COLOMBIA

Communist Party of Colombia (M-L)

Grim picture of the Colombian economy

As part of the complex and turbulent international situation, elements of the general crisis of capitalism in Colombia are revealed, including fictions about the bases and sustainability of certain periods of GDP growth, marked by certain currents of anti-capitalist opinion since the crisis of recession of the capitalist world that began in late 2007.

Today life has shown the truth with the notorious fiscal deficit and the increase in the destabilizing factors such as the growth of the foreign debt and its high interest, the growing imbalance of trade, the decline in investment, the unemployment, the very low incomes and wages, the crisis in the countryside, the serious problems of industry and the relationship of all these elements with the implementation of the Free Trade Agreement and the Pacific Alliance. We will show how the above are part of the grim picture of the world economy.

The ups and downs of the Colombian economy

The economic information given out by the government, banks, institutions and many international organizations keep insisting on and presenting as a great example the positive results achieved by the government in economic growth, control of inflation, growth of employment, balance of public finances and reduction of poverty. The majority of the economic reports highlight the good performance of the national economy, even placing it after Brazil and Mexico as the third largest economy in Latin America.¹

In the political landscape it is obvious and almost insane to say otherwise when the majority of the analyses are based on government statistics certified by the big banks and intergovernmental organizations. With the publicity and intense idyllic discourse of bourgeois and neoliberal analysts everything seems true, but facts are stubborn things and with the same errors and fictions that government statistics present one can show the opposite.

The boom in dollars and its effects

It is no secret that over the last 10 years the amount of Foreign Direct Investment (FDI) coming into the country is greatly modifying the structure and profile of the Colombian economy. Without agreeing about its productive centers, today in the international arena Colombia is following a neoliberal and extractive model that places it among the leading producers of raw materials in the world.

To point out the major implications of this new orientation of the Colombian economy, it is enough to note what is surprising about these figures. According to the Bank of the Republic, during the last decade including the first quarter of 2014, the country reached a FDI of US $131,939 million. This means that in the last decade, Colombia has had an annual average FDI of US $12,700 million, almost unmatched among the other Latin American economies.²

Now, if we look at the figures for FDI that have already been agreed upon for the next four years, which reach US $40,000 million, we can foresee the continuation of this model for quite a long period in the country.

The serious problem with all these investments is that they are channeled into the extraction of the most varied natural resources, mainly gold, oil and coal. With all the favors and guarantees that the big multinationals receive from the state, there is no doubt that Colombia at the dawn of the 21st century is suffering the consequences of the most terrible exploitation and plunder of its natural resources ever.

With all this boom of dollars coming into the country and increasing the mining activity, it is not surprising that the growth of the Colombian economy in recent years has appeared among the highest in Latin America. But the instability continues to increase if we consider that Colombia is a backward and dependent capitalist country, which in these years has maintained an open economy, inserted into a galloping process of globalization that does not allow it to get rid of the deep problems and conflicts that occur on the international economic and political level.

In the international context of economic and political crisis and instability, the big problem that is beginning to confront the country’s economy and with it the entire driving force of energy mining, is that the revenues and profits are beginning to weaken on account of the fall in the international prices of both oil and coal, as well as the weaker demand for raw materials today from the advanced countries, mainly China and Europe mired in a slowdown that is tending to deepen.

Under these conditions the new model is beginning to founder, the balloon that all sectors applauded and bet on with special veneration is beginning to lose air. Most bourgeois analysts who are pondering over the overheating are beginning to make new recommendations to address the fall and not perish at the first shock. Faced with this new economic picture that is beginning to take shape at the international level, the Colombian bourgeoisie and government are beginning to show signs of despair, but as history has shown, no measure can be taken without consulting the determinations and commandments that its bigger partner, “the master to the North,” imposes.

Indeed, further setbacks affect not only the Colombian bourgeoisie and the government, they also affect the profitability of the investments made by finance capital and the monopoly groups; thus the effort that they jointly made is understandable in order to not lose anything and secure the maximum profit. Still for the ruling classes in the country this means a greater subservience and dependence on US imperialism.

