OP-ED Lessons from Colombia

By Omar Chedda, Contributor

A study tour of Colombias national competitiveness programme, sponsored by the Inter-American Development Bank, was undertaken by representatives of The Private Sector Organisation of Jamaica; the Jamaica Exporters Association; the Jamaica Manufacturers Association and government ministries and agencies in March.

During this mission, the delegation learnt many interesting details about the efforts by Colombia to tackle the challenges facing the country to improve the business environment and the prospects for economic growth.ÂÂ Jamaica could learn some important lessons from Colombia as that country has experienced relative success in recent times in turning around a dire situation.

Country Background

Colombia has a population of over 43 million people, 74 per cent of whom live in urban areas. The GDP per capita (purchasing power parity) is US$9,200. Colombia currently has an unemployment rate of 12 per cent, while 47 per cent of the population is below the poverty line.

There are socio-economic similarities between Jamaica and Colombia despite the obvious differences in population and geographic size in terms of level of development. According to the statistics, poverty levels are more extreme in Colombia where much of the poverty is concentrated in the rural areas, as in Jamaica.

In the twentieth century, Colombia experienced decades of instability from internecine warfare arising out of political divisions, which later degenerated into violence connected to drug trafficking. The political war known as La Violencia began in 1948 after the assassination of a popular liberal leader, Jorge Eliécer GaitÃn. The long history of violence in Colombia had its genesis in this period of social and political turmoil.

Interestingly, despite the high levels of violence, the Colombian government has never been seriously threatened. Colombias political system is considered one of the oldest and most institutionalised in Latin America.

Despite its experience with violence, the country managed to achieve an average GDP growth rate of 5.9 per cent from 2002 to 2007. This growth rate has declined somewhat over the last two years due to the global economic recession. The remarkable growth rate over the 5 year period was achieved since President Alvaro Uribe took office in 2002. The President was able to achieve considerable improvements in national security, while at the same time instituting a national and regional framework to improve Colombias competitiveness.

For most of its history, Colombia had a very centralised government structure which stifled initiative in local communities. Over the last ten years, considerable effort was made to decentralise this administrative structure and to expand the resources and responsibilities to 32 regional commissions.

There are some clear similarities with the Jamaican experience, although this might have taken a different form in Colombia.

Addressing National Security

Since coming to office in 2002, President Uribe undertook a concerted effort to rebuild social capital: the set of shared norms, values and rules that contributes to the cohesion of societies.Â

Similarly, Jamaica has sought to establish a Social Partnership, as the foundation for economic growth and business opportunities but has failed to achieve an actionable agreement to date, despite the urgency for its implementation.

The President, it was said, travelled to remote villages in the farthest regions of the country to listen to the concerns of the ordinary Colombian, and he would ensure that all the issues raised were fairly addressed at the local level within resource constraints.

While building an effective national security apparatus, opportunities were made available for persons formerly engaged in violence to be trained for productive activities.

Colombias capital, Bogota, was once among the worlds most violent cities, with homicide rates and chaotic traffic on par with Jamaica. Many pessimists at the time suggested that BogotÃs downward spiral was irreversible because a culture of lawlessness had taken over the city. Nevertheless, with effective and honest political leadership, and with a commitment to root out corruption, homicide rates dropped dramatically. Bogotas leadership took measures to strengthen trust in social institutions by ensuring that state resources were not used in a partisan manner, establishing effective local government, and improving the citys transportation infrastructure.

These are examples which Jamaica should emulate.

The National System for Competitiveness

As Colombia negotiated a free trade agreement with the US in 2004, the private sector partnered with the government in developing a competitiveness plan. Concerned by the lack of continuity and progress in past competitiveness initiatives, private sector leaders realised that they had to become more engaged in the competitiveness agenda.

One of the problems with previous initiatives was that the central government was overly responsible for the competitiveness programme, and that changes in government usually resulted in policy changes.

This was overcome by:

1. Establishing private/public sector partnership for joint decision making.
   
2. Moving responsibility for the programme to regional commissions which would be responsible for its implementation.
   
3. Greater involvement of academia in designing the programme

The turning point came with the advent of the free trade agreement with the USA and the development of an Internal Agenda, where both the private and public sectors committed to addressing Colombias challenges in preparation for the free trade agreement. The FTA with the USA created the awareness among stakeholders that they had to implement an effective competitiveness programme in order to reap the benefits.

Firm level buy-in was critical to the process. Accordingly, there was recognition of the need for relative autonomy of each of the 32 regions of the country in the implementation of the National Competitiveness System (NCS) for the programme to work effectively. Therefore, regional commissions were established, which were encouraged to develop their own plans to improve competitiveness in the respective regions. This was an important step in achieving stakeholder ownership of the system.

The key attributes of the NCS were committed political leadership at the highest level with a clear and relatable vision, and an effective tracking system operating out of the Presidents Office. The tracking system relied heavily on the commitment of well placed contacts in the various sectors to complete progress reports on time, and on strong communications linkages.

