An overview of Colombia
Colombia is a constitutional country found in the northwestern part of South America. The country is bordered by Brazil and Venezuela to the east, Peru and Ecuador to the south and the Caribbean Sea to the north. The Muisca and the Quimbaya were the original inhabitants of Colombia. In 1499, the Spanish invaded the territory and colonized it up to the 19th century.
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During their reign, the Spaniards created the Viceroyalty of Peru. It was later in changed to the Viceroyalty Granada that comprised of a number of countries that are found in the northern part of South America. Bogota was the capital of Viceroyalty Granada. In the year 1819, Viceroyalty Granada got its independence from Spain. In 1830, the Republic of Granada was formed (Boix, 2003).
This country comprised of the present day Colombia and Panama. However, in 1903, Panama seceded from the coalition. This was after a long struggle of independence after the Republic of Colombia was declared in 1886 (Garcia, 2010).
Colombia is the first country to be declared an independent state in South America. The country has a strong history of politics that has affected the various sectors of its economy. The country is comprised of citizens of almost every race in the world. This has made it to have a rich culture and heritage.
This paper will therefore focus on the economic and political transition of Colombia since the world war. It will also concentrate on the impacts of these two factors (politics and economy) on the well-being of the country.
Economic Transition of Colombia since the Second World War
During its early days up to the end of the Second World War, Colombia had been experiencing a lot of transitions in its form of government. This has resulted to two great wars in the country, the war of a thousand days that occurred between 1899 and 1902 and La Violencia that occurred between 1948 and 1966 (Mendez, 2009).
Both these wars resulted to the loss of hundreds of thousands of lives and massive destruction of property. As a result, the economy of the country was greatly affected. The gross domestic product and the gross national product of the country declined. The wars also destabilized major sectors of the economy. Agriculture was one of the sectors of the economy that was greatly affected by the war.
During those days, agriculture was the major economic activity of Colombia. The export of coffee was the major foreign exchange earner of the country. La Violencia specifically hindered this economic activity. The economy of the country therefore declined between the 1950 and 1980s.
It was characterised by high rates of inflation and unemployment. The prices of goods and services were also relatively high. In addition, the gap between the rich and the poor was high.
The economy of Colombia had been highly regulated by the government since early 1950s up to early 1990s (Coppedge, 2005). During this time, the government had the control of most of the sectors of the economy. Private investment was only limited to a small portion of the economy. As a result, the government had the influence on market forces and controlled the prices of goods and services.
This in turn led to unfair competition between state owned and private corporations. Most state owned corporations enjoyed the monopolies that they had in their various markets. Due to lack of competition, the quality of goods or services that they offered was of a poor quality. The overall outcome was the decline in the status of the economy.
However, from the mid 1980s, massive economic reforms were initiated in the country. A number of policies and laws were enacted. These policies and laws aimed at improving the various sectors of the economy. They also aimed at reducing the rate of inflation and unemployment. The government improved the education and health system of the country.
In addition, it also boosted the aggregate output of most of the domestic industries of the country. This aimed at increasing the level of production in order to meet the internal and external demand of goods and services. Finally, Colombia encouraged foreign investment in the country.
The transition of Colombias economy from a regulated market to a free market begun in the early 1990s when the country was under the reign of president Cesar Gaviria (Coppedge, 2005). The president was responsible for enacting policies that would initiate economic liberalism in the country. These policies are still in place.
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Among the amendments that were made included; reduction of tariff rates, privatization of state owned companies, financial deregulation and improvements on the rates of exchange (Coppedge, 2005). These amendments aimed at making Colombia to gain economic stability.
With these amendments, most sectors of the economy were open to foreign investments. This therefore boosted their operation. These changes would make it easier for the country to meet its internal and external demand of goods and services because of increase in production.
At this time (during the early 1990s), the major problem that the majority of citizens in Colombia were facing was the high prices of food. To relieve this pressure from its citizen, the government of Colombia under the direction of the then finance minister, Rudolf Hommes, came up with a new policy (Coppedge, 2005).
According to this new policy, the state should increase the importation of agricultural commodities that it did not have the advantage of producing. This policy was known as Import Substitution Industrialization (Vanden and Prevost, 2011). This included production of commodities such as maize, wheat and cotton.
The government should then subsidize the prices of these commodities so that most of the citizens should be able to afford them. On the other hand, the country was supposed to increase the rates of exportation on the agricultural commodities that it had the advantage of producing. This policy is still being applied up to the present date. It has made food to be relatively cheaper for an average Colombian.