As in other Latin American countries, the dilemmas of the Colombian state is quite large and complex, first because the disasters left by the boom of dollars coming into the country will still have to be dealt with and followed by taking steps to address the revaluation of the peso, the decrease in savings, the cheapening of imports, the increase in consumption, the reduction of national exports and resorting to subsidies for those sectors affected by competition and the weakening of the productive apparatus.

Second, because the prospect of a decline in investment and the weakening of the prices of oil, coal and other raw materials, as well as the major imbalances in the balance of payments imply decreased revenue for the state and government. In this perspective the danger is great since the “recommendations” that international banking is now making call for the approval of the structural reforms that would ensure both increased revenues which the Colombian State and the government need as well as the profits that large companies and international monopolies supposedly will no longer receive.

Third, because the measures taken by the U.S. Federal Reserve system proclaiming the dismantling of the policy of the QE³ [Quantitative Easing], aimed at recovering the productive investment and activity of the US, make Colombia and other Latin American countries defenseless and without a clear orientation, because the imminent withdrawal of dollars from our countries – and particularly from Colombia – involves taking measures to retain them; in other words, the Colombian government forced to cede is obliged to maintain the quantity of foreign direct investment providing greater guarantees to foreign capital.⁴ Now, if we take into account the fact that the new US policy implies also facing the trend towards a greater reduction in current account deficit,⁵ the situation is complicated because any measure taken in this regard by the Colombian State will involve, among other things, a rise in inflation, devaluation of the exchange rate and thus a drop in real wages.

The balance of trade and the Free Trade Agreements (FTAs)

Another major problem of the dilemma is the deterioration that has taken place in the balance of trade. To show a little of the situation it is enough to note that in 2007, according to DANE [National Administrative Department of Statistics], Colombian exports reached a value of US $333,000 million, realizing a positive balance of trade of US $12,421 million. In 2013 this positive figure fell to US $2,202 million, and in July 2014 Colombia had a negative balance of trade of US $1,913 million. The FTAs signed by Colombia are unconvincing when what remains is the growth of imports and therefore the deterioration of the national productive apparatus.

The figures simply illustrate the frank deterioration in the export of manufactured goods, the dramatic fall in the Colombian automotive industry,⁶ the shrinking export of value added products, and the strong dependence on exports of fuels and the mining sector. In the figures for non-traditional exports there is no consistency and they rise and fall very irregularly from one year to another.

In regard to the FTA⁷ it is worth noting the serious repercussions that are taking place. Many of the protections and safeguards that were adopted in the past to protect the production and prices have been broken by the numerous economic agreements that have been signed. It is a fact that both signatories of the FTA prefer to purchase products in countries with lower tariffs, but the stimuli and agreements, whatever differences may exist, accentuate the disadvantages of Colombia with the regard to the United States. It is enough to point out the data on exports of the first year of implementation of the FTA with the US. Exports fell 14% and the trade balance with the US fell from US $7,600 million to US $2,800 million. According to the DANE, in July of 2014 Colombia’s trade balance with the US changed again and has a negative balance of US $2,275 million. We can state that with the signing of the FTA with the US a new trend has begun in the country’s economic performance that greatly deepens the dependence of Colombia on the US.

With regard to the Pacific Alliance, unlike what many analysts say, there will also be no solution to this problem of exports, because the agreement is based on the same paradigm of the free market. Basically, what is becoming evident is the beginning of an economic and political strategy by the countries that signed this agreement aimed at reducing the possibilities of the MERCOSUR [Common Market of the South] and ALBA [Bolivarian Alliance for the Peoples of Our America], to revive the expansionist project of the Free Trade Area of the Americas, strengthening the US presence and dependence in these countries.

We emphasize that the position of Colombia in the FTA and now in the Pacific Alliance is quite similar to that of the peripheral countries of Europe if we look at all the plans of the European Common Market and the European Union. With such a stubborn implementation of the free market economic policy, it is more than obvious that the country can sustain the competition imposed by globalization only by lowering wages, thus further exacerbating the distribution of income.

