Colombia’s competitiveness rating has declined despite a rising GDP, according to experts.
A recent report from the Private Competitiveness Council (CPC), a non-profit organization that analyzes the economic challenges facing Colombia, suggested that Colombia’s high levels of informal employment coupled with low educational investment have caused the country’s competitiveness rating to slip in comparison with countries like Mexico, Peru and Brazil.
A country’s competitiveness, as defined by the World Economic Forum, is “the set of institutions, policies, and factors that determine the level of productivity of a country.”
According to the World Bank, Colombia spent 4.8% of its GDP on education in 2010. In 2009, Brazil and Peru spent 5.7% and 5.3% of their GDP on education respectively.
The CPC report stated that, “the allocation of labor in Colombia is not efficient because of informal employment levels [as well as the] high costs of hiring and firing employees.”
A new tax policy supported by Colombian President Juan Manuel Santos and Finance Minister Mauricio Cardenas aims at fixing this problem by lowering corporate payroll taxes. Supposedly, this will make it easier for companies to hire labor. However, the proposed reform has been met with staunch criticism for being nothing but a corporate tax break.
The CPC findings contradicted the supposed strength of Colombia’s economy. Although GDP rose 4.28% from 2009-2011, this is a misleading figure as GDP does not take into account inequality statistics or a country’s competitiveness rating.
According to the World Bank, Colombia is the seventh most unequal country in the world with a Gini coefficient comparable to Haiti and Angola. A Gini coefficient is the leading indicator of a country’s inequality.
Colombia’s September unemployment rate also rose to 9.9%, the first such rise in one and a half years.
