Guillermo Perry

The Political Economy of Fiscal Reform: The Case of Colombia, 1986-2006

This paper explores the characteristics of the political economy process that conditioned the scope and success of the combination of fiscal reforms before and after Colombia’s 1991 constitutional reforms. Using formal analysis of reforms and interviews with actors, reforms in taxation, decentralization, the budgetary process and pensions are examined in times of political crisis, economic crisis, and economic boom. The results generally confirm the hypothesis that increased political fragmentation and limited unilateral executive power after the 1991 reforms restricted the extent of reforms, particularly in tax law. Nonetheless, the enactment of piecemeal reforms was encouraged by crisis conditions.

Mining Taxation in Colombia

This paper assesses the current Colombian mining tax and royalty regime in terms of efficiency, competitiveness and revenue performance vis-a-vis other relevant mining countries. It then discusses the convenience of introducing a Resource Rent Tax (RRT) to new mining projects (together with a reduced common royalty rate for all minerals) and simulates its potential effects on efficiency and revenue performance. In particular, the paper examines the interactions between a RRT, royalties and the Corporate Income Tax under different RRT designs, tax rates and capital return allowances. It also discusses the convenience of project by project against sectorial ring-fencing. It concludes with a blueprint for reform as well as political economy and administrative considerations for the specific case of Colombia.

Public-Private Collaboration for Productive Development Policies in Colombia

This study analyzes the institutions that shape public private collaboration for the design and implementation of productive development policies in Colombia. Colombia is an interesting case because productive development policies are increasingly designed, in principle, in the context of formal institutions and venues, with public-private collaboration being a pillar of that formal design. We focus on two specific cases: (1) the Private Council for Competitiveness and its role in the National System for Competitiveness; (2) the Colombian government’s Productive Transformation Program. These case studies suggest that public private collaboration has contributed to the continuity of productive development policies across governments. Collaboration has also been behind particular achievements, such as helping overcome specific government failures, and helping develop private organizational capabilities. A central message of this document is thus that formal institutions to foster public private collaboration, such as the ones adopted in Colombia over the last few decades, have an important potential for advancing adequate productive development policies. However, public private collaboration for productive policies has by no means brought a development “miracle”.

Building a Culture of Accountability in Service Delivery: Conclusions from the GDN Project on Varieties of Governance and Service Delivery

This chapter summarizes the main conclusions from a Global Development Network (GDN) research project that was designed and directed by the authors. It supports them with detailed references to the three Latin American case studies published in this volume, which examined the impact of decentralization reforms on quality of education and water supply in Colombia, the effects of citizen participation in municipal budgeting on the quality of water supply in Peru and the consequences of a wide set of reforms—decentralization, teacher incentives, school autonomy—on the quality and equity of basic education in Chile and Uruguay. It also makes occasional references to some of the other 13 country or multi-country case studies of the GDN project (four in Asia, six in Africa and three in Central and Eastern Europe), covering 30 countries in total.

The Influence of Multilateral Development Institutions on Latin American Development Strategies. Special Issue of International Development Policy on Latin America

This paper discusses the changing relation between Multilateral Development Institutions and Latin America, especially since the 1980s to the present. The paper first depicts how MDI’s influence on LA has varied over time and across countries, depending on access to international private capital markets, the development of long-term markets for domestic currency government bonds, and the significant reduction of macro-financial vulnerabilities in the region. It then illustrates how MDI’s views on macroeconomic and development policies has evolved over time, influenced by academic developments and also by Latin American governments. Finally, the paper shows how most governments in the region, whether left-wing or center-right oriented, have increasingly converged with MDI’s recommendations on macro-financial policies, while historically many, from all ends of the political spectrum, applied both macro and micro policies differing with MDI’s views.

State Capabilities in Colombian Municipalities Measurement and Determinants

This paper constructs a comprehensive set of State Capacity indicators for Colombian municipalities, focusing in four basic governmental capabilities: fiscal, financial, physical and operational. First, a group of relevant variables was selected from a vast array of sources and classified into these four categories. Second, synthetic indicators were constructed using Principal Component Analysis (six in total as operational capabilities were further divided into three subcategories). These indicators allow us to study differential effects of a wide scope of potential determinants and controls upon each component. Such determinants included geographical features, natural resources, internal conflict, local political competition and early indigenous presence and immigration Controls included present income per capita and population density. This interdisciplinary variable selection provides a holistic explanation of State Capabilities related to public service delivery in Colombian municipalities.

Regional Public Goods in Finance, Trade and Infrastructure

This paper analyzes the potential for regional collective action in Latin America in the areas of finance, trade and infrastructure. Seven priority areas emerge. First, regional cooperation within increasingly important global financial and trade institutions (the G20, the Financial Stability Board, the Basle Committees, the IMF, the WTO, etc) may enhance the influence of the region in the pursuit of its common interests. Second, regional harmonization of financial markets regulations and cooperation in supervision could play a key role in achieving a safer and more efficient financial integration into the global economy. Integration of regional securities and insurance markets and setting up regional catastrophic insurance facilities may also bring significant efficiency gains. Third, some degree of collective pooling of reserves (through a Regional Monetary Fund) would also contribute to a safer and more efficient financial integration. Fourth, completing missing links in the “spaghetti-bowl” of regional (and extra regional) free trade areas (FTA´s), deepening trade liberalization within them and, especially, harmonizing rules of origin and other trade practices under current overlapping FTA’s, could render major efficiency benefits. Fifth, given that at present high freight costs are limiting trade expansion (especially intra-regional trade), even more than remaining tariffs and quotas, selected regional transport infrastructure initiatives and harmonization of regulatory frameworks can lead to significant efficiency gains. Cooperation in logistics and in maritime and air transport negotiations can also deliver large benefits. Sixth, regional infrastructure and regulation in telecommunications and energy can also lead to significant efficiency gains. Regional development banks can contribute to set up or strengthen specialized regional institutions required to solve the complex coordination, cost-allocation, financing and conflict resolution problems that are at present limiting regional collective action in these areas.