Export Promotion Policies and Instruments in Colombia by dib16550

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      Export Promotion Policies and Instruments in Colombia




           Pablo Ochoa

    Planning Director. Export Promotion-Proexport, Colombia


            Summary

     Export promotion policies in Colombia have been based on the adoption of commercial
  services and incentives, but without activities designed to increase business productivity and
  competitiveness. Promotion has therefore not guaranteed a sustainable growth of export supply,
  nor of export diversification.
     Moreover, while it is true that trade policy instruments affect exports, the absence of a plan
  to link those instruments makes it difficult to determine the contribution of each of them to the
  aims of the State.
     Policies are therefore required to integrate all trade promotion activities, and to improve
  productivity and competitiveness. For that reason, this article recommends segmentation of
  the State’s aims, and that strategies of service provision and incentive management should be
  based on entrepreneurs’ knowledge of productivity and competitiveness, and on the services
  and incentives that will meet their needs. The means of assigning such incentives and services
  should be transparent, and they should be provided in line with entrepreneurs’ interests and,
  particularly, their capacities.




I. INTRODUCTION
           This study is founded on the conviction that a country’s trade performance, and
therefore its export growth, is an equation dependent on the sum of the variables affecting
the country’s behavior, and which determine the trends of growth or decline in total exports.
A positive commercial performance therefore stems from linking the efforts made in each
part of the chain in order to form a complete equation.
           To put the preceding statement in context, the study will analyze the main
considerations that make trade performance a variable composed of multiple factors, among
which the following are worth stressing for the purposes of the analysis:
           First, the macroeconomic factors which condition, above all, those exports lacking
in high value added, cutting-edge technology or brand recognition abroad. These elements
include the exchange rate and internal structural factors.




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                  Second, the country’s industrial base and the competitiveness of its businesses
      – that is, their capacity for producing and adapting their products; the products’ quality
      level relative to those offered by companies from third countries; the final price of such
      products when placed in various markets; the degree of adaptability and of response as
      regards design and the firm’s technology; and, of course, the financial capacity to attain
      such technology. This factor mostly corresponds to links in the value chain which precede
      promotional efforts, and it determines the kind of supply with which the promoting
      institution must work.
                  Third, the export promotion policy, the promoting organizations and the export
      incentives which support business efforts to penetrate international markets. Incentives are
      to be temporary elements that allow entry barriers to be overcome, not permanent elements
      that distort the real competitiveness of business; and the promoting organizations provide
      services that support the export process, mainly through information and advice that allows
      assessment of their competitiveness.
                  A general vision of these elements as they concern Colombia is given below,
      with particular reference to export promotion policies and instruments, and an assessment
      of those policies is then made.
      MACROECONOMIC FACTORS
                 The Colombian economy has taken pride in being one of the most stable in Latin
      America. The macroeconomic measures adopted by Colombia in recent decades allowed it to
      avoid the crises that affected most of the region. It has not experienced hyperinflation, nor
      was it part of the “debt crisis” evident in most Latin American countries in the 1980s.
                 In the second half of this century, Colombia has followed three development models:
      (i) an import substitution model up to 1967; (ii) a mixed substitution-promotion model up to
      1990; and (iii) a model of economic opening from 1990 to date (Departamento Nacional de
      Planeación, Vol. I). In general terms, it can be shown that changes in the economic model
      have focused on foreign trade in two periods: 1967-1990 and 1990 to date.
                 In 1967, Colombia adopted a mixed substitution-promotion model. Among
      other things, this entailed cutting the cost of raw material imports, eliminating the
      system of prior export licenses for a large number of goods, and creating credit facilities
      to stimulate minor exports. Over several decades since 1967, a crawling peg devaluation
      system was adopted.
                 Measures applied between 1986 and 1989 have been seen as the first stage of a
      gradual economic adjustment in a timid process of trade liberalization. This became apparent
      in the greater flexibility accorded to import control instruments, but the prevailing economic
      model was unchanged. In this period, tariffs were cut on several products, as were export
      subsidies, and progress was made in gradually liberalizing imports.
                 From 1990, Colombia began its process of economic opening. It is worth noting
      that although it was initially conceived as a gradual process to allow internal structures to
      adapt to the new development model, it was finally decided to accelerate the process. This
      included, among other things, reduction in average tariffs, transformation of the country’s
      institutional trade structure, faster devaluation, and the adoption of anti-dumping measures.
                 In recent years, however, evident symptoms of economic decline have been
      interpreted by some analysts as the result of economic measures implemented at the start
      of the decade. It is true that that the rate of industrial growth was relatively satisfactory
      until 1995, when it was stalled by the real revaluation of the peso evident from that year
      on, and by a significant rise in interest rates.




