Institutions and Development in Colombia

Transcription

1 Institutions and Development in Colombia Congreso Colombiana de la Construcción: Productividad y Sostenibilidad. James A. Robinson University of Chicago Cartagena de Indias, June 8, 2018 Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

2 Introduction Introduction There are a few clear facts about Colombian economic development Colombia is relatively poorer now compared to high-income countries than it was 170 years ago (according to the calculations of Salvador Camacho Roldán) though the gap has been stable for 120 years. This has coincided with a large absolute divergence in living standards The likely explanation for this are important institutional failures which have undermined the incentives and opportunities of most Colombians Nevertheless, there has been (slow!) progress (on education, poverty reduction, the expansion of healthcare). But these improvements have been a consequences of changes that have been reactive - Colombia needs to be proactive! Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

3 The Facts This Lecture I shall start by reminding you of some of the facts about the economic development of Colombia. Then I shall argue that it is institutional problems that explain this comparative pattern. I shall try to reconcile the institutional problems with the improvements that have occurred. I shall conclude by asking where does Colombia go now and now that it has joined the OECD how can it really make the transition to being a developed country with the sort of living standards for its ordinary people enjoyed by north America. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

4 The Colombian Relative Divergence

5 The Absolute Divergence

6 Explanations The Colombian Divergence A story of lack of productivity Why has Colombia experienced such relatively poor economic performance? Economists typically de-compose changes in income per-capita into changes in the adoption or innovation of technology investments in human capital (education) investment in both private and public (e.g. infrastructure) capital It is increments in these factors that leads to increases in productivity. Productivity response to changes in incentives and opportunities and as a direct result of public policy. Let me start with public policy and public investment... Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

7 Explanations Public Policy The story of the road to Mocoa... In 1582 a Fray Jerónimo de Escobar noted This town is next to the mountains, far away from the road, so that it is a great travail to enter. Said town of Agreda (Mocoa), is not growing, it scares people away. There is no way to communicate and with the gold being extracted there, which can reach twenty-three carat gold worth some ten thousand pesos annually, with this they live and have a priest and a clerk, everyone having a miserable life. By 1850 a Prefect of the Territorio de Caquetá noted The journey from Pasto to this city [Mocoa] is gruelling, often bumping into horrifying places. Those of thin build travel on the back [of] Indians in a ridiculous, extravagant, and painful position; fastened with bale-rope and tied like pigs. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

8 Explanations The Proposal for the Road Public Policy Rafael Reyes, before becoming a soldier and President of Colombia in 1904 had a business partnership with his brothers who did extensive investigations in Amazonia with an eye to exploiting rubber and quinine. They crossed from Pasto to the Amazon. In his Memorias Reyes noted Those virgin and unknown forests, those immense spaces, fascinated and attracted me to explore them, to traverse them and... to open roads for the progress and welfare of my country; those forests were absolutely unknown to the inhabitants of the cordillera, and the idea to penetrate them terri ed me since the popular imagination populated them with wild beats and monsters, besides the numerous savage cannibals found there. In 1875 Los Hermanos Reyes proposed the construction of a road from Pasto to Mocoa. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

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10 Explanations Public Policy The Plan for the Road Once president in 1906 Reyes authorized through the newly created Ministry of Public works that an engineering study be made of potential routes. An engineer Miguel Triana was given the contract with an expectation that he would proceed to lay out the road. He did they survey... In 1908 a new contract was given to Victor Triana, but by 1909 the new project was abandoned for lack of funds. In 1909 at their urging the national government decided to put the Capuchin priests of the Sibundoy Valley in charge of construction, with the Governor of Nariño in charge of the money. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

11 The Capuchins Explanations Public Policy With the aid of a lot of semi-coerced indigenous labor the Capuchins nished the 120km road from Pasto to Mocoa in 1912, but only after an attack by Peruvian soldiers on a Colombian military garrison at La Pedrera on the Caquetá river induced the national government to provide 36,000 pesos. It took until 1931 to reach Puerto Asís. But by the end of 1912 the road was in a bad state: a Commissioner Joaquín Escandón wrote to the Minister of Government that Regarding the state of the road from Pasto to this place [Mocoa].. most of the road has su ered damages due to collapsing of slopes and platforms and destruction of palisades in the at and swampy areas, to the point that the tra c, eve for pedestrian travellers, is now extremely di cult. An engineer reported that there were serious problems with the road design and construction. For example, the bridges were poorly built and the road width inadequate for tra c needs. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

