Colombia is the United States’ fifth-largest export market in Latin America, but, with a relative lack of exports and investment, it does not score well for openness in the Index. Its prospects for raising incomes and climbing the value chain are limited by a notable weakness in commercialisation of innovation, indicated by the low levels of patents and the small number of highly-skilled researchers in the workforce. Low levels of capital per worker also suggest difficulties in moving into higher value-added business activities.
The Colombian economy is currently suffering from austerity government budgets, and from the destabilising effects of the drug trade and serious armed internal conflict. Although drug-dealing generates an estimated $4 billion a year -- according to Fedesarrollo, a research foundation, almost 10% of Colombian GDP -- the accompanying violence disrupts the market economy, imposing considerable costs even on those who are not directly affected. Still, governance scores are not as negative as these issues, largely confined to selected rural areas, might lead one to suspect.
Some economists argue that the drug trade slows Colombian economic growth, as drug money spent on imports generates contraband sales, and local industries are consequently forced out of business. Whatever the cause, the Colombian economy is rated somewhat poorly both for international competitiveness and for levels of competition in domestic markets.
|
|
Colombia has a higher level of Comparative Liveability than its Economic Competitiveness might suggest. This is despite moderately high levels of unemployment (12%). Colombia suffers from severe income disparities, poverty, and inadequate social services. Drugs, poverty, violence and an economy pressured by illegal groups affect the quality of life. According to USAID, nearly 50% of Colombians live in poverty. Poverty issues have been addressed by government action, but with mixed results.
Social indicators reflect positive social development trends -- particularly the high family life score, led by the 0.4%g divorce rate and 2.1%g widowhood rate. 87%g of Colombians report satisfaction with individual health to the Gallup World Poll, and the country scores well for gender equality of opportunity. Religious faith is also a source of comfort in difficult times, according to the World Values Survey. However, there have recently been unprecedented rates of homicide and domestic violence, largely affecting the poor, and property crime, affecting the better-off.
Colombia’s increasing economic insecurity has triggered calls for policy instruments, such as safety-net programmes, to enhance social protection. Development is very uneven, and numerous rural municipalities remain isolated, with poor infrastructure and fragile institutions. This makes villagers easy targets for human rights abuses, aggression by illegal armed groups, and forced displacement by organised gangs. Counterbalancing these negative factors, Colombia has a long history of national democratic government, and the current president’s tough approach appears to have forced the largest guerrilla organisations onto the back foot. A warm climate further enhances wellbeing, especially for those who cannot afford adequate housing.
|