Assessing the effects of violence on regional economic development in Colombia

Abstract

This study explores whether high levels of violence have affected regional economic growth in Colombia. Prior studies investigating the effects of violence on regional economic development are analyzed and found to have narrowly focused on certain areas in Colombia, and only during short periods of time. In contrast, this study investigates this issue during three periods: 1) 1938-1959; 2) 1960-1975; and, 3) 1980-1997 to provide not only an economic and historical framework but also to see whether there is a development pattern among the regions that exhibit high levels of violence and economic growth. For each of the periods, homicide rates for each of Colombia's departments are used as a variable to measure levels of violence, and departmental GDPs and sector variations are used as a measurement of economic growth. Results reveal a positive relationship between violence and economic growth when the region is experiencing an economic boom. The different types of actors and institutional arrangements that were involved in the exploitation of economic activities that allowed a dynamic growth for the region are further explored. Moreover, the "cause and effect" relationship between violence and economic growth is explored.