Many developing countries are frustrated because better macroeconomic conditions haven’t led to faster economic growth. Clearly, earning an investment-grade rating on sovereign debt isn’t enough. Our work in Colombia, where we helped to create and implement an economic development program based on a public–private alliance focusing on improvements in specific industries, can provide useful lessons for other developing countries.
This article outlines how the former president of Colombia collaborated with business leaders to create a new apolitical entity that in turn created the infrastructure necessary to develop the country’s development strategy. A critical component of that strategy was to launch a productive transformation program aimed at identifying and growing high-value-added industries, but to do so without picking winners or signaling losers.
After developing an understanding of each industry’s role in the global economy and the potential it held for contributing to the country’s development, the government decided to invite all industries to participate in the program. Given the government’s limited resources, it organized a contest to decide which ones to work with first. It set preconditions: subsidies or protection would not be granted, so any improvement in competitiveness would have to occur under market conditions. In exchange, the government agreed to work with private businesses to educate and train the workforce in pertinent skills, improve the regulatory environment, help promote industries in foreign markets, and develop the required infrastructure. The article goes on to describe the selection process, some of the initiatives undertaken for one of the chosen industries (business process outsourcing), and the encouraging early results of the program.