Hausmann, R. & Bustos, S., 2021. New Avenues for Colombia’s Internationalization: Trade in Tasks.Abstract

One of the consequences of COVID-19 is the recognition that many tasks can be done from home. But anything that can done remotely, can be done from abroad.

Given large salary differences between white collar workers across countries, it would make sense for value chains to try to exploit them. This opens an opportunity for Colombia to further promote its integration into the world global value chains and access new markets.

This paper explores the possibility of exporting teleworkable services from Colombia. The goal is to provide useful information to guide strategic interventions to speed-up the development of such service industries in Colombia.

We first introduce a definition of teleworkable jobs and describe its occupations and industries along different dimensions. We show that there are many teleworkable jobs in the US, representing a significant share of industry costs. Then, we show that many industries intensive in teleworkable jobs are currently traded across borders. To quantify Colombia’s advantage providing teleworkable services, we study the cost structure of industries and quantify the potential savings in overall costs if the tasks were performed by Colombians. Given Colombia’s current presence and the density around teleworkable industries we can calculate a proxy of the latent advantage in teleworkable services. We propose an index that summarize these dimensions and rank the potential gains from including telework from Colombia in an industry. We end with a set of policy recommendations to move this agenda forward.

The Role of the Diaspora in the Internationalization of the Colombian Economy

After surveying over 30% of the diaspora of Colombia, Growth Lab researchers and their co-authors studied a number of factors related to this diaspora.

In this Growth Lab podcast, Ana Grisanti interviews Professors Ricardo Hausmann, Annalee Saxenian, and Ljubica Nedlkoska, who describe the internationalization mission in Colombia, the role of the diaspora in this mission, and the policy implications of this research.

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Grisanti, A., et al., 2021. Colombian Diaspora Survey Results Dashboard. Explore DashboardAbstract
As part of the "Role of the Diaspora in the Internationalization of the Colombian Economy" project, Growth Lab researchers surveyed 11,500 members of the Colombian diaspora, located in well over 100 countries. They studied the migration journeys, the diaspora’s attachment to Colombia, the level of diaspora engagement and interest in engaging, the intentions to return back home, the interest in diaspora government policy, and the overall sentiment of the diaspora towards Colombia.

The Role of the Diaspora in the Internationalization of the Colombian Economy

As of 2021, about ten percent of the Colombian population, or five million Colombians mainly resided outside Colombia. As Colombians live and work abroad, they develop perspectives that are different from those of the Colombians that never migrated. Some are learning to use more advanced technology at the job in a foreign firm, some are learning cutting edge skills in a foreign university, some are immersing in a new language and a new cultural experience through relationships with non-Colombian partners, and some are even working on groundbreaking inventions and innovations involving...