In 2007, private sector leaders decided to create the Private Council on Competitiveness (PCC) to develop a unified set of private sector recommendations and lead a more effective dialogue with the government. The PCC became one of the driving forces behind the NSC. The Council has been successful in placing private sector issues of concern in the public agenda, such as labour regulations; financial regulations; infrastructure; education; transport; and communications.

Public/private sector partnership in Colombia resulted in a policy framework that focussed more on the micro-economic factors impacting on firm level performance which would then feed into improved macro-economic indicators rather than the other way around, which has been the experience in Jamaica.

Thus we can see the critical importance of public/private sector dialogue and a unified private sector approach in the establishment of an effective national competitiveness system.

The Strategies

In 2008, the PCC, in collaboration with government authorities, developed the National Competitiveness policy which has similarities with Jamaicas 2030 Vision. The strategy involved efforts in 14 policy areas: building world class sectors; productivity improvement; business and labour formalization; science, technology and innovation; education and labour skills; infrastructure for mines and energy; environmental sustainability for competitiveness; tax simplification; information technologies; contract enforcement; and strengthening the NCS.

The strategy to build world-class sectors sought to develop selected export clusters with potential. These were clusters in the tourism, apparel and textiles, business services, auto parts, energy and related services, communication, and cosmetic industries. This was not viewed as a picking winners strategy, which many analysts had criticised, but was said to be a process of self-selection. These sectors had produced the most viable business plans for their development and, hence, were deserving of support.

Despite the determination of sectors of special interest, the overall competitiveness strategy involved upgrading and enhancing sectors which were lagging in productivity, through industry collaboration and product innovation.

Part of the process of improving competitiveness in Colombia involved working towards increasing integration with the world economy. This meant that the country moved from 5 free trade agreements in 2002 to 12 free trade agreements with 48 countries in 2010.

To enhance business formalisation, the strategy sought to simplify legal requirements and control informality. To address labour informality, labour market information and strengthening the rights of workers were recommended. The number of steps required for business formation was reduced and simplified.

For the science, technology and innovation sector, the research capabilities of public and private institutions were strengthened for technology appropriation and innovation.

A new education and training model was launched that responded to the needs of the private sector, and the language skills of the workforce were also improved.

In the financial sector, the development of private equity and venture capital were incentivised, along with increased regulation of the derivatives market.

Finally, contract enforcement improvement was considered a priority to improve Colombias business environment.

Country Branding

A not to be forgotten important aspect of Colombia competitiveness programme was a re-branding strategy for the country which sought to highlight the positive aspects of the country, particularly the outstanding cultural, sporting and intellectual output of its people. This was slickly portrayed in a variety of media forms to an international audience with the intention of overshadowing the negative images that had been created in the minds of people about the country. Hence, the countrys branding slogan, Colombia es Passion.

The flagship of this campaign was the production of short videos, in English, advertising the beautiful aspects of Colombia. This promotion was complemented with Colombia is Passion merchandise and a countrywide campaign to change Colombians perception of themselves. This campaign achieved spectacular results. In just two years after the launch of the re-branding strategy tourism increased by 65%.

President Uribes government created and paid for this campaign to brand Colombia as a country of passionate, good people, utilizing the skills of high-powered international branding consultants.

Of all the strategies implemented by Colombia, this might be one of the easiest for Jamaica to implement due to the already positive image in the minds of many in the tourism market, despite the existing high crime rate. However, it is important to note that the re-branding campaign of Colombia took place in tandem with improved national security and competitiveness, without which the promotion would not have been successful.

Recommendations

Although Colombia still has a long way to go and the jury is still out on the countrys break with its past, there is no doubt that the country has made significant progress in turning around a bleak situation. The lesson that Jamaica should take from the Colombian experience is that with the commitment and support of all the social partners in Jamaica, the country can achieve its vision for 2030.

This process must involve the development of world class sectors; technology development and innovation; legislative and regulatory reforms; strengthening local authorities through decentralization; effective tracking and monitoring systems for policy implementation; effective country branding and promotions strategies; targeted skills training and re-training; embracing free trade agreements and encouraging increased investments, whether local or foreign, against the background of improved national security.

These recommendations are not new but their implementation has been challenging. Success requires effective public/private sector partnership and dialogue, an increased role for the private sector in national decision making, and the rebuilding of social trust in the countrys institutions.Â

The political leadership at the highest levels in Jamaica need to fully commit to and undertake all the necessary actions to make Jamaicas 2030 Vision a reality. In Colombia, President Uribe led the initiative to forge a new path for the country, mobilised the support of social partners and took ownership of the programme to make Colombia a place where its people want to live and where people would want to visit. We should expect nothing less of our leadership here in Jamaica.

Omar Chedda is an economist with the Private Sector Organisation of Jamaica.