Colombia’s lesson in economic development

A faster pace of economic development calls for microlevel reforms to help specific sectors and companies become more competitive in global markets.

Many developing countries are frustrated because better macroeconomic conditions haven’t led to faster economic growth. Clearly, earning an investment-grade rating on sovereign debt isn’t enough. Our work in Colombia creating and implementing an economic-development program, with a model focused on improving specific industry sectors, could provide useful lessons for a number of developing countries.
Colombia has enjoyed a surprising political and economic turnaround over the past decade. Nonetheless, many economists assert that the improvements in the business environment are necessary but not sufficient to ensure sustainable economic development. The country’s government concluded that to achieve enduring success, it would have to focus on making specific business sectors more competitive. Its Productive Transformation Program,1 launched in 2007, created a novel public–private partnership engaging eight industry sectors. Early results suggest that tighter collaboration has not only removed investment barriers but also built competitive advantages.

From:
JULY 2010 • Luis Andrade and Andres Cadena
McKinsey Quarterly, the business journal of McKinsey & Company.