their own hands- are financed through a transference fund which is regulated according to fixed formulas aimed at social redistribution.

In the midst of these general transformations, the Colombian economy has managed to sustain an average yearly growth of almost 4%, which might be modest by international standards but is highly respectable at a Latin American level. Per capita income did not stagnate as in other countries of the region and reached an annual average of 2%. Contrary to what happened in most of Colombia’s neighboring countries, the state’s part in the country’s GDP grew considerably, going from 10% to 30%. Nonetheless, Colombia is practically the only country in the region which is caught up in a profound political crisis, tainted by the dispersion and radicalization of forces in conflict and expressed by the disgrace of 30,000 violent deaths per year.

[1] This text is an excerpt from a confernce presented by the author in the Encuentro de la Red Iberoamericana de Investigadores en Globalización y Territorio in Toluca, México, in 1999.

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