Macroeconomic Trends

Macroeconomic Trends

Following the global economic downturn of the early 1980s, Colombia's economy began to grow at a respectable level in 1984. Economic growth occurred in all sectors, with the volatility of the coffee market determining the relative strength of each. During the 1980-85 period, for example, generally low commodity prices forced domestic public and private consumption to lead the economic expansion, admittedly at a low level. By contrast, during the 1986 boom, coffee earnings rose more than 60 percent, which encouraged increased saving and improved public finances.

Nontraditional exports--including textiles, coal, oil, and noncoffee agricultural products--also contributed to economic growth. Output by this group rose by an average of 10 percent during the 1983-86 period and, depending on the relative contribution of the coffee industry, was responsible for a large portion of GDP. In 1987 nontraditional export revenues exceeded earnings from coffee, with oil earnings reaching US$1.1 billion, an increase of 66 percent over the previous year.

By the late 1980s, per capita income--another telling measure of growth--had improved only slightly for the past three decades and remained at a level below that of most of Colombia's neighbors. Per capita income in 1986 was approximately US$1,330, which placed Colombia tenth among the nineteen Latin American countries. Real change in per capita GDP had consistently lagged behind change in aggregate GDP by two percentage points since 1982 and was actually negative for 1982 and 1983.

Despite indications of solid performance in aggregate terms, individual social and economic indicators suggested that Colombia was still a society of numerous disparities. Colombia in reality did not distribute the fruits of economic production more equitably in 1986 than it had fifty years earlier. In the 1980s, as much as 70 percent of income went to only 20 percent of the population, and three-quarters of all Colombians were classified as members of the lower class and the masses. Furthermore, per capita income in agrarian areas was only half the national average.

Although workers made gains in the 1970s, improvements in income distribution that occurred at that time were lost during the 1980s. Despite government efforts to improve education, health services, and aggregate output, Colombia may have actually experienced a widening of the income gap. Inequalities inherent in fast growth strategies (such as capital-intensive industrialization), continued rural-to-urban migration (which swelled the urban labor market), and the effects of the global recession were cited as the major reasons for the downturn.

In the 1980s, ownership of land, financial resources, and productive assets remained highly skewed. One percent of all shareholders controlled 50 to 80 percent of all stock issued. Debt was also distributed unevenly; only 1 percent of all debtors held 50 percent of all outstanding loans. Furthermore, industrial and agricultural wealth tended to overlap, so that most financial and economic assets were concentrated in the same hands.

Other indicators of social well-being, such as literacy and education, closely followed income patterns. Government estimates in 1987 suggested that although the nationwide illiteracy rate was only 12 percent, it ranged from a low of 5.7 percent of those at the upper-income level to nearly 30 percent of those in the lowerincome bracket. Illiteracy was most common in rural areas.

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