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COMPETITIVENESS
            A recent study by Colombia’s National Planning Department (Departamento
Nacional de Planeación) suggests that the country’s industrial structure has not shown
accelerated dynamism since the second half of the 1970s. The study concludes that
Colombian firms have not faced up to the economic opening and have continued to
concentrate on the domestic market, despite the turn towards a market economy that the
country took in 1990 (Departamento Nacional de Planeación, op. cit.).
            The study reveals that the last significant attempt at industrial modernization occurred
in the 1970s and that, in the last 25 years, industrial development has stagnated. It also shows
that the business sector has still not taken steps to address the implications of globalization.
            Evidence for the above resides in two considerations: industry has continued to
focus on the domestic market; and, in the post-opening phase, industry has concentrated in
the center of the country rather than consolidated a presence in border and port areas.
Moreover, the slow growth of manufacturing industry has prompted gradual de-
industrialization: in 1974 industry accounted for 23% of GDP, but its share now is just 18%.
            The research also shows that none of the models has included sectoral promotion
policies. Rather, they have been based solely on trade policies (import restrictions, high
tariff levels, special import-export regimes).

EXPORT PROMOTION POLICIES
           The institutional birth of export promotion policies in Colombia occurred in 1967,
when decree 444 established an export promotion agency called Proexpo, and when a
series of export incentives were introduced.
           Proexpo was established in the context of a closed economy, following a model
of import substitution at a time when the country was a markedly mono-exporter of coffee.
The new institution’s main function was to diversify the export supply by promoting non-
traditional exports.
           The export incentives included the Certificates of Tax Payment (later, Certificates
of Tax Reimbursement – Certificados de Reembolso Tributario, CERT), and regulations
governing temporary imports for active processing, known in Colombia as the “Vallejo
Plan”. The former constituted a system of tax incentives to export, and the latter was a
means of exempting from duties and taxes those inputs and machinery that would be
processed and subsequently exported.
           The second stage of export promotion in Colombia began in the 1990s. As
mentioned earlier, in 1990 the country embarked on a process of economic opening, which
entailed revision of the prevailing guidelines and adapting trade-related institutions to support
the new market-oriented economic model.
           Among the series of reforms undertaken, the framework law on foreign trade
(Law 7 of 1991) was one of the most aggressive as regards institutional transformation.
The law established a ministry of foreign trade for the first time in Colombia, and dictated
that export promotion fell within the new ministry’s competence. With respect to Proexpo,
the law separated trade promotion from financial support. Hence two new export promotion
agencies emerged: Bancoldex as a credit institution, and Proexport as the organization
responsible for trade promotion.
           Proexports’s philosophy included three basic considerations. The first was the
establishment of a cost structure shared between the promoting institution and the