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Nedelkoska, L., et al., 2021. The Role of the Diaspora in the Internationalization of the Colombian Economy.Abstract
We studied the geography as well as the demographic and socio-economic characteristics of 1.7 million members of the global Colombian diaspora (34% of the total estimated Colombian diaspora) using census and survey data from major host countries, and 3.5 million Twitter users located around the world presumed to be of Colombian origin. We also studied the locations and industries of Colombian senior managers and directors outside Colombia, using a global database of over 400 million companies. Moreover, we studied the migration journeys, the diaspora’s attachment to Colombia, the level of diaspora engagement and interest in engaging, the intentions to return back home, the interest in diaspora government policy, and the overall sentiment of the diaspora towards Colombia, through a survey which received 11,500 responses from the diaspora in well over 100 countries in less than two months. We additionally interviewed 12 Colombian transnational entrepreneurs and professionals, to understand what attracts them professionally to Colombia, and what may stand in the way of more diaspora engagement and professional growth.
Hausmann, R. & Klinger, B., 2008. Achieving Export-Led Growth in Colombia. Publisher's VersionAbstract
The purpose of this paper is to analyze Colombia’s experiences with and opportunities for export led growth. We first review Colombia’s growth and export performance over the past 30 years and find that the country is indeed facing an export challenge. We then go on to develop new metrics and apply them to Colombia’s export challenge. First, we consider the opportunities for upgrading quality within existing exports, and find that Colombia has very little opportunity for growth in this dimension. Second, we consider the level of sophistication of the current export basket, and find that it is low and commensurate with the lack of export dynamism. Although not a significant drag on growth, the current export basket will not be sufficient to fuel future output growth. Finally, we develop the concept distances between products, open forest, and the option value of exports to examine the possibility that Colombia’s current structure of production is itself a barrier to future structural transformation. While improvements in the export package have been slow in the past, this evidence suggests that Colombia does now enjoy more options for future structural transformation. As there are attractive options for structural transformation nearby, a parsimonious approach to industrial strategy, rather than a risky strategic bet to move to a new part of the product space, seems appropriate. In order to inform such a strategy, we use the metrics developed in the diagnostic to evaluate new export activities in terms of their proximity to current activities, their sophistication, and their strategic value. We identify the sectors representing the best tradeoffs between these aims for Colombia as a whole, as well as its regions. We also devote separate attention to the topic of Agricultural exports, and to exports of services. Finally, we use these metrics to analyze the list of ‘high-potential’ sectors in the United States, developed by another firm, as well as the sectors prioritized in Colombia’s Agenda Interna. These external lists of high-potential sectors are found to be sensible, but could be further rationalized using these metrics. This identification of nearby, high-potential, and strategically valuable sectors is not meant to be a definitive list for targeted subsidies and ‘picking winners’. Rather, it provides a robust data-driven approach to inform the next steps in achieving export-led growth in Colombia: which private sector actors should be consulted first? What sector-specific reforms should be stressed? How should public spending on infrastructure and training, which are also sector-specific, be prioritized? What foreign firms should be targeted by FDI promotion agencies? These decisions can be informed by our analysis and the accompanying data.
Lora, E., 2020. Income Changes after Inter-city Migration.Abstract
Using panel data for workers who change jobs, changes in several labor outcomes after inter-city migration are estimated by comparing workers in similar circumstances who move to a new city –the treatment group—with those who stay in the same city –the control group. After matching the two groups using Mahalanobis distances over a wide range of covariates, the methodology of “difference-in-difference treatment effects on the treated” is used to estimate changes after migration. On average, migrants experience income gains but their dedication to formal employment becomes shorter. Income changes are very heterogenous, with low-wage workers and those formerly employed by small firms experiencing larger and more sustained gains. The propensity to migrate by groups of sex, age, wage level, initial dedication, initial firm size and size of city of origin is significantly and directly correlated with the expected cumulative income gains of migration, and inversely with the uncertainty of such gains.

The Double Crisis: Insecurity and Humanitarian Plight at the Colombia-Venezuela Border

In 2019, Dr. Annette Idler wrote Borderland Battles: Violence, Crime, and Governance at the Edges of Colombia’s War (Oxford University Press, 2019). Based on her extensive research on this issue, her book reveals why the Colombian-Venezuelan borderlands are enabling crucial, but largely unacknowledged interactions between Venezuela’s devastating crisis and ongoing political...

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Ravinutala, S., Gomez-Lievano, A. & Lora, E., 2017. Assessing Rural Productive Capabilities and Identifying Potential Products by Municipality, Growth Lab at Harvard's Center for International Development.Abstract

How can the productive capabilities of each municipality be unleashed taking into consideration the resources available to them? A first pass at this ambitious question begins by understanding the set of outputs a municipality is capable of producing. We answer this by discovering relationships between agricultural inputs and outputs and ask a relatively simpler question: how similar are agricultural outputs in terms of the inputs they use? Answering this question is made difficult by the fact that most UPAs cultivate just one or two crops. This may be a rational response to economies of scale. Given a plot of land and inputs, it may be easier to cultivate one crop on the entire land than plant a number of them with each requiring a different care regimen3. It may be that the inputs available only allow for a few types of crops.

In this paper, we use the rural census data from Colombia to build an agricultural product space capturing the similarities between outputs. We test the predictive power of the product space and use this to answer the question above. In section 2, we discuss the various sources of data and how they are merged, cleaned, and transformed before processing. In section 3, we look at some high level features of the dataset and how inputs, outputs, and land use are related. In section 4, we explore the mechanics of diversification.

We construct similarity and density matrices and show that they do indeed predict what a municipality produces. Finally, in section 5 we use Machine Learning algorithms and the density matrices to predict municipalities that are best suited to produce a given output. Further, we identify "missing" municipalitiesoutput pairs i.e. municipalities that should be producing a given output at high yield but currently are not. Finally, we summarize our findings and suggest areas for further work.