A growth induced by a bubble

Turning to production, the economic growth achieved in recent years has been remarkable. For 2012 and 2013 respectively, a GDP growth of 4.0% and 4.3% was recorded. For 2014 the government forecasts are for a growth of 4.4% of GDP, although there are some who say that if the national economy grew by 6.4% in the first quarter and by 4.3% in the second half, the country’s growth this year will exceed 5.5%. But the concern again is evident and is related to the instability suffered in the external sector, and especially by the reduction in prices of the raw materials, oil and coal,⁸ which obviously is complicated with the fall in production. For example, the figures from the DANE speak of a decrease in crude oil production of 1.5%,⁹ no new findings have been announced and there have been constant complaints of a fall in reserves.¹⁰

As for production, the other major concern remains the state of industry and agriculture, due first to the substantial changes that are taking place within each of these sectors, and second to the effects of the FTAs and other economic agreements signed by the Colombian government. Therefore, we agree with some analysts who argue that we are facing the effects of a growth induced by a bubble, which fills the national economy with instability.

The results are clear, in 2012 manufacturing industry shrunk by 1% and in 2013 by 1.2%. So far in 2014, the sector did not rebound and still fails to show a trend of recovery and growth.¹¹ In the first half of the year, manufacturing industry achieved a growth of 0.9% compared with the same period of last year. In the analysis of this sector there is definitely not much to talk about. The economic sub-sectors that have seen any growth are those that have received a stimulus from growth in domestic consumption and are characterized by being little tradable, typical of a domestic economy with little production of capital goods. These are clothing, drinks, electrical supplies, sugar refining, brown sugar, paper and cardboard, coffee products and transport equipment. It is striking that in a country like ours, for the first half of the year, compared to the same period last year, oil refining has shrunk by 8.8%, with 2 refineries and oil production of over one million barrels per day. In reality oil is being exported unrefined and is returned to us as gasoline for which we pay international prices.

In the agricultural and livestock sector, growth in 2012 was 2.5%, in 2013 it rose to 5.2%, and in the first half of this year growth was 3.8%, figures that, if one looks at them superficially, do not indicate an economic slowdown or recession. Actually what is happening is the trend towards specialization in this sector of the production and export of agro-fuels, coffee, banana and flowers, and to a lesser degree temporary crops (vegetables). Sub-sectors such as poultry, forestry and fish farming are losing strength, among other reasons because of the smuggling that has been growing throughout the country. More precisely, while the peasant economy is going bankrupt accompanied by food insufficiency, the financial institutions with their tentacles linked to agriculture are doing what they please by exploiting the comparative advantages that they have in Colombia.

One sector that is notable for its emergence and degree of influence in the Colombian economy is the construction industry. Its growth is due largely to the construction of large civil engineering works and public housing. According to the DANE figures, comparing the value added in this sector between January and June of 2014 with the same period in 2013, this sector grew by 14.2%. For the construction of roads, ports, as well as housing programs that are moving forward in both the public and private sector, the perspective is for further growth.

Looking at it this way we can summarize that the economic model of foreign investment and free trade that makes up the production profile is sinking, and this is the biggest proof we have of the failure of the economic policy of the government. At this stage of the game it is clear that the engines of the Colombian economy are mining and construction. But nothing is certain, as needs of capital are greater and, as we have explained, the revaluation and the FTAs are ruining the limited progress achieved in industry and agriculture.

The other thing is that although the FDI is assured in the coming years, this is not sufficient guarantee of the growth of reserves and production of oil since there are more and more factors such as the decline in exports, the informal sector and the reduction of workers’ income that are slowing down the Colombian economy. Furthermore our analysis corroborates the present announcement of the fall in the GDP and a fiscal deficit of about 13 billion, as well as the absence of the same amount for costs that would have to be added to the current costs to pay for the much touted “post-conflict”. A tax reform has been announced with more direct taxes for the poor, with great political and social effects that complicate the work the Santos government.

The Trojan horse of the external debt

Another element to be clarified on this point includes the external debt. According to figures from the Bank of the Republic, in the third month of 2014 Colombia’s foreign obligations reached US $94,620 million, registering an annual growth of 15.9% and accounting for 23.9% of GDP. According to these figures, Colombia’s external debt rose to 2.3% of the GDP compared with the same month of 2013. According to these figures, the growth is explained by the increase in long-term debt (17%) and to a lesser degree by the short-term debt (9%). The external debt is mainly concentrated in bank loans (US $47,515 million) and bonds (US $37,589 million). According to data, the public sector debt grew by US $7,421 million (16%) while external debt in the private sector showed an increase of US $5,547 million (15.8%).