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      entrepreneur, so that the latter assumed responsibility as a participant in the promotion of
      his products in international markets. This allowed the export promotion policy to be adjusted
      in line with the new multilateral trade regulations. The second consideration was the need
      for the State to make the promotional institution flexible, establishing it as a trust governed
      by private law and therefore able to attend to business requests. The third consideration
      was the adoption of the Export Units scheme as the main strategy for providing support
      services to international marketing, through which entrepreneurs interested in the same
      markets, or with affinity or complementarity of supply, could develop export programs.
                  Bancoldex is a “second floor” bank, set up as a mixed economy trading company
      with a public sector majority holding. Its main function is to finance productive and
      commercial operations for the sale of Colombian products in overseas markets. The Bank is
      linked to the Ministry of Foreign Trade.
                  The forms of credit are: pre-shipment; consolidation of liabilities; creation,
      acquisition or capitalization of firms; fixed investment; production of capital goods and/or
      provision of technical services; leasing operations; transport infrastructure projects; post-
      shipment; and credit to the overseas buyer. Bancoldex credits are not subsidized, and the
      interest rates it offers are practically the same as market rates. These credit lines are granted
      through discount operations in national or foreign currency, through financial intermediaries.
                  The beneficiaries of the credit lines are: financial intermediaries; individuals or
      companies which produce, market or promote goods and services for export purposes;
      producers of raw materials or goods and services involved in indirect or joint exports;
      producers which sell their goods to International Marketing Societies for the subsequent
      export; service companies which contribute to the export process; importers of Colombian
      goods and services; and individuals or companies producing export goods and services
      which, in order to improve their competitiveness, have to import capital or intermediate
      goods, or technical services.
                  With regard to the incentives contemplated in the above legislation, the law
      established the continuation of the Certificate of Tax Reimbursement (CERT) and of the
      systems of temporary import for active processing. The law also laid down the legal
      framework for the operation of free zones.
                  A recent governing scheme of export policy is the Strategic Export Plan, approved
      in December 1994. In general terms this has three main aims in trade policy: to diversify
      export supply, to diversify export markets, and to consolidate export supply (CONPES [1994]).
                  One of the basic strategies contemplated by the plan concerns the Sectoral
      Competitiveness Agreements. These aim to analyze integral activities for developing output
      and exports, and to coordinate such activities between the government, the business sector
      and labor. The agreements were formulated as a means of coordinating sectoral activities
      geared towards resolving the specific problems of the sector in question.
                  As a means of specifying the tasks proposed within the strategic export plan, there
      follows a brief outline of the activities within which export promotion institutions should play
      a role, and which are contained in the plan’s Chapter Three, “Export Support Mechanisms”.
                Proexport’s and Bancoldex’s functions within the government’s export strategy
      concern international markets and the expansion of export support schemes.
                The strategic export plan stipulates seven basic activities to be undertaken by
      Proexport:

                • consolidate the Export Units model (export consortia), integrating them in
      the sectoral competitiveness agreements;




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           • establish business training programs and dissemination schemes to create an
export culture in relation to the product, technological development and sustainable
development;
            • become a means of communication with public sector institutions to channel
exporters’ problems in the fields of technological development, human capital and financial
difficulties, among others;
          • expand its information services on market niches, commercial opportunities,
information on international tenders and general technical data on international trade;
          • broaden the coverage of its services and form a trade information network
with trade unions and chambers of commerce at the national level;
            • strengthen the free zone regime through marketing and promotional
activities; and
           •
           boost the export of services.
        As regards Bancoldex, most of the strategic export plan’s instructions concern
recommendations for expanding the bank’s credit lines in the following areas:
           •   Colombian investment abroad for product marketing;
           •   export-related infrastructure projects;
           •  participation of Colombian firms in international tenders under competitive
conditions; and
           •    granting credit lines to foreign buyers of Colombian goods.
            As regards export incentives, the plan suggests the maintenance of the CERT
as a compensating instrument in a context of economic disequilibria, but calls into question
the CERT’s concentration at that time (1994) in several sectors of the economy. The plan,
moreover, recalls the temporary nature of the mechanism, in view of the commitments
acquired by Colombia in the Uruguay Round. With respect to the “Vallejo Plan”, expansion
of its coverage on two fronts is recommended: services, and the exports of small and
medium producers.
            Colombia’s current foreign trade policy seeks to establish a more pro-active
attitude in the country’s external integration strategy. It therefore proposes an Integration
Action Plan centered on the Andean Community of Nations and, more generally, on
hemispheric integration (Consejo Superior de Comercio Exterior [1997]). It can be said for
practical purposes that, with regard to promotion, the instructions laid down in the strategic
export plan refer to the products and services of the promoting institutions, while trade
policy stresses those institutions’ tasks in terms of export markets.
            It can therefore be said that current trade policy seeks to strengthen integration
agreements and to gear the dependent institutions of the foreign trade ministry toward
activities that will help strengthen and expand trade links with such markets, as well as with
those that have granted unilateral tariff preferences to Colombia.
            The most active of Colombia’s integration processes, the Andean Community
of Nations, is characterized by the current trade policy as a “public good ... which should
be conserved for the member countries and especially for Colombia” (Consejo Superior
de Comercio Exterior, op. cit., p. 12). With regard to hemispheric integration also, the
policy seeks to support that process and to push towards the consolidation of such
integration in 2005.