In this report we will be making extensive use of concepts described in more detail in the companion report "How Industry-Related Capabilities Affect Export Possibilities," especially with respect to Machine Learning techniques.

Ravinutala, S., Gomez-Lievano, A. & Lora, E., 2017. How Industry-Related Capabilities Affect Export Possibilities, Cambridge: Growth Lab at Harvard's Center for International Development.Abstract

The central question we will explore in this document is: Can we anticipate the opportunities that Colombian cities have to export specific products based on their existing productive capabilities?

In the following pages, we report a collection of results, analyses, and advances in which we assess how industry-related capabilities affect export possibilities. Our final goal will be to create a single measure that synthesizes all the knowledge and existing information about the productive capabilities of each city, both “horizontal” and “vertical”, and that quantifies how competitive a city can be if it aims at exporting a given product it does not yet export.

This document is broken in two main efforts: First, we want to understand the “mechanics” of diversification processes. And second, we want to be able to provide recommendations of products that are not produced in cities, but should be. The first effort requires a multitude of analyses, each trying to describe the characteristics of firms, of cities, and of the mechanisms that expand the export baskets of places. The second effort requires the development of a statistical model that is accurate when predicting the appearances of products in cities. These two efforts, explaining and predicting, are complementary, but different.

Explanations that lack the power of accurately predicting the future are useless in practice; predictions of phenomena for which we lack understanding are dangerous. But together they provide a unified story that can inform policy decisions.

Coscia, M., Cheston, T. & Hausmann, R., 2017. Institutions vs. Social Interactions in Driving Economic Convergence: Evidence from Colombia.Abstract

Are regions poor because they have bad institutions or are they poor because they are disconnected from the social channels through which technology diffuses? This paper tests institutional and technological theories of economic convergence by looking at income convergence across Colombian municipalities. We use formal employment and wage data to estimate growth of income per capita at the municipal level. In Colombia, municipalities are organized into 32 departamentos or states. We use cellphone metadata to cluster municipalities into 32 communication clusters, defined as a set of municipalities that are densely connected through phone calls. We show that these two forms of grouping municipalities are very different. We study the effect on municipal income growth of the characteristics of both the state and the communication cluster to which the municipality belongs. We find that belonging to a richer communication cluster accelerates convergence, while belonging to a richer state does not. This result is robust to controlling for state fixed effects when studying the impact of communication clusters and vice versa. The results point to the importance of social interactions rather than formal institutions in the growth process.


O'Clery, N., Gomez-Lievano, A. & Lora, E., 2016. The Path to Labor Formality: Urban Agglomeration and the Emergence of Complex Industries.Abstract

Labor informality, associated with low productivity and lack of access to social security services, dogs developing countries around the world. Rates of labor (in)formality, however, vary widely within countries. This paper presents a new stylized fact, namely the systematic positive relationship between the rate of labor formality and the working age population in cities. We hypothesize that this phenomenon occurs through the emergence of complex economic activities: as cities become larger, labor is allocated into increasingly complex industries as firms combine complementary capabilities derived from a more diverse pool of workers. Using data from Colombia, we use a network-based model to show that the technological proximity (derived from worker transitions between industry pairs) of current industries in a city to potential new complex industries governs the growth of the formal sector in the city. The mechanism proposed has robust strong predictive power, and fares better than alternative explanations of (in)formality.

O'Clery, N. & Lora, E., 2016. City Size, Distance and Formal Employment.Abstract

Cities thrive through the diversity of their occupants because the availability of complementary skills enables firms in the formal sector to grow, delivering increasingly sophisticated products and services. The appearance of new industries is path dependent in that new economic activities build on existing strengths, leading cities to both diversify and specialize in distinct areas. Hence, the location of necessary capabilities, and in particular the distance between firms and people with the skills they need, is key to the success of urban agglomerations. Using data for Colombia, this paper assesses the extent to which cities benefit from skills and capabilities available in their surrounding catchment areas. Without assuming a prioria a definition for cities, we sequentially agglomerate the 96 urban municipalities larger than 50,000 people based on commuting time. We show that a level of agglomeration equivalent to between 45 and 75 minutes of commuting time, corresponding to between 62 and 43 cities, maximizes the impact that the availability of skills has on the ability of agglomerations to generate formal employment. Smaller urban municipalities stand to gain more in the process of agglomeration. A range of policy implications are discussed.