Trying to make sense of these data, although many analysts do not see the external debt as a danger but a situation under control, we cannot ignore the fact that compared to income and with all the efforts to pay it off, the Colombian external debt is quite high and represents a decrease in domestic product. Now, there are many implications of the growth of the external debt; of all of these we shall note that one serious matter affecting sovereignty is the subjection for over a decade of the State and the national economy to the adjustment program which the international banks dictate. This limits the development, income and salaries, the social investment and the general living standard of all Colombians.

The labor market and its inconsistent data

Faced with this issue, it is important to note that according to DANE statistics in July 2014 the percentage of the population of working age that is employed was 57.6% in the country, making a total of 21,241,000 employed people. By sectors of industry, construction, services and real estate activities produce the largest number of jobs. The mining sector, despite its high share of the GDP, creates less employment. Inactive workers reached 13,432,000 people.

Undoubtedly, these figures are very dry if we do not put them in context and with them and others we perform an exercise that allows us to clearly discern trends in the labor market in Colombia. First it should be noted that the data on the growth of employment and the decline of unemployment provided by the DANE are consistent with the growth of Colombia’s GDP, but they also clearly reveal the increasing casualization of labor in our country. The new jobs that are been created are mostly in the formal sector, but not in those sectors with the highest share of the national GDP, in this case the energy mining sector. The construction and service sectors are the ones that hire the most labor power in the country. Another significant portion of the new workers are the self-employed, who belong to the informal sector of the economy and who are a growing part of the labor market.

These new workers account for an increasingly flexible and particularly cheap market. The high turnover of labor is prevalent and in sectors such as construction the rule is that contracts do not last more than six months, except in public works in which the technological level demands the retention of skilled workers.

Recent studies show that the composition of the employed part of the population has changed substantially, because while in the late 1990s a little more than 10% of workers were skilled, now about 60% are. Although this trend is widespread, the secondary and tertiary sectors have a higher proportion of skilled workers. Thus one can see that people with a higher level of education are more likely to be hired in the formal sector and have longer-term contracts. The workers with a low level of education are mostly in the informal sector and have the lowest pay.

The growth in employment cannot cover up or obscure the profound deterioration of important sectors of industry and agriculture, that is, the closure of many enterprises, the elimination or reduction in staff. Studies show the transition of most of these workers to the informal sector.

The labor market in Colombia is characterized by the lack of labor protection, lack of individual and collective rights, the promotion of outsourcing and a low level of unionization. The data also show the evolution and ever increasing share of women in the labor market as well as the rising youth unemployment.

The informal sector

Regarding the informal sector,¹² the Great Integrated Household Survey (GEIH) conducted by the DANE shows the great impact that this has on the labor market in Colombia. One in every three workers is in the formal sector, while two out of three workers are self-employed or independent. In a country in which the economically active population is growing and jobs in both the public and private sectors are shrinking, the informal sector is the main alternative for survival; in addition, the high labor turnover leads many workers who lose their jobs and are looking for another one to see self-employment as the main alternative for earning an income to survive. Since the informal sector prevails in low- skilled and lower productive areas, most of the workers there have low-paid, unstable jobs without social security, showing the strong link between the informal sector and poverty among such workers.

Under these conditions we can also note that the informal sector not only includes street vendors, unlicensed taxi drivers, masons, carpenters, plumbers, cooks, vendors of cell phone minutes and many other professions involving many workers; the informal sector is also not alien to the transformation into maquiladoras of the production process imposed by the implementation of measures for the casualization of the labor market. Thus there are Special Economic Zones, Free Trade Zones and firms such as Simplified Corporations (SAS) and Cooperatives of Associated Workers (CTA) [which hire temporary workers for other companies – translator’s note] and many productive units that are not legalized or lack recognition by the state, and are simply strategies for satellitization of production used by capital to reduce costs and intensify the exploitation of labor power. We can note that the informal sector, which demonstrates situations and strategies of exclusion of thousands of workers from the labor market, is a manifestation of what in the social field is called inequality and political exclusion.

