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Colombia to Strengthen Participation in Global Value Chains with Help from IDB

The Inter-American Development Bank (IDB) will promote a more competitive and inclusive integration of Colombia’s economy into global and regional value chains, benefiting especially micro, small and medium-sized enterprises (MSMEs) and women entrepreneurs.

Federico Perez
September 8, 2021

The Inter-American Development Bank (IDB) will promote a more competitive and inclusive integration of Colombia’s economy into global and regional value chains, benefiting especially micro, small and medium-sized enterprises (MSMEs) and women entrepreneurs.

Although the country’s economy had a solid recovery in 2021, it still faces major fiscal and employment challenges as well as inflationary pressures. In this context, the reconfiguration of global value chains (GVCs), which accelerated during the Covid-19 pandemic, paves the way for Colombia to leverage its foreign sector and create long-term sustainable growth conditions.

The program includes a series of measures to improve the business environment to attract productive investments and facilitate foreign trade. It also aims to boost MSMEs’ productive and export capabilities so they can successfully participate in the internationalization process and maximize their impact on employment and the local economy.

The lending program reflects Colombia’s commitment with the consolidation of a competitive legal framework sustained over time so that its production sector can compete in the global market, creating quality jobs, boosting productivity and fostering sustained economic growth.

The loan (details here) has a potential to benefit 900 new and current investors, more than 41,000 companies involved in foreign trade operations, and some 171,000 MSMEs with export potential. The loan program reflects Colombia's potential to compete in the global economy, creating quality jobs and more sustainable growth.

A 10 percent increase in a country’s participation in GVCs translates into a 1.6 percent rise in labor productivity and up to a 14 percent increase in per capita GDP. Companies participating in GVCs typically adopt and transfer knowhow and technology, require better qualified personnel, pay better wages and hire more women. Colombian firms already participating in GVCs are 38 percent more productive than other exporting businesses not participating in these value chains.

Relocating global value chains to the hemisphere is one of the top priorities of Vision 2025, the Bank’s roadmap for the region’s economic recovery.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance, and training to public and private sector clients throughout the region.

ABOUT THE AUTHOR
Federico Perez

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