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      II. THE PERFORMANCE OF COLOMBIAN EXPORTS
                  In 1965, Colombia’s traditional exports accounted for 80% of the country’s total
      foreign sales, and coffee alone accounted for 63%. Non-traditional exports amounted to
      barely 20% of total exports (figures from Proexport-DIAN).
                  By 1975, seven years after the adoption of the incentives and services of the
      substitution-promotion model, non-traditional exports reached 48% of the country’s total.
      This did not imply any decline in the growth of traditional exports, and occurred at a time
      when the international price of coffee was rising significantly.
                  By 1985, the composition of exports suggested that there had been a withdrawal
      from the aggressive diversification process evident ten years earlier. In effect, and following
      the highly positive export performance between 1975 and 1980, the 1980-1985 period
      was characterized by a significant decline in both export volumes and in levels of
      diversification. Non-traditional exports fell to 40% of total foreign sales, eight points below
      the 1975 percentage level. The share of traditional exports, with the exception of coffee,
      substantially increased. Oil, which a decade earlier had experienced an international crisis,
      accounted for 11.5% of total exports in 1985. Ferro-nickel and coal, whose share had
      been practically insignificant in 1975, accounted for 3.2% and 1.4% respectively.
                  Equilibrium between traditional and non-traditional exports has been attained
      in the last ten years. By 1995, five years after the onset of economic opening and 10 years
      after the period examined above, non-traditional exports accounted for 54% of total exports.
      As to traditional exports, the percentage distribution per product changed drastically,
      principally because of recent oil finds.
                  Total exports grew substantially in the 1970s, at a rate of 474%, with values
      increasing from US$741 million in 1970 to US$4,255 million in 1980. Between 1980 and
      1990, exports grew by 68%, recording a total value of US$7,139 in the latter year. In the
      first five years of economic opening, total exports have grown by 37%.
                  Non-traditional exports have grown at higher rates, reflecting the weight that
      they have attained in the country’s export supply. Between 1970 and 1980 non-traditional
      sales grew by 651%, with values increasing from US$196 million in 1970 to US$1,472
      million in 1980. In the 1980s the growth rate was 84%, with sales totaling US$2,709
      million by 1990. Under the internationalization program, the rate has been 97%, with
      total sales of US$5,323 million in 1995 (Proexport [1997]).
                  As regards general export performance, and specifically the diversification issue,
      it can be concluded that exports performed positively between 1967 and 1990, under a
      hybrid scheme of promoting exports within a closed economy, using the export promotion
      policy instruments mentioned earlier.
                  However, this growth is positive in relative terms, since it highlights Colombia’s
      weak export culture in contrast to other countries of the region, revealed by reviewing per
      capita exports and the contribution of exports to GDP. In 1996, per capita exports in
      Colombia totaled US$296, in Venezuela US$1,052, in Chile US$1,031, in Mexico US$991
      and in Ecuador US$410. In the same year, exports accounted for 13% of GDP in Colombia,
      38% in Venezuela, 21% in Chile, 33% in Mexico and 28% in Ecuador (calculations of
      Proexport, Colombia).
                  It is also worth mentioning that the recent study from the National Planning
      Department argues that “since the 1980s Colombia has experienced a gradual de-
      industrialization and a relative expansion of the economy’s tertiary sector (...)” and that
      “the premature relative expansion of the tertiary sector is worrying in as much as it is not
      founded on developing activities with productive and dynamic linkages and externalities,
      such as technological services or research and development, as has been the case, for