According to the DANE, in July of 2014 the share of jobs in the informal sector for 23 cities and metropolitan areas was 49.2%. By branches of industry, 41.7% of the informal working population is concentrated in trade, hotels and restaurants. By occupational position, the self-employed make up 61.8% of the informal working population. By cities the highest rates of informality were in Cucuta (69.9%), Quibdo (66.1%), Riohacha (65.5%) and Santa Martha (65.4%). The informal sector is smaller in Cali (47.1%), Bogota (44.0%), Medellin (43.9%) and Manizales (42.4%).

Unemployment and underemployment

The exclusion of people from the labor market is also reflected in high unemployment and underemployment. In July of this year, unemployment reached 9.3% for a total of 2,175,000 people without work. The cities with the highest unemployment rates are Cucuta (15%), Armenia (14.9%) and Pereira (14.2%).

It stands to reason that changes in the productive structure of the country can also be seen in the labor market and that the changes in this would reflect the state and/or cycle of the economy. Considering the data at our disposal on the labor market in recent years, we find that in addition to the inflexibility of capital given the substantial changes in the real wages of workers and the low productivity, the growth in employment is closely linked to the expansion of the labor supply, mainly in the construction and service sectors. Faced with decreasing unemployment this trend is mainly explained by the growth of the informal sector and the number of inactive workers.

Regarding the last months, it is necessary to point out that the reduction in the unemployment rate is explained by the greater participation of personnel hired in the election campaigns that were held. In addition to the 23 cities surveyed, according to the DANE, in the second half of the year only 8 cities had single-digit unemployment rates, the rest are far from that level. This means that the reduction of the unemployment rate to a single digit is more of a temporary situation rather than a trend in the Colombian labor market.

To further the analysis of the trends that we just discussed, it is important to study the impact on the growth of employment and the reduction of unemployment of situations such as the decrease in industrial and agricultural employment, the participation of young people and women, of the indigenous and black communities, in the labor market, as well as the growing participation of workers in illegal activities and drug trafficking, on which there are no statements nor consistent statistics by the DANE or the government. Given the above situation and noting that these methodologies and indicators are not neutral, the data presented can only be assessed and taken as points of references and working hypotheses.

As to underemployment, it is enough to note that it is an indicator associated both with the low skill of those hired and the underutilization of labor power. Its measurement shows the dissatisfaction of workers when their salaries are inadequate or also when they are working but want to work more hours, as they work less than 48 hours per week. In general they are workers who are not covered by social security, minimum wage laws, nor extra-legal guarantees. The underemployed in Colombia are, therefore, those workers who rotate between jobs without optimal or favorable conditions, the informal sector and unemployment. Therefore, the evolution of underemployment follows patterns similar to those of the informal sector and shows the serious problem of the quality of jobs in Colombia.

According to statistics from the DANE, in July of 2014, in the 23 cities and metropolitan areas, subjective underemployment¹³ reached 27.0%, making a national total of 6,476,000 people. In the same month objective underemployment reached 11.1%, reaching a total of 2,477,000 people nationwide. The total underemployment rate is 37.1%. The number of underemployed nationwide comprises 8,953,000 people.

The fate of the labor market reforms

Among the reforms that the Colombian State has advanced regarding labor matters, we emphasize: first, law 789 of 2002 under which the surcharges for night work and for Sunday and holiday pay are reduced, changes are made to the working day, vacations and compensation. Then law 1429 of 2010, also called the law of formalization and creation of employment, which established taxes on commercial trade registration, progressive income tax payment, parafiscal discounts, hiring of apprentices in order to increase employment and reduce the informal sector in the country. Then, law 1607 of 2012, known as the tax reform law, which frees businesses from paying parafiscals and creates income tax for equity. There have also been regulations for public service employment (Decree 722 of 2013) and there is a large body of law on hiring of apprentices, reinforced labor stability, the inclusion of clauses on restitution in collective contracts, essential public services and strikes and union autonomy.