Foods would have been expensive for most of these individuals if trade restrictions on the importation and exportation of food products would have been restricted. This policy ensured that the country would not be depending on only one sector of the economy (Dependency Theory). It aimed at diversifying its factors of production (Vanden and Prevost, 2011).
During the reign of president, Cesar Gaviria, Colombia experienced a tremendous growth in its economy. The recorded rates of economic growth during his administration ranged within 4% and 5% per annum (Diamond, 2002). This was as a result of the implementation of the several policies that the president had initiated during his reign.
The administration of Ernesto Samper took power from president Gavira after the 1994 elections. Samper came up with new policies, which, he believed would improve the social welfare of the low-income earners in Colombia. These new policies, together with the ones that Gaviria had initiated were believed to further boost the status of Colombias economy.
These policies were well thought. However, their implementation led to increased public expenditure. This in turn broadened the fiscal deficit and increased public debt. This resulted to the decline in economic growth. The GDP of Colombia by the end of 1998 was 0.6%.
The unemployment rate also increased to 20%. As a result, Colombia fell into the greatest depression that it had ever faced since the 1980s in the beginning of 1999 (Feng and Paul, 2009). The repercussions of this depression were severe. It was characterised by high rates of inflation and decreased rates of economic growth. It took several years for the country to recover from this depression.
When president Arango took power in early 1998, the economy of the country was in turmoil. The country was facing a depression, its internal security was unstable and the rates of unemployment were high. This therefore meant that the gap between the rich and the poor was very high. In addition, the GDP had declined to as low as 0.6% (Diamond, 2002).
To stabilize the economy and the entire status of nation, the president implemented a number of policies. First, he controlled the value to the local currency by letting it to float. This stabilized the value of the peso.
In addition, the country entered into an agreement with the International Monetary Fund (IMF) to boost the budget and in return, the administration should implement national reforms that would stabilize the economy and improve the status of its citizens.
These strategies were successful. By the year 2000, Colombia had started to recover from the depression that it was facing. Despite the fact that the unemployment rate did not improve, the rate of economic growth increased. By the end of the year 2000, the GDP of Colombia had rises to 3.1% from 0.6% in 1999 (Diamond, 2002). Other sectors of the economy also grew.
The export sector was the main economic sector of the country. Initially, coffee used to be the main product that the country was exporting overseas. However, the variable prices of the product made the venture not to be as profitable as it used to be several years back. Instead, Colombia had a new product to export; petroleum.
Once in power, president Uribe came up with a several policies that aimed to improve the economy of the country much further. One of his main measures was to reduce the public deficit of the country to under 2.5% of the GDP within the first two years of his reign. In addition, he hopes to reduce the rates of inflation and unemployment and increase the GDP of the country.
Colombia has been experiencing a relatively stable economy in during the 21st century. This is as a result of the policies that were implemented by president Gavirio (1990-94), president Arango (1998-2002) and president Uribe (2002-2010).
At the present moment, Colombia is among the countries in South America that report the highest GDP. This is supported by the various sectors of its economy. This includes mineral and mining, agriculture, tourism and the service industry. the graph below shows Colombias GDP since 2001 (Diamond, 2002).
The economic stability that Colombia is experiencing is essential since it plays an important factor in attracting private investors into the market. This can be individuals within the country or foreigners. This strategy has been successful since the economy of Colombia is largely driven by private investors.
These individuals have invested in virtually every industry in the economy. Since the discovery of oil in 1986, many private investors have invested in the venture. By the year 2000, export on petroleum products had been the leading income earner for the country.
Other mining processes that have high rates of private investments include gold, emeralds and coal mining. In addition, there is also a lot of private investment in the service industry. The cell phone industry, to be in particular, has received a lot of support from foreign investors. The United States is the leading trading partner of Colombia. As a result, it is the country that has the highest number of foreign investors in Colombia.
Historical Process of Democratization in Colombia since the Second World War
Unlike many Latin American countries, Colombia has embraced democracy in its form of governance. The country has not experienced a lot of coup d’états, a characteristic of many South American countries. It had enjoyed civilian rule during much of its independence. Ever since it gained independence, Colombia has been governed by two main political parties: the Liberal Party and the Conservative Party.
These two parties have good different ideologies and different forms of governance. This has resulted to a lot of political pressure that has led to severe wars in the history of the country. There was a lot of tension between these two parties in the late 1940s.
Mariano Ospina Perez was the first president to be elected into office after the end of the Second World War. He was a candidate of the conservative party and was elected on a majority vote in the 1946 presidential elections (Vanden and Prevost, 2011). In his reign, he managed to increase the GDP of the country by bringing in a number of reformations into the economy of the country.