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example, in South Korea. Rather, the process has largely been based on financial services
and government services that do not, by their very nature, foster the adoption of technology
that the productive sector needs”.

III. ASSESSING THE PROMOTION POLICIES
            Export promotion policies have sought to increase and diversify exports in terms
of both products and markets.
            However, there have been no strategies to reconcile these general aims with the
various factors favoring exports – in line with the equation mentioned earlier – as well as to
define the function of each factor in a concrete manner (increasing, diversifying). This
makes it difficult to determine the direction of policy, and to assess its real contribution.
            One effect of this is the excessive responsibility placed on individual trade
promotion incentives and instruments for increasing and diversifying exports in general
terms. It is true that individual and collective assessment of these instruments can reflect a
trend in their influence on exports, but the instruments are not accountable for all outcomes.
They can sometimes be effective mechanisms for sustaining export supply in a given sector,
but they are weak instruments for securing a diversification of supply, since other factors
work against such diversification. This argument is analyzed below in the context of the
main promotion incentives and institutions.

INCENTIVES
            The “Vallejo Plan” affected Colombian exports in the 1982-1995 period, since
the share of exports carried out under the system in that period fluctuated between 21%
and 42% of total exports. With regard to export diversification, however, this mechanism
seems to have had no effect, since the country’s export structure underwent no substantial
change (Departamento Nacional de Planeación).
            Analysis of the CERT is more complicated. It should be noted that while in
general terms the mechanism was granted under the same criteria between 1967 and
1974, exports not only grew, but non-traditional exports increased their share of the
total (Proexpo [1998]). Gauging the effect of the mechanism in the two later periods is
much more complicated, since it underwent a significant series of changes in line with
criteria linked to different contexts (withholding it from products in markets where there
had been some degree of consolidation or success, and the need to provide greater
incentives to penetrate certain markets, to the point of becoming an element of
compensation for the crises in some sectors, etc).
            It is worth noting that in 1998 the government decided gradually to dismantle
the CERT and to draw up a strategy for improving companies’ productivity and
competitiveness. This decision stemmed from the government’s view that the CERT is not
a suitable instrument for increasing and diversifying exports and export markets, and that
export growth does not spring from incentives but from strategies geared toward improving
the competitiveness of firms. The mechanism is to be dismantled by 1 January 2002, in line
with Colombia’s commitments in the WTO (Consejo Superior del Comercio Exterior [1998].
            The new strategy proposed and approved by the government consists of reallocating
CERT resources to projects which aim to boost the long-term productivity and competitiveness
of the country’s export sectors, so that they will not be vulnerable to exchange rate fluctuations,
nor subject to state subsidies; resources will also be made available for risk capital investment.
These two mechanisms will be managed by a financial corporation to be created for this
purpose, in which the public and private sectors will participate.