In general we can say that the new regulations on labor matters have dramatically changed the rules of the game in the labor market, on one the hand cheapening labor power and on the other putting great emphasis on limiting the few labor guarantees and rights that exist. As various studies have confirmed, the reforms that have been implemented have not served to create jobs and, despite the talk about legalization or formalization of new enterprises, the reduction of the informal sector is not a trend that prevails with the new flexibilization policies of the government. With these reforms the Colombian State and the government is fulfilling the mandates of the international banking sector, favoring big business that have seen their profits increase while the workers have seen both their jobs and their income decrease.

The “growth” does not suffice to erase poverty in Colombia

Studies on poverty in Colombia note a downward trend, but there is still a fairly large sector of the population that remains poor. After many attempts and methodologies implemented just since 2011, the DANE has been annually reporting information on monetary poverty,¹⁴ multi-dimensional poverty¹⁵ and inequality.

Regarding monetary poverty, for the year from July 2013 to June 2014, nationwide the percentage of people in poverty was 29.3%, in the major cities it was 25.6% and elsewhere it was 41.6%. Reporting new methodologies for the measure of poverty, the government states that economic growth, the creation of jobs¹⁶ and policies targeted to helping the poor¹⁷ has allowed 3.6 million people to be lifted out of poverty. According to the government, in June 2010 Colombia had 17,121 thousand people in poverty and in June 2014 this number had fallen to 13,509 thousand people.

Although there is much embellishing of these data, the country cannot forget that the report released by the FAO [Food and Agricultural Organization] and the United Nations a few days ago points out that hunger strikes 11.4% of Colombians, that is 5.5 million people, about the same figure (11.3% ) reported worldwide.

In this sense the statistics presented by the DANE and the government are not very consistent if we considered the lack of opportunities and the real social crisis that exists in the country. While the data show the reduction in poverty, they also show the increase in inequality among Colombians. Many institutions and researchers that note these changes over time point to the importance of developing new methodologies and indicators¹⁸ that reflect the real impact on the quality of life, such as declining real wages in the country, changes in consumption, precarious employment, marginality, the continuing high rates of underemployment and unemployment, mental problems in a country like ours that has gone from being a low to medium consumer of drugs, bankruptcy of the country’s hospitals and the agony of the health care sector in general, the extremely poor quality of education, the growing number of homeless people, the displacement due to the intensification of the armed conflict, among other issues.

In this regard the government can make up many econometric models and methodologies but it cannot ignore the fact that there is a social crisis of profound dimensions in this part of the world that economic growth could not erase. In other words we can categorically note that economic growth about which so much fuss is made in the country and the world has not brought progress but rather further inequality among Colombians; the gaps are increasingly growing and this is confirmed by national and international statistics.

According to data from the United Nations,¹⁹ in Colombia 10% of households with the greatest resources receive more than 40% of labor income, while 90% get the remaining 60%; this accounts for the high levels of inequality in the country. The DANE also confirms that the 1% with the largest highest income keeps one fifth of the wealth produced in Colombia, one of the highest indices in the world, second only to the US.

Another example that shows this inequality is the concentration of land, although there are no recent figures. The University of the Andes²⁰ recently revealed that in 2010, 77.6% of the land was owned by 13.7% of landowners and that the Gini for land reached 0.86. According to the study the situation has worsened since 2000 when 75.7% of the land was held by 13.6% of landowners.

Regarding the Human Development Index (HDI)²¹ developed by the United Nations for 2014, which is used to analyze the progress of different countries, Colombia fell 7 position, ranking 98th among 168 countries in the world, which puts Norway, Australia and Switzerland in first places. In this ranking Colombia is below Chile, Venezuela, Brazil, Mexico, Peru and Cuba.

The per capita income in Colombia is US $7,800 per year, but in cities such as Buenaventura and Tumaco the figure drops to $440, well below that of Chile, Cuba, Argentina, Venezuela, Brazil and Peru.

The Gini coefficient,²² which measures the degree of inequality on a scale from 0 to 1 (where 0 represents a perfect equality and 1 is the most extreme inequality), was 0.54 for Colombia in 2013, while for the US, Mexico and Argentina it was 0.40. Over the last ten years, in Colombia this indicator has remained constant and even had peaks of 6. The increase in per capita income about which the statistics speak has not served to reduce inequality in Colombia. Compared with other countries in the region, Colombia remains in 3rd place after Haiti and Brazil; it ranks 12th in the world according to the 2014 Report of the United Nations.

