Understanding the Resilience of the Colombian Economy

The Colombian economy is widely acknowledged as one of the most resilient economies in the world. In this context, a resilient economy is one that is able to do well, in spite of overwhelming odds. In understanding just how resilient the Colombian economy is, you just have to look at GDP growth over the last 50 years. You also need to look at how the economy has become modernized over that period of time (that is, over the last 50 years). In these respects, you will come to realize that the Colombian GPD has grown tremendously over the last 50 years: and this is in spite of country having been almost continuously involved in armed conflict over those last 50 years. You also come to realize that the Colombian economy has been hugely modernized over the last 50 years, again, in spite of the nation having been almost continuously involved in armed conflict over those last 50 years.

When we refer to the Colombian economy as being resilient, we are just appreciating that a less resilient economy would have collapsed under the weight of trying to wage the anti-insurgency war. But the Colombian economy seems to have succeeded at financing the anti-insurgency campaign without faltering.

As we dig deeper in trying to understand the resilience of the Colombian economy, we discover several things.

Firstly, we discover that the resilience of the economy is as a result of the fact that it is a well diversified economy. It is unlike, say, the economy of its neighbor Venezuela, which is almost entirely dependent on oil, and which suffers hugely whenever oil prices are depressed.

Secondly, we discover that the resilience of the economy is as a result of the fact that it was always a (reasonably) big economy to start with. In this regard, you have to appreciate just how big the Colombian economy is, compared to certain nations whose GDP is no bigger than the annual revenues of a company like, say, American Airways (whose staff website is accessible at jetnet.aa.com). Such small economies tend to be very vulnerable to all sorts of vagaries, which makes them less resilient. Conversely, bigger economies show greater resilience.

Finally, the fact that the Colombian economy is a free market economy also aids in enhancing its resilience. Controlled economies tend to show less resilience than free market economies, and Colombia is lucky to have opted for a free market economic model.


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