Road infrastructure, exports, and oil revenue

Without transportation infrastructure, there is no development. This thesis seems to have had little resonance in the country until very recently.

A study by the World Bank indicates, for example, that if Colombia had prioritized its infrastructure in the mid-1990s, as other countries like South Korea, New Zealand, Turkey, and Malaysia did, which improved their infrastructure in four years, it would have achieved Gross Domestic Product (GDP) growth rates of 3 percentage points per year.

It seems that a quarter of a century later we are catching up. This is due to the decision of the previous Government to launch the Fourth Generation of Road Concessions program, 4G, considered by many as one of the most ambitious in the history of the country's infrastructure, perhaps comparable to that led by President Rojas Pinilla in the 1950s. In the case of the 4G, it involves an investment of nearly 50 trillion pesos, with more than 8,000 kilometers of roads, of which 1,370 are dual carriageway and 159 tunnels.

But not everything is rosy, as evidenced by the facts and pointed out by the Minister of Transport, Ángela María Orozco. At the beginning of the current Government, out of 29 projects, 23 were stalled due to difficulties in their financial closure, environmental and security issues, and the fear of many officials to make decisions due to corruption scandals. It was necessary to “recover credibility in the sector and move it forward with transparency,” according to the Minister.

In a recent journalistic special, Juan Martín Caicedo Ferrer, president of the Colombian Chamber of Infrastructure, points out that to date, of the 29 projects, 17 have financial closure, six have 50 percent work progress, and it is expected that two will start operating in the remainder of the year.

But there are others in trouble, such as the Ruta del Sol Section II, and others with considerable delays like the dual carriageway to Buenaventura, which, according to the ANI, would be completed in 2026; twenty years after it was decided to undertake it.

It is evident that, despite the enormous challenges, Colombia has made unprecedented progress in its road connectivity within the country, but it remains turned away from the outside.

It seems that other modes of transportation -air and sea- have been chosen to fulfill that purpose. It is necessary, for example, to prioritize the dual carriageway Popayán-Pasto and Pamplona-Cúcuta and promote new connections with neighbors, such as the Tumaco-Esmeraldas road in Ecuador. And to dream again of the Pan-American Highway: once the highway from Medellín to Turbo is completed, 87 kilometers would be missing to connect with Panama, that is, with Central and North America.

Now, the existing advances have been possible thanks to private financing. This explains why the transport and communications sector represents only 51% of the national budget. The concession system has proven to be extraordinary but, the truth is, it is insufficient; greater public resources are required.

One option is to allocate a significant part of the national oil revenue for a time to the construction of strategic road infrastructure, and to commit the regions to contribute to this end, with royalty resources.

Hydrocarbons have become a decisive source of income for the country. Between 2005 and 2015, they contributed 200 trillion pesos to the treasury. It will be necessary to analyze the lessons learned from that last bonanza, as over the years these resources have not always been invested well or in the most strategic way.

Oil revenue should not be used as pocket money for the Nation or the regions, nor for low-impact projects. It must contribute to the competitiveness of the country and the regions; and the most appropriate way to achieve this is to invest strategically in road transport infrastructure.

Moreover, if we really want to further diversify the economy and fiscal revenues, bolster tourism and agro-industry, and not depend so much on oil and its derivatives in the export basket -which represented 40% in 2018- we must decisively turn to conquering international markets, otherwise, what are Free Trade Agreements for?.

In a recent analysis published in Carta Financiera, Sergio Clavijo and other economists point out that our economy is boxed in. It indicates that after the “lost decade,” Latin America pinned its hopes on FTAs but that the region's penetration into international markets leaves much to be desired.

The (Exports + Imports) / GDP ratio of the region hovers around 41 percent while in Asia it is 80 percent. Mexico and Chile do not fare so badly, with 78 and 56 percent respectively. In Colombia, it is only 35 percent.

This is due, according to ANIF, to the fact that “53 percent of our production is 1,000 kilometers from the nearest port to the north and about 500 kilometers from the nearest port to the west.” In addition to climbing twice 2,500 meters in height of mountain ranges.

The above is to emphasize that the country must not let its guard down regarding transport infrastructure. If we want to grow economically and diversify our exports, without replacing external sales of hydrocarbons, we must continue to invest in infrastructure. And the moment could not be better, as the country has a Minister of Transport who, in addition to being executive and honorable, knows as few do about foreign trade.