|
Colombia GROWTH AND STRUCTURE OF THE ECONOMY
Colombia first became an exporting region in the
sixteenth
century, under the Spanish system of mercantilism
(see The Colonial Economy
, ch. 1). Spanish imperial rule defined much of
Colombia's
social and economic development. The colony became an
exporter of
raw materials, particularly precious metals, to the mother
country.
With its colonial status came a highly structured
socioeconomic
system based on slavery, indentured servitude, and limited
foreign
contact. Colombia's modern economy, based on coffee and
other
agricultural exports, did not emerge until well after
independence
(1810), when local entrepreneurs were free to capitalize
on world
markets other than Spain.
Although colonialism fostered minimal domestic economic
growth,
small entrepreneurial efforts began to take shape, so that
by the
nineteenth century, well-defined economic enterprises were
under
way. The economy at that time was based primarily on
mining,
agriculture, and cattle raising, with contributions also
made by
local artisans and merchants.
Socioeconomic changes proceeded slowly; the economy
existed
essentially as a loosely related group of regional
producers rather
than as a national entity. Land and wealth were still the
privilege
of a minority. Forced labor continued in the mines, and
various
exploitative labor arrangements existed on the haciendas,
such as
sharecropping, renting, and low-wage labor. In each case,
those
owning the land benefited excessively, whereas those
working the
land remained impoverished.
The late nineteenth century witnessed the development
of
tobacco and coffee export industries, which greatly
enlarged the
merchant class and led to population expansion and the
growth of
cities. Wealth was concentrated in agriculture and
commerce, two
sectors that focused on opening channels to world markets,
a
process that continued slowly but steadily throughout the
nineteenth century.
Following the War of a Thousand Days (1899-1902),
Colombia
experienced a coffee boom that catapulted the country into
the
modern period, bringing the attendant benefits of
transportation
(railroads) and communications infrastructure and the
first major
attempts at manufacturing
(see Consolidation of Political Divisions
, ch. 1). The period 1905-15 has been described
as the
most significant growth phase in Colombian history,
characterized
by an expansion of exports and government revenues, as
well as an
overall rise in the gross domestic product
(GDP--see Glossary).
Coffee contributed most to trade, growing from only 7
percent of
total exports in the 1870s to nearly 75 percent by the
mid-1920s.
Unprecedented amounts of foreign capital found their way
into both
private investment and public works during this period as
a result
of the strong performance of coffee and other exports.
Despite the outward signs of growth, serious flaws
remained in
the Colombian economic system. The benefits of economic
growth
accrued disproportionately to the export sector, cities,
and
manufacturing groups, with perhaps as much as 70 percent
of the
population receiving little or no benefit from this period
of
expansion. Skewed income patterns would continue
throughout the
twentieth century, as manufacturing and services developed
and
became significant parts of the national economy.
The rapid growth and development of the economy in the
early
twentieth century helped prepare Colombia for the economic
problems
that accompanied the Great Depression of 1929. Colombia
continued
to produce raw materials, and although coffee prices
collapsed
during the depression, output continued to expand.
Nonetheless,
social and economic improvements remained uneven. Wages
for
agricultural laborers remained low, whereas other workers,
notably
urban employees, received large salary increases.
The expansion of the coffee industry laid the
groundwork for
national economic integration after World War II. During
the course
of the postwar expansion, Colombia underwent a distinct
transformation. Before the 1950s, because of the steep
terrain and
a relatively primitive transportation network, Colombia's
manufacturing sector was dominated by local industries
that were
only loosely linked to other regional businesses. National
development proceeded from improved transportation
facilities,
financed directly and indirectly by the coffee industry.
Greater
economic integration soon became evident with the heavier
concentration of industry and population in the six
largest cities.
Coffee's success, therefore, was ultimately responsible
for a
reliable transportation network that hastened urbanization
and
industrialization.
In addition to coffee production, economic expansion of
both
the noncoffee industrial sector and the service sector was
accomplished in two distinct stages. From 1950 until 1967,
Colombia
followed a well-defined program of
import substitution industrialization (see Glossary),
with most manufacturing
start-ups
directed toward domestic consumption that previously had
been
satisfied by imports. After 1967 planners in both
government and
industry shifted the economic strategy to export
promotion,
emphasizing nontraditional exports, such as clothing and
other
manufactured consumables, in addition to processed coffee.
From 1967 to 1980, the Colombian economy, and
particularly the
coffee industry, experienced sustained growth. GDP grew at
an
average annual rate of over 5 percent during this period,
supported
by an expanded labor force, increased labor productivity,
and
accelerated investment. Strong export earnings and a large
increase
in foreign exchange reserves were the most noticeable
results of
this economic expansion.
Despite the successes of the 1970s, the national
economy began
to flounder in the early 1980s. This was largely because
the global
recession that began in 1981 caused demand in external
markets to
fall precipitously.
The combination of domestic economic achievements in
the 1970s
and generous foreign aid, however, placed Colombia in a
relatively
favorable position to ride out the global recession,
especially in
comparison with other Latin American states. Drawing down
foreign
exchange reserves (20 percent in 1982 and 50 percent in
1983) to
compensate for both trade and national account imbalances
minimized
the financial and social consequences of the recession. In
contrast, other Latin American nations, facing similar
deficits,
borrowed heavily from both private financial and
multilateral
development institutions, which forced them to restrict
government
spending severely. In addition to the large foreign
reserves,
external assistance in the form of grants and concessional
loans
further relieved stress on Colombia's international and
domestic
finances. Throughout most of the 1980s, Colombia ranked
among the
leading recipients of
World Bank (see Glossary) loans, as
well as
direct assistance from the United States. Although this
aid allowed
Colombia to maintain a relatively higher rate of GDP
growth than
the rest of Latin America, aggregate production remained
depressed.
By the late 1980s, Colombia's short-term economic
outlook had
become more promising, in large part because of an unusual
confluence of circumstances that occurred in 1986. That
year, a
coffee production boom in Colombia coincided with a poor
harvest in
Brazil and rising international prices. The overall effect
was a
stronger national economy, which benefited most sectors
and
classes. GDP grew by 4.5 percent in 1987, thanks in part
to a
particularly strong contribution by the construction
industry. For
the near future, analysts predicted continued growth and
stability.
Nevertheless, Colombian planners advocated diversification
of the
economy to reduce its dependence on coffee, so that future
downswings in the industry would not have equally severe
consequences.
Data as of December 1988
|
