Colombia - Economic growth : problems and prospects (Vol. 4 of 12) : Industry : manufacturing and mining

RETPR,N Ti) RESTRICTED REPO RTS D[) C 775. Report No. WH-200a WITHIN ONE WEEK This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted os representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION ECONOMIC GROWTH OF COLOMBIA: PROBLEMS AND PROSPECTS (in XII volumes) VOLUME IV INDUSTRY: MANUFACTURING AND MINING November 1, 1970 South Arnerica Department  CURRENCY EQUIVALENTS (Certificate Market Selling Rate of Exchange) End 1968 1 US$ 16.91 Pesos 1 Peso = US$0.05913 End 1969 1 US$ 17.90 Pesos 1 Peso = US$0.05586 End-March 1970 1 US$ - 18.20 Pesos 1 Peso US$0.05494  TABLE OF CONTENTS Page No. INTRODUCTION **** ........* * - *-* - * *** - ...............*.. 1 PART ONE: MANUFACTURING I THE ROLE OF MANUFACTURING IN THE COLOMBIAN ECONOMY 3 II THE GROWTH OF MANUFACTURING SINCE 1953: OUTPUT, VALUE-ADED AND EMPLOYNENT .................... 8 III GENERAL CHARACTERISTICS OF COLOMBIAN MANUFACTURING 17 IV GOVERNIMT MEASURES AFFECTING INDUSTRIALIZATION: FISCAL, XONETARY A4ND SOCIAL LEGISLATICN ........ 26 V GOVERNMENT MEASURES AFFECTING INDUSTRIALIZATION: PROTECTION AND EXPORT PROMOTION ... .. 35 VI THE STRUCTURE AND COMPETITIVE POSITION OF COLOMBIAN MANUFACTURING ......................... 56 VII RPIONAL STRUCTURE OF INDUSTRY . ........... 90 VIII PROJECTED GROWEH AND ITS IMPLICATIONS FOR TRADE, E!PLOYMENT AND INVESTMENT ................ 106 II CONCLUSIONS ............ o....118 PART TWO: THE EXTRACTIVE INDUSTRIES x MIr .....ee............. 121 XI PETROLEUM . .. .........-.- 136 APPENDICES: 1. STATISTICAL APPENDIX 2. NOTE ON COLOMBIAN MANUFACTURING STATISTICS 3. THE MINING CODE 4. POTENTIAL MINING PROJECTS 5. PHOSPHATE DEPOSITS 6. PROPOSED PREINVESTMENT STUDIES ANNEXES: SECTOR REVIEWS 1. IRON AND STEE 2. PULP AND PAPER 3. SYNTHETIC FIBERS 4. CHICALS 5. WOOD PROCESSING   INTRODUCTION 1. The scope of the discussion which follows relating to Colombian industry encompasses various objectives. The most important are to des- cribe the growth and structure of the industrial sector, to discuss and evaluate government measures that have affected its development and to provide policy recommendations relating to its future growth. For purposes of this study industry is defined as including manufacturing and mining. Part I of this Report (Chapter I - IX) deals with the manufacturing sector. Part II (Chapter X and XI) discusses extractive industries -- metallic and non-metallic mineral mining and petroleum. 2. In Chapter I, manufacturing's share in gross domestic product, employment and fixed investment identify the sector's role in the Colombian economy. The contribution of the small "handicraft" industries to manufac- turing output and employment is analyzed. The size of the Colombian market for various categories of manufactures is presented to indicate the role of foreign trade in manufactures. 3. Chapter II analyzes the growth of output and employment in manu- facturing between 1953 and 1967 on the basis of available statistical in- formation. Growth rates in manufacturing as a whole and in broad catego- ries such as consumer goods, intermediate goods and capital goods are given for the first and second halves of this period to indicate the changes which have occurred in the pattern of growth. 4. Chapter III presents information on Colombian manufacturing such as the scale of enterprises, the importance of different legal forms of ownerhsip, financing requirements and how they have been met. It also describes briefly labor and employer organizations. 5. Chapter IV discusses the measures taken by Government in the fields of taxation, monetary policy and social legislation as they affect the manu- facturing sector. 6. Chapter V discusses commercial policy as it affects the manufac- turing sector. It deals with tariffs, and non tariff import restrictions and export incentives. The discussion embraces the operational aspects of the foreign trade control mechanisms as well as their economic impact. 7. Chapter VI, the longest chapter, first presents a comparison of the manufacturing structure of Colombia with that of Brazil. A detailed analysis of the major Colombian industries follows. Each industry is discussed individually and those aspects which shed light on its inter- national competitive position are analyzed - so far as the data permit. In a number of industries, specific suggestions are made which would im- prove their position; suggestions concerning export marketing possibilities, effects of changing the import regime, and multiple-shift working are made.  -2- 8. Chapter VII describes the regional distribution of manufacturing in Colombia, pointing especially to the concentrations of particular indus- tries in specific cities or regions and to the implications of this loca- tional pattern for future industrial growth. 9. Chapter VIII analyzes the implications for industrial production, foreign trade, employment and investment of probable changes in the size and character of the domestic market for manufactures. The prospects for expansion of manufactures exports are also discussed. 10. The final chapter of Part I, Chapter IX, summarizes the conclu- sions drawn from the discussions in the previous chapters. 11. Part II of the Report deals with the extractive industries. Chapter X considers mining other than petroleum while Chapter XI briefly analyzes the status and outlook of the petroleum industry.  L A/V CO~lOMBIA :~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~OT A\ MERICAS 7.h6%,t , ~ j/4 tyl ATANTr ' / 3.5% "7MGA.N6 CESAR / 5. - NEA T _s U I /A 9 .C O R D 0 5 ^ e. s ,- ~~~~' z$)O 'I I I i N T A N D E : A 'COROOBA Is (5 3 -9 C 1 t A C A $ RISAt CALDJ RCUNDINAMARCA' , ' t }>