Colombia Approaching Year 2000

Abstract

This appraisal paper attempts a view about the Colombian historical shortcomings to reach modernity and linking the economy to international trade. Recent Washington Consensus experience associated with a profound liberalization process initiated during the 1990's decade, lead basic economic indicators to show promising results to sustain long term growth. As the economy pronounced the absorption of increasing amount of saved foreign currency and private foreign indebtedness, the national productive sector experienced an unpredictable, unexpected and preoccupying rate of decline in production at the end of the decade. For the first time in a Century the Colombian Economy experienced negative rates of growth. The external cycle coincided with an over-shooting in the economic activity mainly in the production of non-tradable goods, generating pari-passu a worrisome financial speculation around this unproductive consumption of goods like city apartments and other lavish goods and services. Productive sectors around manufacturing and agriculture activities, as well as some peripheral less productive regions experienced economic contraction, and did not experience predictable convergent growth. As a counter-cyclical measure Government activity oriented political action favoring unproductive spending, faced rampant corruption, and allowed financial institutions boom traduced on the abuse of speculative gains. To recover the economy along productive activity and to sustain long-term economic expansion still seems to be a dream. The paper invites for institutional transformation to improve technological change and risk venture investment to accelerate innovation-based growth, and allow somewhat in the future entering the country into new economics.