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Distortions to agricultural incentives in Colombia : Main report (English)

The population of Colombia in 2005 was around 41 million. The annual rate of population growth accelerated from 2 percent in the 1940s to almost 3.4 percent in the 1950s, it fell to 2.8 percent between 1964 and 1985 and it fell sharply to 1.3 percent in the 1985-2005 periods. This development was accompanied by a rapid increase in the urban population due to rural-urban migration, increasing the urban share of the total population from around 30 percent in the late 1930s to 73 percent in 2005. The evolution of the level of poverty in Colombia is variable. The headcount measure of poverty decreased from 52 percent to 50 percent between 1990 and 1994, but this was followed by a sharp rise to reach its highest level of 57 percent in 2002. Poverty decreased again during the 2003-05 period to 49 percent. Poverty in the rural sector remains high: 68 percent of the Colombian rural population lives below the poverty line and 15 percent live in conditions of extreme poverty (Montenegro 2006). Although a parallel market for foreign exchange coexisted with the official market, the level of the exchange rate in the parallel market was lower than the official rate in 19 out of the 27 years for which data are available. An exception is the 1980s, when the rate of exchange in the parallel market averaged around 1.2 percent higher than the official rate. That was reversed from 1991, due mainly to the large inflow of foreign exchange arising from the illegal drug market. As a result, since then the parallel exchange rate averaged 6 percent below the official rate.


  • Author

    Guterman, Lia

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    Working Paper (Numbered Series)

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    Latin America & Caribbean,

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    Main report

  • Keywords

    price band system;annual rate of population growth;policy of fixed exchange rate;domestic production;palm oil;Agricultural Research and Extension;andean trade preferences;market rate of interest;high levels of protection;market price of land;real rate of exchange;agricultural distortions;access to world market;domestic production of wheat;headcount measure of poverty;import tariff;agricultural product;agricultural sector;export subsidy;Exchange Rates;export subsidies;domestic producer price;quantitative import restriction;total agricultural production;real exchange rate;cost of production;rate of growth;gross domestic product;balance of payment;Exchange rate policies;value added tax;barrier to import;ad valorem tax;exchange rate policy;price control;support price;foreign exchange;price of rice;acceleration of inflation;transfer of technology;average production cost;oils and fat;restrictions on imports;machinery and equipment;lack of infrastructure;free trade zone;imports of rice;world war ii;fats and oil;flow of credit;system of price;sugar cane producer;amount of credit;quantity of exports;international coffee price;import substitution policy;per capita income;production of ethanol;foreign exchange market;official exchange rate;multiple exchange rate;rate of crawl;process of liberalization;parallel exchange rate;irrigation and drainage;fruit and vegetable;palm oil production;investments in agriculture;allocation of credit;agricultural raw material;domestic production subsidies;preferential interest rate;trade liberalization process;tax on imports;market interest rate;agricultural input market;evidence of payment;agricultural pricing policy;urban agricultural policy;price stabilization;world price;nominal rate;trade status;small farmer;subsidized credit;agricultural commodity;government intervention;import surcharges;credit subsidy;large farmer;perennial crop;preferential access;parallel market;agricultural import;border price;raw milk;international market;import competition;processed food;land reform;exportable commodity;domestic price;paddy rice;tax rate;guarantee price;food product;Agrarian Reform;outstanding credit;agricultural price;Rural Sector;minimum price;Direct Subsidies;direct subsidy;net importer;price comparison;rural employment;import quota;grain imports;consumer tax;free market;high tariff;industrial sector;output price;Macroeconomic Policy;minimum level;price distortion;price market;quantitative restriction;foreign trade;export promotion;fiscal incentive;export product;export earning;export earnings;land distribution;agricultural producer;crop production;price policy;rural housing;commercial policy;price stability;conversion factor;foreign market;farm product;price support;live cattle;external price;primary product;coffee production;import tax;agricultural frontier;country imports;market intervention;preferential imports;domestic industry;cultivated land;urea fertilizer;export credit;tropical timber;coffee sector;coffee grower;social unrest;gini coefficient;implicit subsidy;monopoly market;export sector;commercial agriculture;tax credit;Land Ownership;tropical forest;Price Fixing;agricultural loan;export tax;imported inputs;agricultural enterprise;government investment;capital good;customs reform;inflationary pressure;price fluctuation;real wage;relative price;Labor Market;licensing system;derivative product;monetary authority;protective device;land price;small landholding;severe drought;tax saving;export quota;private exporter;private investment;capital inflow;capital subsidy;government expenditure;freer trade;cotton seed;farm profits;agricultural productivity;domestic crop;grant element;poor farming;interest group;trade restriction;import market;Ocean Transport;oligopolistic structure;textile producers;consumer price;price differential;milk supply;milk output;low-income consumer;export market;dry milk;domestic inflation;border measure;input subsidy;special treatment;comparative advantage;subsidy rate



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Guterman, Lia

Distortions to agricultural incentives in Colombia : Main report (English). Agricultural Distortions working paper ; no. 14 Washington, D.C. : World Bank Group.