Volume 44, Number 174,
July-September 2013
Colombia: Commercial Integration
and Trade Imbalances in the Pacific Basin
Jaime Torres
DETERIORATING PRODUCTIVITY IN LATIN AMERICA VS. THE EXPORT MINING SECTOR ( ...continuation )

Additionally, proven oil reserves have grown very slowly with respect to the speed of production. In 2001, reserves were 1.842 billion barrels, and in 2011, they had scarcely grown to 2.259 billion, or an annual growth of 2.1%.16 During the same period, production grew at 4.2% a year and in 2011, 915,000 barrels were extracted per day, indicating that at this rhythm of production, current proven reserves would be exhausted in just over six years (the relation of reserves/production is 6.8). In other words, the growing export speed is very unsustainable.

Time for Another State Industrial Policy?

The economic development model of Colombia in place since the 1950s has favored industrial development, but has also contributed to increasing the concentration of business ownership and higher extraction of income with low stimulus for international efficiency and competitiveness. At the beginning of the 1990s, this model morphed into “internationalization and free markets,” leading to a rapid abandonment of State industrial policy and reduced share of industry in national gdp. Lower industrial dynamics obliged investors to readjust their participation of production factors in each company, with capital increases favored to the detriment of employment levels. This dynamic produced more productive companies with lower linkage to sectors (Bonilla, 2011). The limits of the current national development model are clear in low business competitiveness, such as the cases analyzed regarding trade with countries of the Asian Pacific — with the exception of mining/energy product extractors — where the argument of comparative advantages due to low local salaries does not play a role, and productivity, technological innovation, aggressive international trade and the development of strong productive clusters play a major role. Authors from the German Institute for Development Policy (Altenburg, 2011: 1-4) have proposed the following:

Industrial policy is once again on the agenda [...] The question is not whether or not to adopt industrial policies, but rather, more practically, how they should be designed and implemented more effectively [...]. Given the competitive disadvantage of nations that have recently entered global commerce, it is difficult to imagine implementing a virtuous cycle of productivity that does not include a government to build a consensus on the national development project, in order to stimulate business entrepreneurship and technical capacities. This would help build confidence among producers and reform a series of formal and informal institutions [...]. The evidence would suggest that countries can improve their industrial policies by “learning while doing.” Policy decisions are therefore even more important than the initial level of administrative capacity.

Industrial policies in medium to low-income countries must include Altenburg’s ideas among their objectives: 1) emphasize technological absorption instead of developing cutting-edge technology, 2) encourage adoption of policies for innovative business entrepreneurship, 3) prioritize jobs and income for the poor population and a friendly investment environment that also protects living conditions for that population, 4) create effective government programs and horizontal social control that avoids industrial policy being taken over by lobbying groups and 5) negotiate global trade agreements on an individual basis that avoid limitations that industrialized nations do not have and which might hinder development.

This type of argument is even more important in countries with strong income gaps — like in Latin America — where the differences between modern and competitive companies and micro, small and medium-sized enterprises grow on a daily basis. State leadership will be key to attain a national project that combines private and public efforts to establish effective industrial policy, which could be financed with the product of taxes on mining or energy exports. A first step has been taken in Colombia with “Law No. 1530 on Royalties,” effective May 22, 2012, by the President of the Republic. In its first year (2013), it will allocate 10% of mining royalties to projects on technology innovation (nearly 900 million dollars), as well as 7.3 billion dollars, approximately, for regional development projects (Portafolio, 2012). However, just having the funds will not be enough. There must be strong leadership committed to creating industries with policies that encourage technology absorption, qualified labor and greater participation in local and foreign markets. State commitment to a new development model will be demonstrated if it ensures that these new resources resulting from mining and export wealth are allocated for the creation of industry and not to traditional political corruption.

16 http:222.anh.gov.co/es/index.php?id=8 National Hydrocarbon Agency of Colombia — figures and statistics for 2012. The World Fact Book of the CIA points to lower proven reserves of 1.900 billion barrels.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 192, January-March is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Alicia Girón González. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: Feb 23th, 2018.
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