BY CLAUDIO LOSER
Latin America Advisor
WASHINGTON, DC — In November, I attended the 2007 Session of the Houston Seminar Series organized by the U.S. Embassy in Cartagena, Colombia. The meeting dealt with poverty reduction and income distribution in the context of growth. A few days earlier, the Center for Strategic & International Studies published the Report Back from the Brink: Evaluating Progress in Colombia, 1999-2007, which mainly focuses on political developments.
Both positive events made me think how unfair the country is being treated abroad, and particularly in political discussions surrounding the approval process by the U.S. Congress of the FTA agreement with Colombia.
STRONG ECONOMIC GROWTH
Outshined by the recovery of Argentina and Venezuela, the sustained growth of Chile and Peru, and the sheer weight of Brazil and Mexico, Colombia's GDP growth has been much better than the average for Latin America. Strong export prices and growing remittances have helped, but this has been the case for the whole region.
The average rate of GDP growth since the beginning of the decade has been 4 percent, compared with 3.3 percent for the region, only exceeded by Chile and Venezuela among the big Latin seven. For 2003-07 the average rate of growth is estimated at 5.6 percent, and for the region, 4.5 percent. Colombia grew less than Argentina and Venezuela, but more than Chile, Brazil, and Mexico. The chart (see above, right) shows per capita income outdistancing the average for the region and behind Chile by a narrowing margin.
Colombia, within a market economy approach, has been extremely successful in helping the poor. Extreme poverty has declined by almost 70 percent since 2000, after having experienced no gains in the previous 10 years, with similarly good results for poverty overall. However, inequality remains very high and requires further work. Nonetheless, Colombia shows a reasonably solid Human Development Index position, being ranked 70th out of 177, about in line with the regional average. Targeted expenditure to combat poverty and relatively high expenditures in education and health also help.
STRONG BUSINESS RECORD
Equally relevant, Colombia has a strong record in terms of its business environment. The country is ahead of Brazil, Argentina and Venezuela, in global competitiveness (69th out of 131 countries); ahead of Argentina, Venezuela, China and India in terms of economic freedom (73rd out of 177); and ahead of most countries in the region in terms of perception of corruption (59th out of 163). Finally, Colombia ranks 67th out of 175 countries in the most recent Ease of Doing Business listing published by the World Bank. It has moved form 79th since last year, leaving most of the region behind.
This enumeration may be tedious but shows an entrepreneurial spirit and functioning government that deserves external support, and certainly by the US. A negative FTA vote would hit Colombia badly, but also hurt the U.S. in its relations with a strong and promising trading partner that could soon become the third-largest economy in the region.
Claudio Loser is a Senior Fellow at the Inter-American Dialogue and former Head of the Western Hemisphere Department at the International Monetary Fund. Republished with permission from the Inter-American Dialogue's daily Latin America Advisor newsletter.