Colombia

Colombia has made impressive strides in
reducing poverty and promoting shared prosperity during the
last decade. Extreme poverty fell from 17.7 percent in 2002
to 8.1 percent in 2014, while total poverty (including
moderate poverty) fell from 49.7 percent in 2002 to 29.5
percent in 2014. The decline implies that 6.2 million people
left poverty in the period. The multidimensional poverty
rate, which takes into account education, health, labor,
childcare, and housing, has also experienced a remarkable
decline from 49 percent in 2003 to 21.9 percent in 2014. The
number of multidimensional poor declined by 9.8 million.
Shared prosperity indicators followed a similar trend,
especially after the second half of the decade. Between 2008
and 2013, the income per capita of the bottom 40 percent of
Colombians grew at an average rate of 6.6 percent,
significantly higher than the national average rate of 4.1
percent for the same period. Economic growth that led to job
creation has been the main driver of poverty reduction and
shared prosperity gains. The economy sustained an average
GDP growth of 4.4 percent during the 2000s, almost 2
percentage points higher than the previous decade. For the
period 2002-2013, economic growth explains 73 percent of the
reduction in extreme poverty and 84 percent of the reduction
in total poverty. Moreover, price stability, and in
particular stable food prices contribute to poverty
outcomes. As in the case of poverty reduction, labor income
growth is the main determinant of shared prosperity in
recent years in Colombia. Labor income represents at least
fifty percent of income growth for the poorest 10 percent of
the population, and up to 70 percent for those in the fourth
decile, in the period 2008-2013. This evidence highlights
the importance of high growth and low inflation for
achieving the World Bank’s twin goals in Colombia.