12 Explanations Public Policy Start Again, Fail Again In 1915 the national government put out a public tender to repair the road and nish the part to Puerto Asís. In December 1917 the government canceled the contract because the contractor had not met his obligations. The government put it back in the hands of the Capuchins. A telegram to the Ministry of Public works from Mocoa in June 1919 read National road totally abandoned. From here to San Francisco thirty landslides; from here to Umbria, all bridges destroyed. In 1924 the road was taken away from the Capuchins again due to unsatisfactory execution of works and a contract given to an engineer in Pasto. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

13 Explanations Public Policy Perú to the Rescue? In 1932 a border con ict started with Perú which led the Colombian government to label the road a national defense road and allocate 120,000 pesos to maintain and expand it. An engineer s evaluation of the state of the road was that it was little less than an eyesore. But even this didn t get the road extended from a trocha. As early as 1925 a national law decreed the upgrading of the rst 25km of the road out of Pasto to a carreteable (motor road). In 1929 the government removed the funding with 5km built. In 1931 in Law 88 the road was incorporated into the national road network which involved making it motorable to Puerto Asís. The gravel road reached there in November 1957! Of 18,500kms of roads in 1945 only 613 km (none paved) were in the Intendencias or Comisarias Especiales, the peripheral territories that made up 3/4 of Colombia s territory. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

14 The Trampoline of Death Explanations Public Policy In 1942 an engineer evaluated the section between San Francisco and Mocoa, noting The condition of this section, especially regarding road width, curvature and drainage works... constitute a threat to the lives of those travelling there. El Tiempo reported in 1991 The entire road to the Putumayo is horrifying. The drivers that cross it daily call it the road of death. It was built during the con ict with Peru, way back in It looks more like a trocha. Moreover, travellers are constantly threatened by guerilla. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

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16 The Saga Continues Explanations Public Policy Then there was President Uribe s Integration of the Regional Infrastructure of South America plan of 2005 (by km had been built and the work was suspended because of lack of funds). There are serious tra c restrictions on the section of road (78km) between San Francisco and Mocoa (capital of Putumayo) built in the 1930s, which has long 4-metre wide stretches where only one vehicle can pass, high gradients, unstable areas, constant cloudiness, and sharp cli s, making this one of the roads with the highest accident rates in the country (IADB, 2009). Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

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18 Explanations Public Policy The Failure to Invest The saga of the road to Mocoa is one of many in Colombia (like the roads to Buenaventura, Quibdó..). It is related to a broader phenomenon of the absence of the state and e ective state authority from large parts of the country. It is good to point out that income per-capita in Colombia isn t just low, it is a lot lower in some places (like Putumayo or Chocó) than others. Poverty and underdevelopment in Colombia has a clear regional dimension with a distinct relatively rich core and (relatively poor) periphery. This pattern has been very persistent historically since the colonial period. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

19 Distribution of % of Population above the Poverty Line Fraction % of Population above the Poverty Line

20 Distribution of Secondary Enrollment Rate Fraction % Secondary Enrollment Rate

21 Figures and Tables Figure 4 Unfulfilled Basic Needs 1993 vs (5,10] (10,30] (30,50] (50,70] (70,90] >90 Missing Andes (Andes) JR Paper August 2, / 26.

22 Explanations The Importance of Infrastructure Public Policy One way of seeing what a critical problem this is, is to note that before the British Industrial Revolution there was an infrastructural revolution. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

23 The Spread of the Canal System Source: Daunton, Martin J. (1995) Progress and Poverty: An Economic and Social History of Britain, , New York: Oxford University Press. p. 292.

24 Canals in 1830 Source: Daunton, Martin J. (1995) Progress and Poverty: An Economic and Social History of Britain, , New York: Oxford University Press. p. 293.

25 Turnpike Roads in 1720 Source: Daunton, Martin J. (1995) Progress and Poverty: An Economic and Social History of Britain, , New York: Oxford University Press. p. 300.

26 Turnpike Roads in 1740 Source: Daunton, Martin J. (1995) Progress and Poverty: An Economic and Social History of Britain, , New York: Oxford University Press. p. 301.

27 Turnpike Roads in 1770 Source: Daunton, Martin J. (1995) Progress and Poverty: An Economic and Social History of Britain, , New York: Oxford University Press. p. 303.

28 The Upsurge in Patenting Source: MacLeod, Christine (1988) Inventing the Industrial Revolution: The English Patent System , New York: Camridge University Press. p. 146.

