In 2013 I’m doing my exchange student in Bogota. My teacher was very surprised when I said: “I want to go to Colombia”. Why?
It’s the first reaction people usually have about this country. He said that it was dangerous to go there. He asked me: "why?" My answer was: “I just want to see how do this economy operate its economic transition.”
I was surprised when I found out that my application was accepted.
I arrived in Bogota on August 17th, 2013. The first week was very strange. During my first time at this university, I was afraid of some thuds. But I look around me and nobody looked like afraid. Deep inside I was really scared but I acted as if I wasn't. I looked around me, all the people seemed calm. Later, I learnt that Colombian was in full motion against the government in order to obtain an increase in wages.This movement is called "PARO" and has generalized to all the workers.But what does the "P.A.R.O."mean? Perhaps Penalty Advanced in the Ordinary Routine. I’m kidding. I noticed that in the intersection of the road, there was something written in the intersection of two streets:“PAR”. Thanks to my very advanced intellectual faculties I drew the conclusion that PARO meant blocking. These capabilities are not common. I forbid you to think that.It is not given to all the world.
Now I can explain the causes of the PARO movement.
Since the second globalization in 1990, Colombia has been contracting TLC with developed countries like the United States and European countries.
According to the history of trade unions, these contracts between North and South are generally for the benefice of the North. The North argues that they lead to a better distribution of wealth globally. The TLC, which is one of the free trade agreements, is a contract between the North (the United States, Europe) and the South (Colombia).
What are the themes imposed by developed countries to developing ones?
Firstly, the North demands that the South eliminates subsidies to its domestic producers.They ratified it on November 17th, 2013 while northern countries themselves are careful not to do so. They also subsidize their domestic producers up to a billion dollars every day.
Secondly,the North requires the South to reduce the duties associated with the importation. The southern states are being forced to raise new taxes, generally from workers to compensate for the losses created by the opening of trade barriers.
Thirdly, northern multinationals require that any policy of national preference is abolished, this in order to ensure equality between the parties.
Fourthly,the North asked southern governments to privatize their services, goods or companies. The import quota are required to the South whereas the North can export unlimited quantities for sale in the South. The North imposes on southern governments to adapt their constitutions and local laws according to the rules which are established in the TLC.
Finally, it is essential to repatriate profits obtained by northern mutinationals in order to ensure that there are no restrictions on remittances or control of southern governments.
So we can underline the inequality between northern countries who require or impose and southern countries who suffer from free trade. With apolitical chessboard like this one can we still talk about the famous argument of equalizing global distribution of wealth?
The North argues that free trade is going to give cheaper products of better quality.
As an example we have the United States. It contracted the TLC (free trade) with them with strong rules on quota.The United States argues that both are going to increase the gross domestic product. This indicator is a reference of the government behavior. America had a quota of exportation of agricultural products. The only problem is that they haven’t got the same level of development. So the United States can respect this contract, but Colombia can’t. At that time “campecinos” (agricultural labor) are scared of american agricultural products.
I see two problems concerning the “PARO” movement in Colombia. On the one hand, there is an obvious external problem: what allowed the northern countries to exploit Colombian resources? This can be the main problem. On the other hand, there is an internal problem: why the government doesn't want to work for the population?
The North against or with the South.
The South was born in 1955 at the conference of Bandoeng in Indonesia when nationalist leaders in Asia and Africa proclaim their commitment to anti-colonialism. The nationalist leaders were the northern countries. We can add South America.
In 1960, the split between the Soviet Union and China was over, and seventeen African countries obtained their independence. A year earlier Fidel Castro overthrew Batista in 1962 and welcomed the Soviet rockets. This period, marked by increased rivalry between East and West, saw the organization of the Third World, trying to avoid the domination of one or the other power, as a movement called "non-aligned" at the Belgrade Conference in 1961.
Since this time, Northern have a yoke over Southern. In 1944, Northern built our world in Bretton Woods where a new monetary system was born. This monetary system had a goal: to move from a military world warto a commercial one but not to equalize human well-being. There is still a gap between South and North.
So for the Western countries, the following years are also synonyms with high economic growth: the colonial bilateral relations cedent instead has a “development cooperation", or other multilateral initiatives such as "decades to the development" of the UN, the regional initiatives of Yaounde, the Alliance for Progress and the creation of UNCTAD.
This period shows the efforts of the developing countries, which recently became sovereign countries, to mimic the economic policy of industrialized countries to reach the same standard of living. These strategies are not aggressive regarding the rest of the world, but simply adaptive and dominated by the capital: capital investment is primarily the result of growth and financial factor is the main obstacle . At that time, the world is controlled by neoclassical models and theory. The classical theory argues with tools which are pertinent in an infinite world.
A few years before, in 1935, Keynes obviously showed in his book The General Theory of Employment, Interest and Money that classical model and theory are not relevant to a global world.
