Colombia would earn decade of growth if peace process succeeds

Group of economists reveals huge estimated benefits of achieving an accord with the FARC

A coffee plantation in Gigante, Colombia.
A coffee plantation in Gigante, Colombia.CORBIS

The impact of Colombia’s internal armed conflict goes beyond the astronomical number of victims: 220,000 deaths and more than six million people affected to date. The costs in terms of economic development and quality of life are also enormous, although they have been less obvious to most Colombians until now. According to a group of economists – including Ana María Ibáñez, dean of the economy department at the Universidad de Los Andes – the conflict means it takes over 18 years for Gross Domestic Product (GDP) to double in the provinces. But if the struggle were to end, it would take just eight years to make the same progress. “We would earn a decade!,” the authors write in their book, Costos económicos y sociales del conflicto en Colombia (Economic and social costs of the conflict in Colombia).

The book argues that were the peace process with the Revolutionary Armed Forces of Colombia (FARC) to be successful and were the government also to sign a peace agreement with the country’s second-largest guerrilla movement, the National Liberation Army (ELN), annual GDP in the provinces would grow by an additional 4.4 points, even if crime-related violence continued. But behind this piece of good news is the high cost of the violence on agriculture, manufacturing, foreign investment, and on the physical and mental health of those affected. “People are surprised the conflict has such great impact, but that is what we are submitting to if we do not make peace,” Ibáñez says.

The conflict means it takes over 18 years for GDP to double in Colombia’s provinces

The researchers found that guerrilla attacks increase the probability of mid-size and large manufacturing businesses closing. This is even truer for newer and smaller enterprises. “That’s very bad because the newer ones are often the ones that bring innovation,” Ibáñez explains. According to the economists, if there are three additional attacks within one year in any municipality, the risk of businesses closing goes up by 5.5 points – a considerable impact.

The effect on small agricultural producers is also a cause for concern given that the fear of living in the middle of the conflict forces them to make economically unsound decisions, depending on the possibilities the land offers. “Farmers turn to raising cattle and do not work a large part of the land,” Ibáñez says. “They can easily sell the cows if they have to run away because of the violence, which is something they cannot do with a coffee farm.” And so they drop permanent crops such as cocoa and sugarcane, which need several years to bear fruit. Thus, farmers have adapted in order to survive, but they are also “condemned to poverty.”

Ibáñez says agreements on agriculture made in Cuba where the administration is negotiating a peace treaty with the FARC “are much more structured than the measures the government proposed in 2013 when work in the countryside was at a standstill.” These agreements focus on land distribution, legitimate property titles, and implementation of rural development measures. According to Ibáñez, the important thing now is “to move from good design to good implementation,” when and if the peace process is successful.

Besides economic costs, the conflict has also had a social impact, especially on physical and mental health

Researchers also studied the effects that some of the conflict’s achievements, such as the death of rebel leaders, have had on international markets in terms of the risk the country represents given that violence creates uncertainty. They found that these markets adapted to the conflict over time “because they understood that military successes did not mean the end of violence.” The end of the conflict would permanently reduce country risk by a significant level, which would redound to foreign investment.

Besides economic costs, the conflict has also had a social impact, especially on the physical and mental health of those caught in the middle. The economists found that aerial spraying of coca plantations with the herbicide glyphosate caused skin problems and miscarriages, and they recommend ending the practice, something the peace accords seem to have taken into account.

The studies also revealed that 60 percent of those who have been displaced as a result of combat, massacres or threats show signs of “chronic psychological pain.” “This goes beyond post-traumatic stress and even though it gets better over time, that doesn’t happen from one day to the next,” Ibáñez says. This devastating consequence, she says, affects economic decisions because some people do not take risks and this condemns them to a life of poverty.

The book ends with a study on how Colombians feel about reconciliation. The findings are hopeful. Seventy percent say that making reparations to the victims will contribute to reconciliation and they favor raising taxes to meet the costs. “Many think that we need to rebuild what has been destroyed but sometimes it is much more subtle than we think,” Ibáñez explains. “For example, getting people to trust enough to make good investments and to help in the recovery. These are long processes that will require generosity from all of us.”

Translation: Dyane Jean François

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