According to the UN Habitat, the 13 most unequal cities in the country are Medellin, Cali, Cucuta, Bogota, Manizales, Monteria, Pasto, Villavicencio, Ibague, Barranquilla, Cartagena, Pereira and Bucaramanga.

This map of poverty and income inequality reaffirm that Colombia is a country in which the rich get richer through exploitation and violent expropriation and the poor get poorer through their further exclusion and victimization.

The political crisis deepens

All these elements that we have been sustaining show a rather complex and difficult situation for the country. The instability shown in the economic and social order is also seen very crudely in the political landscape. The peasant strikes and demonstrations, the strikes by coal miners, the protests by oil workers and teachers and the great discussions taking place in the country that presently revolve around the talks in Havana, the presidential authoritarianism contained in the draft balance of powers, the legislative agenda of Congress and all the economic and social tensions in this country reveal the deep crisis that affects the Colombian political system today.

In that vein, Mr. Hernando Gomez Buendia, director of the website “Public Reason” (“Razon Publica”), is correct when he says in one of his articles:

“Santos II will succeed if he maintains investor confidence, the speed of the mining engine and the increase in social spending. He will do well if he stays afloat in the turbulence that many perceive in the world, and if he succeeds in reducing the cost overruns, which in this case are basically the environmental damage, the social conflicts and the corruption that brings a tax bonanza.

“Some people may think that this is not much, but it is everything one would expect from Santos II.”

Notes:

1. These estimates are nothing but a publicity campaign. Considering the statistics on the GDP we can see that the value of the Colombian economy (US $378,147,773,316) is lower than that of Argentina’s (US $611,755,084,645), ranked as the third largest economy in Latin America, after Brazil and Mexico.

2. The figures cited are taken from the Quarterly Report of the Bank of the Republic submitted to the National Congress in March of 2014.

3. These measures, known in the economic world as the clearing of the QE model, are nothing more than the buying of treasury bonds to lower interest rates and raise the prices of stocks and bonds.

4. Foreign Direct Investment increased by 8% in to a record of US $16,772 million, equivalent to 4.5% of GDP. 46.7% of this type of inflow is directed to oil and mining activities.

5. Colombia’s negative balance in its foreign exchanges continues to rise; in 2012 it increased to 3.1 % and in 2013 to 3.4% of GDP. By 2014 the deficit is continuing to rise if we consider that in the first quarter of this year the current account deficit rose to 4.6% of GDP. The current account of the balance of payments is a record of the transactions made between Colombia and the rest of the world and is a sign of a tendency for the exchange rate. The current account deficit, the Bank of the Republic explains in its quarterly reports, is due to a decrease in the trade surplus, which fell by nearly half compared to 2012, reaching US $2,202 million. In July of 2014 Colombia already has a deficit balance of US $1,913 million.

6. According to ACOLFA (National Association of Auto Parts Makers) between January and April of 2013 vehicle exports fell by 94.3%.

7. Recall that the FTA of Colombia with the US was signed in late 2006 and went into effect on May 15, 2012.

8. In the first half of 2014 the mining sector grew by 1.7%, compared to the same period in 2013. This performance was mainly due to the increases in coal production (16.7%) and natural gas (2.1%) as well as a decrease in the production of crude oil of 1.5%.

9. Source: Quarterly Accounts Bulletin. Second Quarter of 2014. DANE, September 16, 2014.

10. According to the Ministry of Mines and Energy, in late 2011 the proven hydrocarbon reserves were estimated at 2,260 million barrels and 155,000 million cubic meters of natural gas. At current production rates, the duration of proven reserves is estimated at 5 years for oil and 12 years for natural gas. The recoverable proven coal reserves are estimated at 4,945 million tons, representing about 60 years of production at current levels. More than 90% of coal production is exported and Colombia is the 5th largest exporter worldwide.

11. The instability is so great that while in the first quarter of 2014 manufacturing industry grew by 3.3%, in the second quarter it shrank by 1.4%, according to the statistics from the DANE. Expectations for the second half are not very encouraging if there is no considerable increase in exports and domestic consumption.

