The contribution of regulatory reform to Colombia’s economic performance
Regulatory reform is an important part of a government’s toolkit for improving economic performance and meeting public policy goals. Over the past several decades Colombia has pursued a range of structural and institutional reforms. The emphasis has shifted over the years, reflecting the priorities of different administrations and the perceived needs of the economy. In the 1980s and early 1990s much of the focus was on macroeconomic management. As progress was made in laying a firm foundation of macroeconomic stability, the focus shifted to other areas (World Bank, 2013).
The government focused on policies and institutions seen as central to enhancing productivity and growth and boosting the country’s competitiveness. As part of this, it set in motion reforms aimed at improving the regulatory framework and the rules underpinning private sector activity.
As Colombia has improved its business regulatory environment, results have shown in the World Bank’s Doing Business indicators — including those on starting a business and paying taxes. Until 2008 the focus was largely on reducing transactions costs, such as by simplifying business start-up procedures or tax administration. These types of administrative simplification reforms have continued since 2008 and the government is proactively promoting competitiveness and the elimination of restrictions to competition and barriers in product markets.
The focus of reforms has now started to shift towards strengthening regulatory institutions and processes, but Colombia has not yet made sufficient progress in adopting a whole-of-government approach to regulatory quality.
Colombia’s regulatory reform efforts have led to significant improvements in the quality of the business environment and a more solid foundation for private sector development. This now needs to translate into efforts to improve regulatory quality more generally. Nevertheless, Colombia’s experience demonstrates the importance of sustaining reform efforts over time and adjusting them to the changing needs of the economy.