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The Colombian economy has experienced reasonable economic growth since the major reform efforts of the early 1990s. However, the growth witnessed during this period can best be characterized as slower and more volatile than growth prior to 1980. The Colombian economy also has experienced a significant restructuring, characterized by greater integration into the world economy, growing importance of oil and mining exports and of mining and services in GDP. In addition, Colombia has experience larger private sector participation in economic activity but also larger state spending, particularly in social services. As of 2013, Colombia faces various challenges associated with managing an uncertain international economic environment and reversing adverse long-term trends, notably high domestic inequalities and the weakening of its manufacturing and agricultural sectors. Even more importantly, it must reform its economic and social policies to implement the outcome of the ongoing peace process.
This article analyzes how the interaction between domestic and external factors has affected the Colombian economy over the past decades and derives from that analysis the major challenges that the Colombian economy faces today. It is divided in five sections. The first briefly summarizes the major domestic and external factors affecting the economy. The second examines what I will refer to as the “dual-track” reform agenda that the country has followed since the early 1990s. The third and fourth analyze in detail the macroeconomic performance and the evolution of economic structure. Some social outcomes are discussed in the second and third sections, but this is not the central focus of this essay, as this issue is considered in other chapters in this volume. The last section highlights the major challenges that Colombia faces. Several comparisons are made throughout the paper with Latin America, mainly based on data from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), which is simply referred to as ECLAC data.