Author:Juan Gutierrez (University of Oxford)
Paper short abstract:
This paper will study how governance measures adopted at the national level in Colombia prepared (or not) subnational governments for the present low-price environment and for the high volatility of most commodity markets.
Paper long abstract:
Colombia is the only Latin American country that has an ad-hoc system specifically designed to manage the oil and mineral revenues. This system was established by the 1991 Constitution and later developed by the royalties law in 1994. The legislation laid three basic set of rules: i) the mechanisms used by the State to extract revenues from the exploitation of non-renewable resources by private on state-owned companies; ii) the share of the rents destined to subnational governments and; iii) how these governments could invest these revenues.
The system has been amended and adjusted several times since its inception, but the most important reforms were approved in 2011, in the midst of the last commodity boom cycle. These reforms aimed to address the low performance (e.g. impact of people's wellbeing) of the investments of oil and mineral royalties in the previous two decades. According to Government and Congress these reforms had four objectives: i) promote equity; ii) increase savings; iii) improve good governance and iv) enhance regional impact.
Did the measures adopted over the past 15 years prepared the Colombian governments for the present low-price environment and for the high volatility of most commodity markets? Did the last reform change the political economy of royalties investment? I will address these questions by presenting a comparative case study of three regions of Colombia that depicts what actors and factors drive the management of resource revenues by subnational governments.
The end of the commodity super-cycle and its implications for oil- and mineral-exporting countries