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                 The new instrument will be applied through a fund without legal status. Financing
      will not be reimbursable, and will be used to develop programs with the following aims:
                 • create a solid export supply;
                 •   improve business management;
                 •   guarantee access to modern technology;
                 •   enhance the efficiency of productive processes;
                 •   train human resources;
                 •   improve business information on new technologies and organizational tools;
                 •   enhance the efficiency of export logistics;
                 •   develop new export products;
                 •   improve quality and design standards;
                 •   examine access to new markets; and
                 • adopt clean technologies.
                The programs will be co-financed with the private sector. Public funds will finance
      25%-75% of the project cost. The difference between the value of the project and the
      support provided by the State will be met by the beneficiary businesses.
      PROMOTION INSTITUTIONS
                  Both Bancoldex and Proexport were designed to offer services free of subsidies
      and without favoring particular sectors, products or markets. This requires outlining their
      role with regard to the aims of diversification proposed by the State.
                  These institutions’ services are available to any company that meets the
      requirements to secure them. This approach undoubtedly makes their operations more
      transparent, stressing as it does the need to address the export issue on the basis of business
      requirements and capacities.
                  Following a process of strategic reorientation pursued since the second half of
      1997, Proexport’s users are now divided into four categories according to their intrinsic
      capacities to enhance their competitiveness. This approach aims to allocate services in line
      with the categories, such that the services can be optimally exploited and greater benefits
      can be derived from the efforts made.
                  Both bodies, however, undertake other specific tasks that can be viewed as a
      contribution to the diversification of export supply. Bancoldex, for example, which promotes
      products via financial intermediaries through which it extends credits, has begun to raise its
      profile among entrepreneurs so as to increase awareness of its services. It has also established
      a service to guarantee credits for small and medium enterprises.
                  Notwithstanding such efforts, it is still necessary to establish clear policy guidelines
      which fix the aims of increasing exports and diversifying supply, with a view to facilitating
      the integration of, and coordination between, the corresponding activities.
                  In the current scheme’s favor, it can be said that the institutions’ efforts and
      incentives coincide at a sectoral level (Departamento Nacional de Planeación, op. cit.). But
      this is simply a reflection of the sectoral composition of the export structure, not necessarily
      of a policy designed to consolidate the current export supply – which policy would go
      beyond the massive use of promotional incentives and services – and neither is it a means
      of bringing about new export supply.
                  As regards the diversification of markets, the promotion instruments only facilitate
      access to international markets. The final decisions on the choice of a market rests with the
      entrepreneur, in view of his assessment of his capacity and supply conditions. An example




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is the relationship between Proexport’s different promotional activities by market, presented
in the chart at the end of this article.
             The chart shows that the Export Units and promotional activities are proportional
to the trade flows with particular markets. The activities and the Export Units seem
disproportionately negative for a growing market such as the Andean Community of Nations,
and positive for markets such as Japan, Chile, and the Central American Common Market.
             This disproportion is simply an indicator of the possibility presented by the export
diversification model. It is probable that because of the proximity (cultural, geographic, etc.)
of the Andean countries, entrepreneurs can deal with them directly, without having to resort
to specialized state services. In the country’s non-traditional markets, by contrast, it is likely
that businesses need more information and a minimization of the risk in order to enter.
             This does not relieve the State of its duty to foster diversification by disseminating
the benefits arising from trade agreements, and by supporting missions and other
promotional events to explore new markets or markets which form part of the integration
action plan established by the State.
             It should be stressed that while the promotion institutions should become practical
instruments of trade policy, Proexport’s activities should reflect business concerns and address
business interest in certain markets – in as much as the prevailing scheme (the strategic
export plan) makes the institutions a channel of communication between the public and
private sectors, as well as of ensuring that the former has first-hand knowledge of the
needs of the latter and acts in line with those needs.
             To reiterate, the provision of financial and non-financial services has the virtue
that they are offered to those with the capacity to exploit them efficiently in their own
interests, which is a suitable compensation for society. A problem arises from the absence
of some means of integrating the various factors that affect competitiveness and favorable
export performance. This would allow those businesses able and willing to meet the challenge
of internationalization to do so in a context in which the efforts of bodies providing
technological and commercial advice, as well as credit, could be added together. It would
also allow the State to gauge the impact of its policies.
             Notwithstanding its benefits, the problem with the general promotional model is
that its lack of linkages to the other elements of the “export equation” impedes the integral
concentration of efforts on those sectors and firms with the greatest potential for sustainable
development; it also hampers assessment of the impact of policy on them. Absent this
linkage, the distribution of instruments will tend to be concentrated in sectors and firms
which are prior exporters, thereby undermining the diversification of supply and obstructing
evaluation of the effect of the instruments on business competitiveness.
             This is not to argue that the State should aim to stimulate per se the penetration
of certain markets without taking account of the plans of the entrepreneurs nor the real
prospects for the products. Neither is to urge the establishment of incentives or differentiated
treatment for firms according to the sector they are in. Rather, it is to stress that the policies
can serve to integrate all activities, so that they are managed with certainty and are linked
to the various aims of the State (increase in exports, diversification, etc.), as part of a
program based on the productive and competitive conditions of firms, on defining the
services and incentives that will meet their needs, and on transparency in the allocation of
incentives and services in line with their interests and, above all, their capacities.

