Colombia and the Coffee Export Upsurge During the 1920's Decade. V. 'Macroeconomic Policy Reactions Against the 1930's Crisis'

22 Pages Posted: 7 Dec 1999

Abstract

The significant expansion of the Colombian open economy during the first thirty years of the century originated on the expansion of the coffee industry, the Panama Reparation, the increase of foreign direct investment and credit obtained abroad. From 1925-1929 alone coffee revenues represented US$ 500 million, Panama Reparation and direct foreign investment US$ 200 million and trade balance deficit which amounted to US$ 209. Nearly one billion dollars financed the widespread of the modern market mechanisms in Colombia figure much larger at present dollar value. The paper attempts to explain what under those referred world facts were the reactions of the Colombians against the balance of payments crisis and difficult access to long term world credit worthiness. To detain economy contraction some institutional changes followed like the elimination of the Gold Standard, introduction of the Exchange Comptroller and the use of the Peruvian-Colombian conflict in the Amazon town of Leticia. This to justify internal debt finance to induce the expansion of the economy trough the encouragement of public works development.

El auge de la economia Colombiana durante las tres primeras decadas del siglo se debio al incremento de las exportaciones de cafe, la reparacion de Panama, la inversion extranjera y el credito externo. Entre 1925 y 1929 el valor acumulado de las exportaciones fue de $ 500 millones de dolares. La indemnizacion de Panama la inversion extranjera y el credito externo generaron cerca de $ 200 millones de dolares. La importacion de bienes y servicios aumentaron a una tasa mayor que las exportaciones, a tal punto, que entre 1925 y 1929, la deuda comercial acumulada ascendio a US $209 millones. Como consecuencia de estos factores, el pais recibio durante este ultimo periodo cerca de $ 1.000 millones de dolares, que a precios de hoy es una suma significativa. El articulo indaga sobre las reacciones de los colombianos ante el desajuste de la balanza de pagos durante la Depresion. La caida de las importaciones fue grande al igual que la inversion ante el dificil acceso a las fuentes crediticias externas de largo plazo. Para recuper la economia y contener el deficit cambiario, iniciaron el desmonte del Patron Oro, instauraron la Oficina de Control de Cambios y utilizaron el conflicto diplomatico de la Guerra de Leticia para favorecer el financiamiento interno y recuperar la demanda interna a traves de la movilizacion de los recursos de ahorro domestico.

Note: Abstract is in English and Spanish. Paper is in Spanish only.

JEL Classification: N26

Suggested Citation

Pérez-Toro, José, Colombia and the Coffee Export Upsurge During the 1920's Decade. V. 'Macroeconomic Policy Reactions Against the 1930's Crisis'. Available at SSRN: https://ssrn.com/abstract=187470 or http://dx.doi.org/10.2139/ssrn.187470

José Pérez-Toro (Contact Author)

Universidad Jorge Tadeo Lozano ( email )

Carrera 4 No 22-61
Bogota, DC Cund 1
Colombia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
79
Abstract Views
2,202
rank
361,470
PlumX Metrics