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Despite the positive progress of the monetary poverty indicator, inequality has remained unchanged in Colombia for the last 50 years

OCH Blog Finanzas 2024

Este contenido es producido por OCH Group, Independent Member de GGI en Colombia.

Colombia has made significant progress in terms of monetary poverty, which has been reduced by 24.9pp since 1991. - Illiteracy has shown a steady decline, affecting only 4.8% of the population by 2023. - Inequality, on the other hand, has remained at the same levels as at the end of the 20th century. Progress in poverty and education has failed to translate into greater levels of equality. This is one of the great structural challenges of the Colombian economy.

Since the enactment of the 1991 Constitution, Colombia has experienced a significant transformation in social policies aimed at guaranteeing fundamental rights and improving the living conditions of the population. This change brought with it the prioritization of the fight against poverty, the promotion of education as a fundamental right and the reduction of inequality. In this sense, it is worth identifying, at least in this dimension, the challenges facing the country within the framework of sustainable development.

To begin with, monetary poverty is one of the most representative indicators of a country’s economic well-being, since it reflects the population’s living conditions, available income and employment generation. This indicator is also the focus of many public policies implemented in Colombia during the last decades. In 1991, 57.9% of the population was living in monetary poverty. Since then, the indicator has shown a general downward trend, with significant declines during the first decades of the 21st century. Despite economic cycles and periods of recession over the course of these years, in 2023 the indicator stood at 33.0%, a reduction of 24.9 percentage points (pp) in more than three decades. The sustained reduction reflects to a greater extent the benefits derived from sustained economic growth, as well as advances in social policies, such as conditional transfers (e.g., Familias en Acción). However, the fact that 33% of the Colombian population is still below the poverty line (set for 2023 at $435,375 pesos) represents an urgent and critical challenge for the country.

OCH Blog Finanzas 02024

The illiteracy rate, which measures the percentage of people over 15 years of age who cannot read or write, is another social indicator that has shown a constant and significant decrease over the last three decades. In 1991, illiteracy affected 11.0% of the population. Thanks to educational policies aimed at increasing primary and secondary school coverage, which today reaches almost 100%, this percentage will reach only 4.8% in 2024. Thus, a reduction of 6.2pp is consolidated.

In contrast to the progress made in poverty and illiteracy, inequality measured by the Gini coefficient has shown a less favorable evolution. In 1991, the Gini was 0.53 and, despite fluctuations over the decades, by 2023 this indicator had increased slightly to 0.55. This is evidence that the benefits of economic growth and improvements in poverty and education have not been sufficient to reduce inequality. Factors such as the concentration of wealth and regional productivity gaps have contributed to inequality, remaining one of the country’s main structural challenges. Despite the implementation of redistributive policies and social programs, they have not been sufficient to close existing gaps.

Thus, some social indicators in Colombia since 1991 reflect significant progress. The reduction of monetary poverty and illiteracy are notorious, but great challenges persist in terms of inequality. To achieve sustainable and inclusive development, it is necessary to implement more effective redistributive strategies, close territorial gaps and improve the quality of education, ensuring that the benefits of growth reach the entire population.

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Si este tema es de tu interés, requieres este servicio o nuestra asesoría, contacta al experto. Llámanos en Medellín al 6042666474 o vía Whatsapp al 3012085777.