Effect of Globalisation on the Economic Environment of Colombia

The adverse effects of globalisation on Colombian economy are primarily evident with the adoption of neoliberal policies advanced by the Bretton wood institutions. Neoliberalism ideal pushed for the privatization of state corporations, deregulation and the liberalization of economies as ways through which the developing countries could attain growth at a rate similar to that of the developed world[1]. The ideal argued that for the developing economies such as those of Latin America, the only way they would achieve development was by allowing free trade. Such economic shift in thought, from the preceding Keynesian based ideal of government intervention, was primed by factors such as wars and colonization advanced based on humanitarian intervention but with a hidden agenda of accessing cheap resources offered in such developing countries.[2] Technological advances of the time that allowed easy communication with distant locations also facilitated the development of the neoliberal ideal in many places across the globe.[3] The effect of the neoliberal ideal and its policy instruments such as the Washington consensus was that various governments that adopted the ideal, e.g. the Latin-American governments, embarked on deregulation, privatization of public corporations and liberalization of the market thus allowing entry of foreign entities in the market with minimal restrictions.

In Colombia, the privatization of state corporations meant the sale of public corporations to foreign investors, whose accountability only rested with shareholders in such countries.[4] Such sale was accompanied by development of increasingly authoritarian state instruments with reduction of social-welfare role of the government.[5] The administrations of Gaviria (1990-94) and Samper (1994-98) continued the application and expanded the neo-liberal policies introduced during the reign of Barco (1986-90). The eventual effect to the Colombian economy was that institutions that provided support for the low-income earners, such as the Caja Agraria, a government-run bank that offered farmers soft loans, were privatised resulting in the loss of safety nets intended to boost social equality.[6] Apart from the loss of the corporations that provided some source of reprieve for the poor, the implementation of the structural adjustment programs (SAPs) advanced by the world bank and the IMF have been associated with high unemployment rates for groups such as women.[7]

Neoliberal approaches that resulted in substantial government borrowing have also left Colombia with a high foreign debt.[8] The servicing of such debts has limited the extent to which the government can institute programs to remedy the income inequality that exist in the country.[9] The entry of multinational corporations due to liberation of the market have also led to the decline in the effect of labour unions as the multinationals take advantage of the laws instituted to encourage such foreign direct investment to adopt aggressive anti-union policies.[10] Accordingly, the globalization forces that resulted into the adoption of neoliberal policies in Colombia have contributed to adverse economic effects such as loss of social safeguards, increased foreign debt, increased unemployment and increased inequality in society. Such effects have catalysed many conflicts that have been prevalent in Colombia since attaining independence.

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Bibliography

[1] Urša Golob, Klement Podnar and Marko Lah, “Social Economy and Social Responsibility: Alternatives to Global Anarchy of Neoliberalism,” International Journal of Social Economics 36, no. 5 (2009), 627, doi:10.1108/03068290910954068

 

[2] Stanley Fischer, “Globalization and Its Challenges,” The American Economic Review 93, no. 2 (2003), 4, http://www.jstor.org/pss/3132195

 

[3] Urša Golob, Klement Podnar and Marko Lah, “Social Economy and Social Responsibility,” 627.

 

[4] Jeff Browitt, “Capital Punishment,” 1068

[5] Ibid.

 

[6] Ibid., 1069

 

[7] Jeniffer, A. Ball, “The Effects of Neoliberal Structural Adjustment on Women’s Relative Employment in Latin America,” International Journal of Social Economics 31, no. 10 (2004), 976-978, doi:10.1108/03068290410555426

 

[8] Jeff Browitt, “Capital Punishment,” 1069

 

[9] Addy Higginbottom, “Globalization, Violence and the Return of the Enclave to Colombia,” Development 48, no. 3 (2005), 122-123, www.sidint.org/development

 

[10] Ibid.

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