Imagine a future where the "coffee country" is not only recognized for its cultural richness but also for its ability to provide solid and sustainable economic opportunities for everyone. This is directly linked to the economic development in Colombia.

This article not only explains what economic development in Colombia is but also delves into its progress and driving factors. Discover where we are heading and what this progress means for you and your environment.

What is Economic Development in Colombia?

What is Economic Development?

Economic development is more than just numbers or growth rates; it represents the structural transformation of an economy that enables people to achieve a better standard of living.

This concept involves equity, inclusion, and sustainability, ensuring that economic progress benefits both present and future generations.

Think of an economy as a large engine: economic development not only makes it run faster but also ensures it operates efficiently and sustainably over time.

It’s about generating wealth while reducing poverty and improving the quality of life for all people.

Key Aspects of Economic Development

Economic development is built upon several essential pillars:

• Growth in GDP per capita: Reflects increased income per inhabitant.

• Meeting basic needs: Access to services such as water, electricity, and decent housing.

• Education and health: Fundamental for developing a productive workforce.

• Technological innovation: Boosts efficiency and competitiveness in economic sectors.

• Strong institutions: Reduce corruption and ensure respect for human rights.

• Sustainability: Ensures progress does not compromise resources for future generations.

Factors Influencing Economic Development

In Colombia and other nations, various factors shape economic development:

• Production factors: Land, capital, labor, and entrepreneurship drive the economy.

• Technology: Digitalization and innovation have enhanced efficiency in key sectors such as trade and agriculture.

• Sociocultural context: Political, social, and religious institutions influence growth by shaping public decisions and policies.

• Human development: Factors like gender equality, access to education, and social security play a crucial role.

• Global context: International relations, such as remittances received from Colombians in the United States, significantly benefit the country’s economy.

How is Economic Development Measured?

To assess economic development, both quantitative and qualitative indicators are utilized:

• GDP: Measures the total value of goods and services produced.

• Human Development Index (HDI): Considers life expectancy, educational attainment, and per capita income.

• CEPAL indicators: Evaluate employment, access to basic services, and economic participation.

• Inequality: Metrics like the Gini index measure income distribution equity.

Economic Development in Colombia

Colombia has established itself as one of the most promising economies in Latin America.

According to La República, citing The Economist, Colombia ranked sixth in economic performance among OECD countries in 2024.However, challenges persist, including regional inequalities, labor informality, and low productivity:

• 2024 GDP Growth: 2.6%.

• Poverty Reduction: Progress has been made, but significant gaps remain between urban and rural areas.

The economic development in Colombia is characterized by resilience and adaptability to global challenges such as climate transition and fluctuating oil prices.

Human talent—for instance, professionals working with international companies—provides an additional boost to the nation’s economic progress.

Regional Comparison

Regionally, Colombia ranks third in economic competitiveness in Latin America, following Chile and Mexico, according to the Institute for Management Development (IMD).

This reflects efforts in public policy and business initiatives to foster innovation, improve infrastructure, and promote foreign trade. However, globally, Colombia ranks 57th, highlighting the journey still ahead for the region.

Differences Between Economic Growth and Economic Development

Economic growth measures the increase in the production of goods and services.Conversely, economic development ensures that this growth translates into improved quality of life.

For example, a rise in GDP may not reduce poverty if wealth is not distributed equitably.Economic development includes education, health, and sustainability, ensuring comprehensive progress.

Organizations Supporting Economic Development in Colombia

The economic development in Colombia is driven by collaborative efforts between public and private institutions that aim to improve people’s quality of life:

• Ministry of Finance and Public Credit: Develops fiscal policies prioritizing strategic investments in infrastructure, education, and health.

• National Planning Department (DNP): Ensures that national resources reach the most underserved communities, promoting equitable development.

• Inter-American Development Bank (IDB) and World Bank: Finance projects enhancing connectivity, protecting natural resources, and supporting agricultural productivity.

• Chambers of Commerce and Business Associations: Provide training and funding to small entrepreneurs, boosting regional economic growth.

• NGOs and Foundations: Complement economic development with social inclusion projects focused on education, the environment, and social empowerment.

These entities not only enhance the country’s competitiveness but also work to close inequality gaps and create opportunities for all Colombians.

The Role of Fintechs like DolarApp

Fintech companies, such as DolarApp, are transforming Colombia’s economic landscape by facilitating access to innovative financial services.

These platforms democratize international transactions, promote financial inclusion, and energize the digital economy:

• Accessibility and Savings: DolarApp lowers economic barriers with commissions of only $3 USD per transaction, benefiting freelancers, entrepreneurs, and businesses.

• Promoting Foreign Trade: Simplifies international payments, enhancing Colombia’s integration into global markets.

• Financial Protection: Enables users to manage income in dollars, safeguarding against devaluation and maximizing purchasing power.

Fintechs are reshaping how people interact with the financial system, significantly contributing to the economic development in Colombia.