Corruption and Economic Development in Colombia: An Institutional Analysis

The image of a country that is guided by vice and illicit activity continues to haunt Colombia, as past and present corruption within institutions has become a leading topic in the subject of economic development. A review of the literature on this topic concludes that when crime and corruption reach a critical threshold, they begin notably hampering economic growth. When studying the correlation between violence and GDP growth in Colombia during the period of late 80s and 90s, we find that the persistently high homicide rates during that period prevented the country’s GDP from growing an additional two percentage points per year. High crime rates were more prevalent in periods where economic growth was slow and institutions were weak. Contrasting this, the argument can be made that high rates of crime were the result of rapid economic growth in regions with weak institutions.

Nonetheless, the existence of weak institutions has a direct relationship with crime and corruption, which inevitably has a distinct correlation with economic development. The main focus of this study is to observe current development conditions in Colombia and attempt to explain the future path of economic growth in Colombia through an analysis of the kinds of institutions present and, specifically, how crime and corruption are tied to the strength of these institutions.

Transparency International Corruption Index:

This index measures highly corrupt as being 0-9 and very clean being 90-100. Corruption in Colombia has been continually decreasing, as it is now 99th out of the 180 countries being studied for corruption. Corruption continues to exist in several social sectors in direct relation to the strength of institutions and economic development.

OUTLOOK

Corruption in Colombian institutions is expected to gradually decrease. This is mostly due to the power that globalization has in promoting transparency in policy and government action. In our quickly globalizing world, it is becoming much harder for countries to

continue their corrupt practices because of the power of the media and social activism. For

example, there is an evident shift among Colombian citizens towards a genuine interest in social development. During the 2016 FARC referendum process, an increasable number of citizens joined the dialogue in expressing their concerns for the future of social and economic development in Colombia. Globalization and technology have created a base for citizens to educate themselves on current events and express their opinions about the government. The voice of society is being heard, and with this, the fragility of institutions is being called out.

Moreover, Colombia will reach a point where economic development will be obstructed by a

lack of strong institutions, if it hasn’t already. It is in the country’s best interest to protect the property rights and safety of all citizens regardless of economic status for standards of living to increase. The greatest economic benefit to come from strengthening institutions to the possibility of increased foreign and domestic investment. With a stronger rule of law and greater opportunities for advancement, Colombia may also witness less “brain-drain”, in which educated individuals seek employment in more developed countries where their opportunities are greater.