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Reversal of Fortune

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  • Mauricio Cárdenas

Abstract

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.

Suggested Citation

  • Mauricio Cárdenas, 2002. "Reversal of Fortune," Investigación Económica en Colombia 3471, Fundación Pondo.
  • Handle: RePEc:col:000100:003471
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    Cited by:

    1. Salomón Kalmanovitz & Enrique López, 2003. "Patrones de Desarrollo y Fuentes de Crecimiento de la Agricultura," Borradores de Economia 3315, Banco de la Republica.
    2. Rony Pshisva & Gustavo A. Suarez, 2006. "'Captive markets': the impact of kidnappings on corporate investment in Colombia," Finance and Economics Discussion Series 2006-18, Board of Governors of the Federal Reserve System (U.S.).
    3. Ricardo Rocha & Hermes Martinez, 2003. "Pauvreté, crime et croissance en Colombie : disparités régionales," Revue Tiers Monde, Programme National Persée, vol. 44(176), pages 803-828.
    4. Rony Pshisva & Gustavo A. Suarez, 2010. "Capital Crimes: Kidnappings and Corporate Investment in Colombia," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 63-97, National Bureau of Economic Research, Inc.
    5. World Bank, 2005. "Colombia : Public Expenditure Review," World Bank Publications - Reports 8559, The World Bank Group.
    6. Polanía Reyes Sandra Viviana, 2005. "Capital social e ingreso de los hogares del sector urbano en Colombia," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, July.
    7. Alexander Cotte Poveda, 2006. "Crecimiento, Desigualdad Y Pobreza: Un Análisis De La Violencia En Colombia," Serie de Documentos en Economía y Violencia 2233, Centro de Investigaciones en Violencia, Instituciones y Desarrollo Económico (VIDE).
    8. Rony Pshisva & Gsutavo Suarez, 2005. "Captive Markets: The Impact Of Kidnappings On Corporate Investment In Colombia," Documentos CEDE 3786, Universidad de los Andes, Facultad de Economía, CEDE.

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    Keywords

    Economic growth;

    JEL classification:

    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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