29 Explanations Public Policy Problems with Incentives Basic for incentives to develop are having well de ned and enforced property rights. One of the most basic intuitions in economics is that people will not invest if the returns on their e orts are not secure. Yet a large proportion of people in Colombia only have informal title to their property Colombia has experienced massive insecurity of property (and human!) rights the judicial system works worse in exactly the places where property rights are ill-de ned and insecure, where the state is absent and where poverty is highest. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

30 Figures and Tables Figure 7 Extent of informality of property rights Proportion of land without property registration [0.0,3.9] (3.9,7.2] (7.2,11.8] (11.8,19.1] (19.1,39.1] (39.1,100.0] Missing Source: IGAC Andes (Andes) JR Paper August 2, / 26

31 Figures and Tables Figure 6 Displacement Rate (average ) Displaced people per 100,000 inhabitants [1,55] (55,153] (153,361] (361,806] (806,2099] (2099,32980] Missing Source: Unidad de Victimas Andes (Andes) JR Paper August 2, / 26

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33 Explanations The absence of the Rule of Law Public Policy Brigard y Urrutia: From the interview on La W radio station. A journalist asked a lawyer from Brigard and Urrutia The question is: did you have to stretch the law so you could buy and keep the land? Brigard and Urrutia: The law is there to be interpreted. Here they are not white or black, they are there to be interpreted...we assumed one which we think is correct (interpretation of the law). Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

34 The Source of the Problems Why the Institutional Problems? Why has the Colombian state failed to invest in basic infrastructure, education (coming soon)? Why has it not properly de ned property rights in large parts of the country or created e ective institutions (for example, judicial) to guarantee their security? Lack of resources; Colombia has been a very low tax country by comparative contexts (something like Ghana or Benin in West Africa) and Colombian governments have never (until very recently - coming..) being prepared to raise taxes to provide public goods. Related to the core periphery structure; the core dominates politics, has no interest in investing in the core and elites can self-provide many public goods (security, education, healthcare). All of this rests on a fundamental lack of accountability and public pressure to provide public goods and improve institutions (related today to clientelism and the fragmented nature of identities) Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

35 The underfinanced Colombian state

36 Colombia turns a Corner? Improvements But despite the relative position and the challenges there have been important economic improvements in Colombia as I will now document. Where did they come from? improvement in the resource base of the state and decentralization of resources to the periphery expansion of education since the late 1950s expansion of the coverage of the health care system since the 1990s pro-poor conditional cash transfer programs since the 2000s These changes were primarily driven by the political instability created by the nature of Colombian under-development rebuilding after La Violencia the struggle against the guerilla and narcotra cantes led to decentralization and the 1991 Constitution Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

37 Figures and Tables Figure 2 Poor People by Unfulfilled Basic Needs and Income Proportion of total population Proportion of total population year Pov. by NBI (Londoño, 1997) Pov. by Income (DANE) Pov. by NBI (DANE) Extreme Pov. by Income (DANE) Source: Londoño, Brechas sociales en Colombia Andes (Andes) JR Paper August 2, / 26

38 Figures and Tables Figure 2 Human Development Index Colombia in Latin America Colombia Mexico Brazil Argentina Chile Source: United Nations Development Programme (UNDP). The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions: health (life expectancy at birth), education (mean of years of schooling for adults aged 25 years and expected years of schooling) and standard of living (gross national income per capita). More info Andes (Andes) JR Paper August 2, / 26

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41 The Right to Health Colombia turns a Corner? Article 49. Public health and environmental protection are public services for which the state is responsible. All individuals are guaranteed access to services that promote, protect, and rehabilitate public health.. Every individual has the right to have access to the integral care of his/her health and that of his/her community. Derecho de Tutela - Ruling T-760 of the Congressional Court in 2008 that equalized health coverage. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

42 Colombia turns a Corner? Narrowing the Gap Unfortunately these reactive changes, though they have brought improvements in living standards, have not managed to narrow the relative gap between Colombia and developed countries. What is needed now is more proactive changes with a real strategy to improve institutions. What Colombian history shows is that this is not a technocratic problem; it is a political one. But I see real changes in Colombian society in a direction which will push for more public goods and better institutions. The role of the private sector is critical. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

43 Colombia turns a Corner? What People complain about in Colombia The data collected by CINEP gives us an excellent way to examine the impact of the 1991 Constitution, particularly the notions of rights that were put into it. The evidence suggests that this did indeed have the impact of changing the way that people protest and in a much less clientelistic direction. Asking for your rights is not clientelistic. Robinson (University of Chicago) Institutions and Development in Colombia Cartagena de Indias, June 8, / 21

44 Share of protests broader than municipal Colombia Share of protests year

45 Share of protests about civil rights or state policy Colombia Share of reasons year_m

46 Share of protests about civil rights or state policy Colombia Share of reasons year_m