10 The Contribution of Agriculture to Growth: Colombia

As a perusal of Colombia's economic history makes clear, agriculture has been central to the economy's generally satisfactory performance. Agriculture's postwar growth rate (3.7 percent over 1950-80) was well above the average for developing countries and was unusually high in relation to the growth rate of GDP (5.1 percent over 1950-80). During the years of fastest GDP growth (5.9 percent in 1965-80), agriculture grew at 4.5 percent, which was somewhat higher than its longer-period average. This chapter therefore gives special attention to the latter period. Despite this record, the relatively low ratio of nonagricultural growth to that of agriculture might suggest a smaller positive spinoff from agriculture than might have been hoped for; the nonagricultural sector as a whole grew a little less than 6 percent annually over this period. Why the ratio was low is a complicated matter to explain, since there is no "correct" ratio between the growth of agriculture and nonagriculture, given that countries vary greatly in their resource endowments and policy options. That Colombia achieved its creditable growth rate with a rather low gross investment ratio in comparison with that of other countries of Latin America suggests that its growth process has been relatively efficient. Of interest from a longer-term perspective, Colombia took off on a path of fairly sustained growth following the rapid expansion of coffee production and exports during the late nineteenth and early twentieth centuries. During much of the nineteenth century, the country had a variety of agricultural and extractive exports, but the quantum per capita remained low. That ratio increased substantially once coffee became the leading export (Ocampo 1984, 1991). Coffee has been the main commodity export ever since, accounting for 60-80 percent of legal exports during most of that period, falling to 55 percent during the 1970s and to less than 50 percent during the 1980s (table 10.1). For most of the study period agricultural exports as a group accounted for 70 percent or more of total legal commodity exports (the 1970s average was 78 percent); in the early postwar years bananas came a distant second to coffee,