RESOURCES FOR EXPORT PROMOTION
          In the 1994-1997 period, when the economic opening was deepened, expenditure
on export promotion grew by US$22.6 million, as is shown by the table at the end of this




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      article. During that period, spending as a share of GDP remained relatively constant, at
      0.157% in 1994 and 0.138% in 1997.
                  With regard to non-traditional exports, promotional spending has been similarly
      stable. In 1991 it constituted 2.44% of non-traditional export values and in 1997, 2.41%.
                  From these figures it can be inferred that despite the greater globalization of the
      Colombian economy, not only has there been no additional public spending on export
      promotion but such spending has in fact declined, comparing its level relative to the growth
      in public spending. The same table shows the growth of the fiscal deficit as a percentage of
      GDP in the period under analysis.

      IV. CONCLUSIONS AND RECOMMENDATIONS
                  Under the schemes adopted in 1967 and during the years prior to the economic
      opening in 1991, non-traditional exports grew, and increased their share of Colombia’s
      total exports.
                  However, despite this diversification in aggregate terms, modification of the export
      structure within the non-traditional sectors did not indicate a significant change in supply,
      nor any substantial increase in the competitiveness of all the sectors which grew. The
      concentration of export promotion mechanisms in those same sectors signals that they did
      not alone have the necessary power to attain a broad and sustained diversification of exports.
                  With regard to the liberalization process, Colombia has adopted an integration
      strategy whose activities are based on the country’s commercial circumstances. Moreover,
      a special institutional framework has been established for work on the various issues of
      foreign trade. This has allowed more work to be done in fields that fall under the
      competence of each of them, but has made it more necessary to formulate policies that
      link the efforts being made, thereby allowing exploitation of the synergies that can emerge
      from the coordination of plans.
                  In recent years, the government has taken steps to integrate macroeconomic,
      mesoeconomic and microeconomic factors to improve sectors’ international competitiveness.
                  Despite the dynamism of integration policy, of the institutional framework, of
      projects to improve competitiveness, and of economic policy activities, there is still no
      connecting theme establishing guidelines for action on the part of the institutions responsible
      for issues related to productivity, competitivity, promotional incentives and services, which
      are implemented on the basis of measurable aims.
                  Consequently, it would be advisable to adopt a strategy to link the aims to the
      tasks and responsibilities implied by promotional incentives and services, as well as to the
      other services designed to improve business competitiveness, on the basis of the following
      considerations:
                  • the basic aim of the strategies is the attainment of sustainable levels of
      international competitiveness;
                  • State aims should be divided in line with real supply conditions, with
      differentiated strategies to: (i) seek export growth and market diversification by means of
      instruments which support the projects of those firms with existing export supply; and (ii)
      pursue the diversification of supply by seeking to develop products which are now exported
      only incipiently, or which have an exclusively domestic market, as long as such products
      have the potential to show sustained growth in international markets;
                  • support market diversification by locating and disseminating information on
      commercial opportunities, leaving the final decision on product destination to the entrepreneur.
      Market diversification is the result of the products’ real prospects for being competitive;




142                   I   N   T   E   G   R   A   T   I   O   N     &         T   R   A   D   E
           •   the projects of different State bodies responsible for business development
issues (production and export) should be linked to the projects, needs, and expectations of
individual firms, without detriment to the fact that such activities are set against a background
of awareness of sectoral needs;
            • those services should be designed to integrate activities in the fields of training,
advice and support to the various links in the productive chain, and to marketing that
improves competitiveness;
            • assign indicators to each service and project so as to be able to measure their
impact on company performance; and
            • support the promotion of an export culture by dissemination of the best
practices derived from the firms’ experience, without breaching the confidentiality of such
information for the firms.




