Reversal of Fortune

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.Economic growth,

Economic Growth in Colombia: a Reversal of Fortune"?"

Since 1979, Colombia´s annual GDP growth has been on average two percentage pointslower than what was observed between 1950 and 1980. The sources-of-growth decomposition shows that this deceleration can be accounted entirely by changes inproductivity. Indeed, between 1960 and 1980 productivity gains increased output perworker by nearly 1% per year. Since 1980, productivity losses have reduced output perworker at about the same rate. The time series analysis suggests that the implosion ofproductivity was caused by the increase in criminality which diverted capital and labor tounproductive activities. In turn, the rise in crime was the result of rapid expansion indrug-trafficking activities, which erupted around 1980. Consequently, the fortunesassociated with the emergence of Colombia as the world largest producer of cocaine had a significantly negative effect on growth and productivity. This explanation is supportedby cross-country evidence that shows that Colombia´s underperformance, especially inthe 1990s, is explained by its high homicide rate.Economic growth, productivity, social capital, crime and conflic

Under-investment in state capacity: the role of inequality and political instability

Existing studies have shown that the state's ability to tax, also known as fiscal capacity, is positively related to economic development. In this paper, we analyze the determinants of the government's decision to invest in state capacity, which involves a trade-off between present consumption and the ability to collect more taxes in the future. Using a model, we highlight some political and economic dimensions of this decision and conclude that political stability, democracy, income inequality, as well as the valuation of public goods relative to private goods, are important variables to consider. We then test the main predictions of the model using cross-country data and find that state capacity is higher in more stable and equal societies, both in economic and political terms, and in countries where the chances of fighting an external war are high, which is a proxy for the value of public goods.

Changes in the distribution of income and the new economic model in Colombia

This paper has analyzed the changes in the distribution of income in Colombia since 1976 using data for urban economy (seven largest metropolitan areas) and for the manufacturing sector. Evidence is shown that the structural reforms that took place in the early 1990s have been related to higher income concentration in Colombia, where levels of inequality were already impressively high. The results suggest that both trade liberalization and skill complementary technological change have a positive impact on skill premiums. The evidence presented suggests that skill complementary technological change has been a key force behind the recent increase in the relative demand for more-educated workers. Much of the change in skill intensity has taken place within specific industries, rather than involving large reallocations between sectors. Trade reform has not resulted in a greater expansion of skill intensive sectors relative to unskilled intensive sectors. Quite the contrary, trade liberalization and other reforms, which lowered the user cost of capital and relaxed liquidity constraints, facilitated investment in skill complementary technologies within all sectors of production. Further evidence in this direction is provided by the fact that the largest increases in the relative earnings of the more educated workers took place in the non-traded sectors. The results suggest that both trade liberalization and skill complementary technological change have a positive impact on skill premiums. As the evidence presented in this paper shows, the structural reforms have been related to higher income concentration in Colombia, a country with already impressively high levels of inequality. For this reason, a better understanding of the relationship between the reforms and distribution is crucial to assess the future of the full reform agenda. Obviously this process has to be consistent with higher levels of growth, lower poverty and more equitable distribution of income.

Panama's growth diagnostics

"In this context, the objective of the paper is to propose a set of recommendations on whatneeds to be done in order to assure success of the current growth strategy. We have nodoubts on the value of strengthening Panama´s geographical comparative advantage withthe Canal´s expansion. The key question is to identify the additional steps which could promote growth in the non-canal economy. In addition to making growth more sustainable,growth acceleration in the traditional sectors can result in a reduction of inequality, whichis extremely high in Panama.To answer these questions the paper proceeds in the following way. Section 2 discussessome key features of Panama´s economic structure that are important for the analysis.Section 3 analyzes Panama´s growth using conventional techniques. In particular, we lookat the role of the `fundamental´ determinants of growth, such as institutions, geography,and human capital. Also, the time series analysis shows that growth has experiencedreversals while a standard sources-of-growth decomposition suggests that Panama has asevere productivity problem. Sections 4 to 8 deal with the GDM. Section 4 presents somegeneral evidence from the Investment Climate Survey (ICS) on the main concerns ofPanama´s entrepreneurs. Section 5 discusses all the problems that could imply low socialreturns to investment. Section 6 analyzes the issues related to problems of appropriability.Section 7 introduces the problems of self-discovery, and Section 8 looks at financingissues. Section 9 concludes"Crecimiento Económico, Panamá

Race and Ethnic Inequality in Health and Health Care in Colombia

In this paper we explore race and ethnic health inequalities in Colombia. We first characterize the situation of Afro-Colombians and indigenous populations in Colombia. Second, we document racial/ethnic disparities in health outcomes and access to health care using data from the Living Standards Survey and the evaluation of the Familias en Acción program. Third, we set up a statistical model that allows us to test whether some of the health inequalities that are observed still remain after controlling for a wide range of individual and household observed characteristics, including access to health care. The results indicate that most racial and ethnic disparities in health and access to health care disappear once we control for socioeconomic characteristics of individuals, employment status and characteristics of the job and geographic location among other things. Based on these findings we make some specific policy recommendations aimed at improving the status of racial minorities in Colombia.Salud, Seguros en salud, Raza y etnicidad.Health Outcomes, Health Care, Race and Ethnicity

