Going for Growth - Colombia

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Colombia The income per capita gap relative to the upper half of OECD countries has marginally decreased, but remains large as a result of low productivity.

Income inequality has declined in recent years, although it remains high. Emissions per capita are low in comparison with the OECD average.

Progress has been made in improving road infrastructure through an ambitious agenda of public-private partnership programmes. Governance of R&D projects at sub-national level has been recently improved by giving a more central role to research centres in planning and executing projects. As part of the peace process, targeted education programmes in rural areas have been launched.

Broadening access to quality education is essential for boosting productivity and reducing large income inequalities. A comprehensive strategy to fight informality, which has fallen but remains very high, is required to boost productivity and inclusiveness. Reducing barriers to trade will contribute to higher growth, less reliance on non-renewable natural resources and more and better jobs. Reducing disparities across regions, a new priority in 2019, is essential to improve living standards of all Colombians. This will require boosting the performance of rural areas.

Growth performance, inequality and environment indicators: Colombia A. Growth Average annual growth rates (%) GDP per capita Labour utilisation of which: Labour force participation rate Employment rate1 Employment coefficient2 Labour productivity of which: Capital deepening Total factor productivity Dependency ratio

2002-08 3.9 -0.3 -1.2 0.8 0.0 3.5 0.8 2.7 0.7

2012-18 1.6 -0.5 -0.5 0.0 0.0 1.7 1.5 0.2 0.5

GHG emissions per capita4 (tonnes of CO2 equivalent) GHG emissions per unit of GDP4 (kg of CO2 equivalent per USD) Share in global GHG emissions4 (%) * OECD simple average (weighted average for emissions data)

Gap to the upper half of OECD countries5 Per cent 0

-10 -20 -30 -40

B. Inequality and environment

Gini coefficient3 Share of national disposable income held by the poorest 20%

C. Gaps in GDP per capita and productivity remain large

Level

Annual variation (percentage points)

-50

2017 49.7 (31.7)*

2013-17 -0.8 (0)*

-60

4.1 (7.6)*

0.2 (0)*

2015 3.5 (12.3)* 0.3 (0.3)* 0.3

Average of levels 2010-2012-2015 3.5 (12.8)* 0.3 (0.4)* 0.3

-70 -80 GDP per capita

GDP per employee

-90

Source: Panel A: OECD, Economic Outlook Database; Panel B: OECD, Income Distribution and National Accounts Databases and World Bank, World Development Indicators (WDI) Database; International Energy Agency (IEA), Energy Database; Panel C: OECD, National Accounts and Productivity Databases StatLink 2 https://doi.org/10.1787/888933954762

114 

Policy indicators: Colombia A. Student performance is low

B. There is room to improve trade facilitation

Average of PISA scores in mathematics, science and reading, 2015

Index scale of 0-2 from least to best performance,¹ 2017

500

2.0

475

1.5 450 1.0

425 400

0.5

375 350

COLOMBIA

Advanced economies

COLOMBIA

Chile

Advanced economies

0.0

Source: Panel A: OECD, PISA Database; Panel B: OECD, Trade Facilitation Indicators Database.

StatLink 2 https://doi.org/10.1787/888933955636

Beyond GDP per capita: Colombia A. Inequality has decreased but remains high Gini coefficient, 2016 or last available year¹ SVK, 24.1

COLOMBIA, 49.7

Advanced economies median, 29.7

ZAF, 63.0

Emerging economies median, 46.2

B. Exposure to fine particulate matter is lower than in emerging economies Percentage of population exposed to PM2.5, 20172

% COLOMBIA

Advanced economies

< 10 μg/m³ 10-35 μg/m³

Emerging economies

> 35 μg/m³

World 0

10

20

30

40

50

60

70

80

90

100

Source: Panel A: OECD, Income Distribution Database, World Bank, World Development Indicators Database and China National Bureau of Statistics; Panel B: OECD, Environment Database.

Note: For the explanation of the sets of indicators above, please go to the metadata annex at the end of this chapter.

StatLink 2 https://doi.org/10.1787/888933956510

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Colombia: Going for Growth 2019 priorities Improve outcomes and equity in education. Limited access to high-quality education increases income inequality and inhibits productivity. 

Actions taken: As part of the peace process special education programmes targeted at rural areas were started in 2018.



Recommendations: Strengthen access to early childhood education and its quality. Limit grade repetition and provide additional support to disadvantaged students. Improve governance in vocational education and adjust curricula and funding according to labour market needs. Increase employers’ involvement in the delivery of vocational education.

Reduce barriers to trade, including infrastructure gaps. The economy remains relatively closed to trade, despite the numerous trade agreements signed. High tariff dispersion, an increasing number of nontariff barriers, infrastructure gaps and long customs procedures, constrain trade and productivity. 

Actions taken: Further progress in the Fourth Generation (4G) public-private partnership programme was made in 2017 and 2018.



Recommendations: Reduce dispersion in tariffs. Evaluate non-tariff barriers and eliminate those found to be distortive. Continue to improve transport infrastructure, particularly primary roads.

Improve long-term planning of intermodal transportation and the use of cost-benefit analysis.

Streamline customs processes.

Reduce barriers to formality. High non-wage labour costs and minimum wage in combination with complex and costly systems to register firms and declare formal workers promote informality, contributing to high levels of inequality and low productivity. 

Actions taken: No action taken.



Recommendations: Continue to reduce non-wage costs by phasing out contributions related to Cajas de Compensación. Differentiate minimum wages for regions to account for differences in productivity. Establish one-stop shops to start-up companies. Reduce the monetary cost to register a company.

*

Reduce regional disparities. Economic performance and living conditions are very uneven across regions. Poor physical and social infrastructure and weak local governance and service delivery hamper productivity and inclusiveness, particularly in rural areas. The end of the 50-year armed conflict creates an historic opportunity to tackle striking differences in living conditions. 

*

Recommendations: Improve rural infrastructure, particularly secondary and tertiary roads.

Complete and update the property cadastre to improve revenues of local governments and land use. Shift the emphasis of agriculture policies away from providing subsidies to producers and focus them more on providing public goods or physical and social infrastructure.

New policy priorities identified in Going for Growth 2019 (with respect to Going for Growth 2017). No action can be reported for new priorities.

116  Improve R&D support and its efficiency. Colombian firms invest little in innovation, which hampers productivity. Most companies that make use of tax credits are large and in traditional sectors, such as oil. 

Actions taken: To avoid excessive fragmentation in R&D projects run by regional and local governments, as of 2018, funding will be allocated directly to research centres. An expenditure review of government interventions in this area has been undertaken in 2018.



Recommendations: Strengthen collaboration between research centres and companies. Promote more the use of R&D tax credits by SMEs and by new firms. Improve the follow-up of firms receiving support to inform the design of new programmes.