Institutions and Welfare in Colombia: a comparative analysis

Von Diego Gonzalez

Based on different sources about institutions and welfare in Colombia, the association between the efficiency of the institutions, and the economic development are evaluated. Adding information from nations such as Chile and Venezuela, the comparison with countries with similarities in culture and economy is executed. In theory, the institutions' strength is related to improvements in welfare. Considering this aspect, the situation of Colombia as a developing country is highlighted from a point of view, thus the recommendations on improvement of current institutional and welfare-related points at issue are worth mentioning. Positive relationships were found between the institutions and economy in most of the scenarios for each country assessed, however, exhibited negative and significant relationships to resources of commodities and economic development.

• Sprache: Deutsch
• Herausgeber: neobooks
• Erscheinungsdatum: 5. Aug. 2019
• ISBN: 9783748557883

Buchvorschau

List of Figures and Tables

List of Figures

Figure 1 Determinants of income

Figure 2 Human Development Index components

Figure 3 Easterlin Paradox: Happiness vs GNI p.c.

Figure 4 Dutch Disease: Demand and offer changes

List of Tables

Table 1 Determinants of development: Channels of Influence

Table 2 Evolution of the dominant meaning and measurement of welfare

Table 3 Life expectancy at birth

Table 4 Infant mortality rate per 1000 live births

Table 5 Expected years of schooling

Table 6 Mean years of schooling

Table 7 GNI per capita PPP

Table 8 Poverty headcount ratio at 1.90 USD a day (%)

Table 9 Share of the total population with improved water sources

Table 10 Access to electricity (% of the population)

Table 11 HDI with country comparison

Table 12 Country Perception Index 2018 (CPI)

List of abbreviations

CPI Corruption Perception Index

GDP Gross Domestic Product

GNI Gross National Product

IMF International Monetary Fond

HDI Human Development Index

IEA International Energy Agency

OECD Organisation for Economic Cooperation and Development

OLS Ordinary Least Squares

PPP Purchasing Power Parity

UNDESA United Nations, Department of Economic and Social Affairs

UNESCO United Nations Educational, Scientific and Cultural Organization

UNICEF United Nations Children's Fund

UNDP United Nations Development Programme

WHO World Health Organization

1. Introduction

The expression of Latin America was mentioned to the countries, located south of the Rio Grande in the United States in which they speak a language e.g. Spanish, Portuguese, and French, derived from Latin, besides referring to characteristics common such as the localisation in the Western Hemisphere and the origins of language (Bulmer-Thomas, 2003). Some authors; such of stated; the differences of climate, ethnicity, natural resources, population, or degree of development marked the difference in the formation of republics by much more than geography and language (e.g., López-Calva, 2010; Ferreira, 2008).

The majority of Latin American countries won independence from their European rulers in the late 1810s and in the early 1820s. Even with the promises of increase of living standards, none of the countries in the region has accomplished uniformly enough high living standards, educational levels, grades of competitiveness, or stages of technological development in comparison to a developed country (Bértola and Ocampo, 2012). Even though some Latin American countries are still deprived of richness and large segments of population are on the sidelines of economic and social development progresses, the region has made large steps in bringing about prominent economic, social, and political changes that have positioned it on a development path, as a whole and in some social areas, to accomplish middle-income position on a global scale.

From another point of view, underpopulation and labor scarcity persisted in North America throughout the entire colonial period, but even with that, there was a tremendously elevated rate of population growth in the colonies, securing the British power over the North American region (Walton and Rockoff, 2013). The overpopulation was relatively associated to the available land and the constant territorial expansion, besides the increasing demand of the population, originated by the commercial successes, auspicious economic circumstances and finally the high value of labor, making an immense difference between South and North.   

Looking in the real world, we see the border between the United States and Mexico in the place called Nogales, one part in Arizona (United States) and the another in Sonora (Mexico). The people of the United States can choose their profession, including education and skill formation, meanwhile, the companies could invest in human capital and technology, resulting in constant increases in productivity and income. In the political aspect, the can freely choose their politicians and participate in the democratic process, in the way the politicians tend to work in benefit for the citizens. In the opposite side, on the other place of the border, in Mexico, the mechanism is different and dissimilar, with lower welfare conditions and in an alternative world with disparate institutions (Robinson and Acemoglu, 2012). The differences between the two Nogales are quite developed because of the efficiency of the institutions and their influence on the welfare of the territory, which leads to GDPs from 30.000 USD per capita to 10.000 USD per capita, although both cities are separated by a short distance.

Why do these countries have different economic outcomes? In the case of the United States and Mexico along the border, the geographical and cultural differences apparently do not play a vital role in economic development and hence in the general welfare of territories (e.g., Robinson, 2012; Rodrik, 2003). According to the example, it determines a significant part of institutions on the development of these two countries, in short, an improvement of institutions quality attracts improved economic conditions for the people.

In the case of Latin America, the countries of Colombia, Chile, and Venezuela have a direct relationship with Mexico, sharing a similar culture and language basis, nonetheless Mexico is larger in population and GDP, economically speaking, in comparison with the mentioned countries (e.g., Franko, 2006; Sigmund, 2011). Comparing with the United States, the cultural, regional and economic difference goes beyond an international comparison with any Latin American country.

How are these countries performing each other and compared with the rest of the world? What does make them different from each other? The three countries share a common history, from the point of the war of independence until today, beginning with upright promises about an independent future success, but ending up with an alternative outcome (e.g., Pop-Eleches, 2008). The recent economic and politic history of Colombia, Chile, and Venezuela is going to be described.

Returning to the topic of country comparison, the following countries Colombia, Venezuela and Chile share numerous common aspects to plausibly participate in this research. Firstly, similarities in the culture, geography, and language are exposed in the three nations. Furthermore, the territories have analogous proportions in population and in economic indicators as well. Finally, the history of the three countries are correlated to each other, but with some different outcomes and situations of each other.

About Colombia, the country has been highlighting the headings