Political Institutions and Policy Outcomes in Colombia: the Effects of the 1991 Constitution

Abstract: The 1991 Colombian constitution strengthened the checks and balances of the political system by enhancing the role of Congress and the Constitutional Court, while somewhat limiting the powers of the president (who nonetheless remains extremely powerful even for Latin American standards). As a consequence of the larger number of relevant players, and the removal of barriers that restricted political participation, the political system gained in terms of representation. However, political transaction costs increased, making cooperation harder to achieve. We show that this has been typically the case of fiscal policy, where the use of rigid rules, the constitutionalization of some policies, and reduction in legislative success rates -due to the presence of a more divided and fragmented congress- have limited the adaptability and flexibility of policies. In contrast, in other areas of policy -such as monetary policy and regulation of public utilities- that were formally delegated to the technocracy, policies have been more adaptable to economic shocks, delivering better outcomes.Instituciones políticas, Política fiscal, Participación política.Political institutions, policymaking, policy outcomes

Measuring Economic and Social Impacts of Migration in Colombia: New evidence

This paper analyses a comprehensive dataset on migration using robust econometric methodologies to assess a range of economic and social impacts of migration on individuals and households left behind. Our findings indicate that there is no significant impact on labour force participation in households with migrants, but remittances do appear to have a negative effect on labour force participation. Migration (either absent or returned) increases total per capita expenditure by nearly US$35 per month while households that receive remittances increase per capita expenditures by US$49 per month on average. Expenditures in health and education also increase. However, there is no effect on school attendance, while individuals living in a household with an absent migrant are almost 4 per cent less likely to state that their health is good. Households with migration experience are around 8 per cent less likely to keep their immediate families together, with this effect particularly pronounced in the sub-group of households with return migrants. Our policy recommendations emphasize the importance of family reunification, and issue that deserves more decisive policy actions on the part of the Colombian government.International Migration, Remittances, Program Evaluation.

Education and life satisfaction: perception or reality?

Using data from the Gallup World Poll, this paper analyze the way in which perceptions on thequality of education affect wellbeing. In addition, we explore if educational quality perceptions aredetermined by objective educational outputs, such as international standardized tests scores (i.e. PISAscores) and individual educational attainment. Results indicate that educational quality perceptionsare positively correlated with standardized test scores but negatively correlated with individualeducational attainment. Similarly, favorable perception on the quality of education contributes tohigher individual wellbeing, even after controlling for individual educational attainment and othertraditional determinants of wellbeingWellbeing, educational quality perceptions, educational outcomes

Loos, Gínzburg y Teige: monumentalidad y modernidad

Durante el exilio norteamericano de 1943, el historiador Sigfried Giedion junto con el arquitecto Josep Lluís Sert y el pintor Fernand Léger escribieron los Nueve Puntos sobre Monumentalidad. El manifiesto fue el antecedente de un texto que el mismo Giedion presentó al año siguiente denominado La Necesidad de una Nueva Monumentalidad. En ese contexto, el interés por discutir el asunto de la monumentalidad buscaba señalar una virtual dirección para la arquitectura venidera en el escenario de la posguerra. Según el historiador, la condición monumental completaba el último paso en una progresión inevitable que tras el establecimiento del paradigma moderno -ocupado inicialmente en resolver temas técnicos, funcionales, simplificados e higienistas- habría de atender los problemas relacionados con la expresión simbólica, conmemorativa, emocional y artística de la nueva arquitectura. En ese sentido nos preguntamos, ¿es la monumentalidad una cuestión abiertamente contradictoria con los principios modernos y por lo tanto excluida durante este periodo?. El crítico norteamericano Lewis Mumford acuñó al respecto una sentencia contundente: "La noción de un monumento moderno implica, en verdad, una contradicción de sus términos: si es un monumento no es moderno, y si es moderno no puede ser un monumento". Con el fin de estructurar un posicionamiento crítico que permita contrastar el amplio espectro conformado entre lo dicho y lo hecho, se toma como referencia la obra escrita de tres personajes fundamentales dentro del desarrollo de la modernidad en la Europa de entreguerras -Adolf Loos en la Viena de transición del fin de siècle, Moisei Gínzburg en los márgenes del constructivismo soviético y Karel Teige en el contexto de la vanguardia Checa- para indagar sobre cuándo y cómo se encuentran o rechazan las nociones de modernidad y monumentalidad en ese período crítico. Dado que es objeto de interés establecer los posibles límites en la reflexión que entreteje desde los posicionamientos conscientes a las complicidades involuntarias del aparente enfrentamiento. En el proceso de mutación entre el proyecto y la obra construida, entre la palabra escrita y la arquitectura, las aportaciones de estos tres críticos figuran como relevantes en un ejercicio que busca comprobar posteriormente la trascendencia del asunto en algunos de los ejemplos canónicos de la arquitectura de los primeros años del siglo XX. A la distancia, la importancia del tema recae en un interés vigente en el que los aspectos de representación, memoria, significado o legitimidad, siguen siendo motivo de debate en el panorama de la producción arquitectónica actual