First, he increased the production and export of coffee. This was the main export of Colombia during the 20th century. He was also determined to improve the infrastructure of the country.
To achieve this, he built Ecopetrol, the Colombian petroleum company. He also constructed the Acerias Paz del Río which was the largest steel mill in the country. These investments aimed at improving the process of production in the country.
However, in the course of the campaigns for the next election, a lot of tension grew between the Liberal and Conservative parties. This tension grew even further after the assassination of Jorge Eliécer Gaitán, a leader of the Liberal Party in 1948 (Feng and Paul, 2009).
Massive riots throughout the country were the resultant effects of the assassination. This resulted to a war that led to the death of more than two hundred thousand individuals. This war was referred to as La Violencia (Feng and Paul, 2009).
In the course of the violence, the leaders of the Conservative and Liberal parties felt the need to improve the socio-political and economic status of the country. The leaders of these parties realised that it was the natives of the country who were suffering a lot as a result of the ongoing violence. The wars had led to massive destruction of property and loss of lives.
This has greatly destabilized the economy of the country due to the poor performance of the various sectors of the economy and a rapid increase in the rate of unemployment. As a result, the two parties agreed to share power in a forum known as the National Front in 1958 (Vanden and Prevost, 2011).
According to this new system, each political side will have a chance to rule the nation for four years (one political term) and give room for the other party to rule in the next four years. This agreement was to last for 16 years. Despite the efforts that these parties put to improve the status of the country, the citizens of Colombia still continued to face a lot of problems.
However, some individuals felt that the National Front was not democratic. This is because the individuals who became presidents were candidates chosen by their political parties and not by the majority vote. As a result, they ruled to serve their personal interest and those of their parties rather than the entire nation.
These allegations led to the formation of guerrilla and paramilitary groups that were against the government and the political system that were in place. FARC, M-19 and ELN are examples of guerrilla groups that were created. These groups still have influence over some parts of Colombia up to the present moment. They are responsible for organised crime in the city. In the late 1970s, the influence of drug cartels could also be felt.
Powerful individuals who were able to control the political and justice system ran these cartels. The Medellin Cartel that was under the control of Pablo Escobar was had a lot of influence in Colombia. With the influence he had, Escobar was able to control the manner in which individuals voted.
He even had control over the justice system. In 1991, he managed to influence the Constitutional Assembly to vote against the extradition of drug cartels to the United States for trial (Feng and Paul, 2009). Two years earlier, Pablo Escobar thugs shot dead Luis Galan who was running for the presidency of Colombia. Galans main aim if voted the into office was to expel drug cartels out of Colombia.
However, the government of Colombia worked hard to ensure that the country is run in a democratic Manner. In 1991, it enacted a new constitution that respected human rights. The constitution was later amended to allow the extradition of drug cartels overseas where they will have minimal control of the justice system.
The government also applied a lot of pressure on the guerrilla and paramilitary groups especially during the reign of President Alvaro Uribe (Mendez, 2009). All these factors increased the economic stability and internal peace of the country.
The Relationship between the Economy and Democracy
The economy and democracy have a direct relationship with one another. The political stability of a country plays a critical role in the determination its economic stability. Political instability may lead to increased rates of corruption, oppression and violence.
As a result, individuals will not be able to work or they will fear to invest in such countries. This in turn reduces the rate of economic growth, increases inflation and the rates of unemployment. In Colombia, this was experience during La Violencia.
Democracy is an essential factor in the determination of economic growth and development of a country. In Colombia, high levels of democracy have been witnessed after 1990. It is also during this time that the nation has experienced a lot of growth and development in the various sectors of the economy. The government together with private investors have increased the viability of the economy.
On the other hand, the opposition is always watching every move of the government, criticizing its shortcomings. Due to this fact, the operations of the government tend to be effective and efficient. With this trend, Colombia stands a high chance of having a bright political and economic future. All these factors therefore have increased the socio-economic and political stability of the state.
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Garcia, M. (2010). A Theory of Political Transitions. The American Economic Review, 91 (4):938–63.
Coppedge, M. (2005). Explaining Democratic Deterioration in Colombia Through Nested Inference. Cambridge:Cambridge University Press, 289–316.
Diamond, L. (2002). Economic Development and Democracy Reconsidered. Newbury Park: SAGE, 93–139.
Feng, Y. and Paul J. Z. (2009). The Determinants of Democratic Transitions. Journal of Conflict Resolution 43 (2):162–77.
Mendez, R. (2009). Endogenous Democratization. World Politics 55 (4):517–549.
Vanden, H and Prevost, G. (2011). Politics of Latin America: The Power Game. Oxford: Oxford University Press