Colombia | Rethinking Industrial Productivity

Recently, the National Government, through the DNP, approved a policy document (Conpes) to boost manufacturing over the next 10 years, with focus on increasing productivity and promoting technological change in the economy. This column summarizes its starting hypotheses and objectives, commenting on some of them.

Key points

• Key points:
• According to the Conpes, manufacturing has been characterized by low productivity, little external openness, limited diversification, reduced sophistication and poor participation in global chains, hindering its growth and productive capacity.
• The starting assumptions of the Conpes are not debatable: productivity has not grown since the end of the 20th century, in line with the slowdown in technological change since the 1970s, while export capacity has increased little and is concentrated in a few products that attract most of the foreign exchange and foreign direct investment.
• The Conpes does ignore, in part, the vertical disintegration of the manufacturing sector: some activities that are now accounted for in other sectors (such as logistics) used to be part of the industry directly. Seeing the lower share of industry in GDP is not, therefore, a sufficient reason to conclude that the country has deindustrialized.
• The Conpes proposes five objectives: to close productivity gaps, to have a diversified and sophisticated exportable supply, to promote linkages and agglomeration, to expand trade with expanding regions and to improve institutional design.
• The tasks to fulfill them have, surprisingly, many diagnoses (which would not seem to be necessary given the number of studies that exist) and the requirement of many state institutions to achieve the energy transition, food sovereignty, the development of the pharmaceutical sector and the diverse use of the military industry.

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