       I   N   T   E   G   R   A   T   I   O   N      &         T   R   A   D   E                    143
      Table 1


                                                         COLOMBIA: RESOURCES FOR EXPORT PROMOTION

                                                                                                                                                                          Promotional
                                  Promotion                                                     Fiscal             Promotional                 Non-traditional
                                                             GDP                                                                                                         Spending/Non-
           Year                  Resources 1                                                 Deficit/GDP          Spending/GDP                    Exports
                                                          US$ millions                                                                                                 traditional Exports
                                 US$ millions                                                     %                    %                        US$ millions                    %


          1994                       110.2                 70,152.3                             0.26                  0.157                       4,523.0                    2.44


          1995                       126.6                 80,524.6                            -0.50                  0.157                       5,334.0                    2.37


          1996                       151.2                 86,362.9                            -1.94                  0.175                       5,099.0                    2.97


          1997                       132.8                 95,925.4                            -3.07                  0.138                       5,521.0                    2.41

      1
       Includes: Foreign Trade Ministry, Proexport and CERT investment and functioning expenses. Does not include credit
      resources which are not subject to subsidy nor taxes non perceived by the implementation of the "Vallejo Plan" as
      there are no figures available.
      Source: Mincomex.




          Graph 1

                                                   PARTICIPATION OF NON-TRADITIONAL EXPORTS
                                                       AND PROMOTION ACTIONS - 1996


      35%
                         EUs
      30%                Events
                         Non-traditional X

      25%

      20%


      15%

      10%

       5%

       0%
                  Central American
                  Common Market




                                                                                                                              European Union




                                                                                                                                                                               and Puerto Rico
                                                                         Rest of ALADI




                                                                                                                                                                                United States
                                                                                                                                                       Community
                                                                                                                                                        Andean
                                                 Japan




                                                                                                           Rest
                         (2)




                                                                               (1)




            (1) Mexico and Chile; (2) Costa Rica, Guatemala, Honduras, El Salvador and Nicaragua.
            EUs: Export Units; Events: Fairs and Missions; Non-traditional X: Non-traditional exports.
            Source: Proexport - Dane.




144                                   I      N   T         E   G      R                  A     T    I      O      N           &                    T          R    A    D     E
Bibliography


CONSEJO NACIONAL DE POLÍTICA ECONÓMICA Y SOCIAL – CONPES. “Plan Estratégico
 Exportador”, document No. 2748, Santafé de Bogotá, 15 December 1994.

CONSEJO SUPERIOR DE COMERCIO EXTERIOR. “Política de Comercio Exterior”, 15 September
 1997.

________________. “Política de Productividad y Competitividad para el Sector
  Exportador”. Santafé de Bogotá, Colombia. 22 April 1998.

D EPARTAMENTO N ACIONAL DE P LANEACIÓN. La industria en América Latina ante la
  globalización económica. Volume I, “Colombia estructura Industrial e Internacional”.
  Santafé de Bogotá, Colombia. Preliminary proof version.

PROEXPORT, Dirección de Estudios Sectoriales y de Competitividad. 1997

PROEXPO. Technical Secretariat of the CERT. “Certificado de Abono Tributario CAT,
  Certificado de Reembolso Tributario CERT”. Santafé de Bogotá, Colombia.
  September 1988.




   I   N   T   E   G   R   A   T   I   O   N   &        T   R   A   D   E                145

								
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