Since 1970 China operated mimic of the economic policy of industrialized countries in order to win this crazy race and be competitive.Our crisis of 2008 came back from Fedex market in the United States, the first developed economy at that times. The hegemony of the United States started to reduce.After 2008, the first place is disputed between United states and China. In the 1970s China was considered a developing country.China had made a spectacular catch which lead to a boom of this economy, and so one.
Research of rent by government
Throughout modern times, the Colombian government has been fighting against corruption. Corruption in the government is like distortion in a market. If the market doesn't work well, the government can’t reach its goal. Corruption is too strong in Colombia. Government set rules for the well being of its population. The population set corruption to escape the bad rules of the government. If corruption is strong in a country, it means that there is a problem about the rules or the government.
Pablo Escobar or transnational firms
We all heard about Pablo Escobar or Colombian dreams in the 1980s. At that time, the Colombian president was Julio Cesar Turbay Ayala. During this period a Colombian whose name was Pablo Escobar was considered one of the most powerful men in the world. He took his power by being a narcotraficant and selling cocean. His wealth was around 24 billions of dollars. He sold this drug from Colombia to America. To avoid American jails he built a jail in Colombia where he spent a very funny time thanks to the president. To reward the government he offered houses and money.
When I arrived on October 29th, 2013 in Colombia I heard about a transnational firm which decided to exploit coalt in Cerrejón in Colombia. A multinational firm came and exploited resources and labor force. I was chocked by how the government let this happen. A little time after, Cerrejon was the biggest mine of coal in the world, the environment of this town changed.
The whole Colombian government used to be rewarded by money to set up rules for the well being of a small part of the population but not for all. According to that assumption the government only makes laws to help a part of this population, a part of the wealthiest of the population. The less numbered.
If the poor part of the population is lucky to understand powerful people, corruption takes place.
What does corruption mean for the economy?
According to classical theories, it's when you don’t allow the market to work. That leads not to reach the Pareto optimal in a society. But we all known that Government doesn't let the market work without any distortion. People who work in an office of a lobby in America don’t let the market work. So we can set them at the same level as corruption. Like a Cornelian result: corruption is bad and lobbying is good. To conclude, we don’t have to avoid corruption. It is part of a country’s economy.
So what about southern people?
Everybody knows the theory of intra-industry trade. According to this theory the United States has to trade more with Europa than with South America. Why?
A little time after I arrived in Bogota, I went to the market to buy somethings like deodorant. I was surprised again when I saw that the design of that product was not the same.The matter of this is not the same in France and in Colombia. In France it is in glass while in Colombia it is in plastic. I suppose that this difference depends on the behavior of the consumers. I imagine that it's more difficult to produce glass than plastic.
The behaviors of consumers living in a same area are connected in a way which results in them behaving in similar fashion. Europe is an area and people in this area seem to have the same behavior. It was why I decided to go to Colombia. Because they are developed consumers can and would buy the same product. The same product trade can started.
All along the southern story, the North is building its chessboard with its rules and advance of knowledge regarding its land. This chessboard setup in 1944 during Bretton Woods. Wright map outweighs the Keynes plan. In other words, this defectuous world was built by the United States.
According to the theory of intra-industry trade, Africa and South America and Asian countries without China would have to trade together in order to build a new chessboard and to be strong on it.
This table shows the trade between developed and developing countries:
In this table we can see two indicators:
On the one hand, exportation over production. If this indicator equals 1, the economy exports all its production.
On the other hand we notice importation over consumption. If this indicator equals 1, this economy consums only foreign goods and services.
For both indicators, if the value is more than 1 that means importation or exportation is more than production or consumption. It is the inverse situation if the value is less than 1. This shows that during 1978-81 in developed countries the trade of chemicals and other semi manufactured products equaled to 1. That means that the economy consumed what it imported.
The world is divided into two parts: a developed country and a developing one.According to this simplification in a better world the exportation of the developed country is equal to the importation of the developing country: Thereby we found that this is not true.
The exportation of the developing country minus the importation of the developed country is decreasing while the importation of the country minus the exportation of developed country is decreasing but not at the same level. What does this mean?
In this table and according to the table 2, I remove the commercial balance. Let’s not forget that we are in situation with two countries: one is developed and the other one is a developing country. We can say that for the first line the exportation of the developed country are more important than the importations for the developing country. That shows the intra industrial trade in the developed country.
Regarding the second line, the values are positive, that shows the importations of the developed country are higher than the exportation of the developing country.
If we look carefully that shows that the developed country produces and consumes more international products than the developing country.
I want to underline something very important, my goal is not to divide the world into North and South or developing and developed or central and periphery. I would only like to show what globalization gives to all the world. I am happy to observe that, even if we have gone through the “Washington consensus", a change in people's minds mistaking place".