12. According to the criteria of the ILO, the DANE considers part of the informal sector: 1. Private employees and workers who work in establishments, businesses or enterprises employing up to 10 people in all their agencies and branches, including the employer and/or partner . 2. Unpaid family workers. 3. Domestic workers. 4. Self-employed workers except independent professionals. 5. Bosses or employers of enterprises with 10 workers or less.

13. According to the DANE statistics, subjective underemployment refers to the simple desire of the workers to improve their income, the number of hours worked or to have a job more appropriate to their personal abilities.

Objective underemployment comprises those who have the desire, but have also made an attempt to realize their aspirations and are willing to make the change.

14. Referring to the annual measure of monetary poverty, on March 21 the results for 2013 were published; the second publication was made in August 2014 and collects information from July 2013 to June 2014. In it the following data stand out:

Per capita income for the spending unit. For the year from July 2013 to June 2014, the per capita income for the spending unit nationally stood at $562,151. [Figures here are in Colombian pesos. As of January 2015, there were about 2,378 Colombian pesos to the $US – translator’s note.] In the major cities it was $661,893 and elsewhere it was $232,969. This indicates that on the average a family of 4 persons in Colombia receives a monthly income of $ 2,248,604, if the family lives in the major cities this figure is $2,647,572, if they live elsewhere it is $931,876.

The poverty line is the minimum amount per capita required to purchase a basket of goods (food and non-food items) to allow for an adequate standard of living in a particular country. For the year from July 2013 to June 2014, the per capita minimum necessary nationally was $208,404. According to the above, if a household is composed of 4 people, it is classified as poor if the total household income is below $833,616. If the family lives in the major cities this amount is $919,420; if they live elsewhere it is $550,448.

The incidence of poverty measures the percentage of the population that has a per capita household income below the poverty line, relative to the total population, according to the geographic area. For the year from July 2013 to June 2014, nationally the percentage of people in poverty was 29.3%, in the major cities it was 25.6% and elsewhere it was 41.6%. Compared to the year from July 2012 to June 2013, the incidence of poverty per unit changed as follows: -2.9% (national), -2.4% (major cities) and -4.4% (elsewhere).

The extreme poverty line is the minimum amount per capita required only for a basket of food items to allow a level of survival in a particular country. For the year from July 2013 to June 2014 the minimum per capita necessary nationally was $92,312 According to the above, a household of 4 people is classified as extremely poor if its total income is below $369,248. If the family lives in the major cities this amount is $386,192; if they lives elsewhere it is $313,328.

The incidence of extreme poverty measures the percentage of the population with a per capita household income below the extreme poverty line, relative to the total population, according to the geographic area. For the year from July 2013 to June 2014 nationally the percentage of people in extreme poverty was 8.4%, in the major cities it was 5.4% and elsewhere it was 18.2%. Compared to the year from July 2012 to June 2013, the incidence of extreme poverty changed as follows: -1.7% (national), -1.1% (major cities) and -3.6% (elsewhere).

15. Multi-dimensional poverty studies the characteristics of the household, related to education, health care, employment, early childhood and home infrastructure.

16. The government talks about the creation of more than 2 million jobs in the last four years.

17. The government talks particularly about the programs “Families in Action” and “Greater Colombia”.

18. For example, it is recognized by researchers that the city of Medellin makes up the Mission for Connecting the Series Employment, Poverty and Inequality – MESEP – who adopt a new methodology for calculating and updating the series prepared by the DANE for this city.

19. We are referring to the Report on Human Development, 2014, UN.

20. Research conducted in 2011 by Ana Maria Ibanez, dean of economics at the University of the Andes.

21. The Human Development Index (HDI) is an indicator of human development created by the United Nations to measure the progress of a country. Unlike many other indicators that measure the economic development of a country, the HDI analyzes health care, education and income.

22. The Gini coefficient is an indicator used by the World Bank and that the DANE uses in its quality of life surveys that measure how much the distribution of income (or, in some cases, consumption expenditure) among individuals or households within the economy departs from a perfectly equal distribution.

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