Colombia and the Economic Premium of Peace
Written by Roger Santos
The case study, “Colombia and the Economic Premium of Peace”, facilitated by Professor Richard H.K. Vietor during the “Re-imagining Leadership in the Age of Disruption” conference held at the Shangri-La Hotel Makati last August 7 and 8, 2017 was about competitive strategy, conflict, economic development, government, international business, labor, negotiations, and productivity.
Over the past 50 years, the dominance of the guerilla factions challenged the development of Colombia’s major infrastructure projects, fostered corruption, and deterred foreign investment.
Despite these limiting factors, Colombia’s economy has been growing at 4.8% annually, for a decade. Its economic outlook is being helped by a young, hard-working population and good macroeconomic management.
There are many reasons to be optimistic about Colombia’s future upon signing a treaty with the Revolutionary Armed Forces of Colombia (FARC). The peace agreement with the FARC and the structural tax reform are important milestones that will reduce uncertainty and set the stage for a favorable outlook. With its strong policy framework and fundamentals, Colombia continues its remarkably smooth adjustment to a combination of external and domestic shocks.
The peace agreement with the FARC would cement huge security gains made over the past decade and is likely to attract increasing amounts of investment in Colombia. The agriculture and construction sectors stand to benefit the most from the peace deal, which is also expected to, generally, contribute more to the diversification of exports. Improved security and robust economic growth will also aid in poverty reduction, particularly in urban areas.
It seems that Colombia is far better today than it was several years ago. As they worked towards achieving peace, they strengthened their economy and dramatically reduced poverty. Colombia is now better equipped to confront the challenges of the future and benefit from its opportunities.
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