Colombia Gets High on GDP Statistics
Why will Colombian illegal drug exports guarantee U.S. imports in the form of foreign aid?
January 14, 2000
Even though Congressional Republicans are generally stingy on foreign aid, that is fortunately not the case for drug-ridden Colombia. This country with a population of only 41 million is estimated to provide 80% of the cocaine bought and sold on U.S. streets.
No wonder Colombia is the third-largest recipient of U.S. foreign aid. While the Secretary of State’s trip to Bogotá highlights what’s at stake, as we see it Colombia has a long way to go. Let’s recall …
When, in 1999, Colombia’s Finance Minister announced that the country would include the value of the its cocaine harvest in official estimates of national income, Colombia’s GDP growth rate jumped by about one percentage point.
But to avoid being accused of “narco-loading” its economic statistics, Colombia’s national statistics agency said it would refrain from including the value-added of processing cocaine and heroin. That would have a major impact on the country’s official growth rate. Colombia’s GDP would jump by $7 billion — a hefty 8% increase from the current official level of $87 billion.
This government pronouncement reminded us of a friend who, toiling away as an economist many years ago in a European finance ministry, came across an IMF report on Ecuador in which the authors had included a line for “illegal drug exports” in their estimate of the country’s balance of payments.
Apparently, this sort of transparency did not sit well with the IMF’s powers-that-be. Two weeks later, a brief page of “errata” arrived, instructing the reader to change “illegal drug exports” to “exports of an unofficial nature.” Much to the IMF’s dismay, these exports will now be considered official in Colombia.
But an even greater change is on the horizon for Colombia. When Dick Grasso, chairman of the New York Stock Exchange, traveled to Colombia in June 1999, he went there as an emissary of U.S. capitalism. Meeting with the commander of one of the country’s leftist guerilla groups, Mr. Grasso held out the promise of a boon of economic investment from U. S. financial markets if the rebels made peace.
Colombia thus finds itself in the middle of a three-pronged attack to change its ways — with the IMF launching a war on drug revenues, the New York Stock Exchange pressing for peace, and U.S. Secretary of State Madeleine Albright doling out crucial buckets of foreign aid.