Overall Score: 71.7 World Rank: 28
Colombia Quick Facts/United States
- Population: 47.2 Million/316.4 Million
- GDP: 527.6 Billion/16.8 Trillion
- GDP Growth: 4.3%/1.9%
- GDP Per Capita: $11,189/$53,101
- Unemployment: 10.5%/7.5%
- Inflation: 2.0%/1.5%
- Foreign Direct Investment: $16.8 Billion/$187.5 Billion
A legal system is used for interpreting and enforcing laws. Property rights is an important factor of legal systems. Property rights allows individuals to own private property, secured by law that is approved by state. For Colombia, their court system has delays and is somewhat inefficient. There is a possibility of corruption and expropriation but it is very rare.
A competitive market is when a large number of manufacturers challenge one another to satisfy the needs of consumers. Government spending considers the level of government expenditures as a percentage of GDP.The government expenditures equals 28.3 percent domestic economy and 32 percent gross domestic product for public debt. It is proven that too much government spending that leads to long term budget losses and the build up of sovereign debt is one of the most crucial drags on economic dynamism.
Limits on Government Regulation
Government regulations is a slow process. It slows new business strategies but allows businesses to become dependent on regulations. Fiscal freedom is a perfect example of limited government regulations. Fiscal freedom allows for both direct tax concern in terms of the highest tax rates on personal and corporate incomes and the total amount of tax revenue as a percentage of GDP.
An Efficient Capital Market
An efficient capital market is made to understand ones ability, a nation must have a technique that creates the capital into wealth-creating projects. Business freedom is a total indicator of the skill of government regulations of businesses. Business freedom is scored on 10 factors from 0 to 100, 100 being the freest. Colombia was ranked in the 80's for most of the regulations.
Low Tax Rates
Tax rate is the tax appointed by the federal government and few states based on a personal taxable income or a businesses earnings. Financial freedom allows individuals to spend revenue on goods and services that they choose because of the low tax rates. Colombia's highest personal income tax rate is 33 percent. Its highest corporate income tax rate is 25 percent.
Free trade is international trade without restrictions or tariffs. Trade freedom effects the import and exports of goods and services. Trade freedom is scored upon two ways, the trade-weighed average tariff and the non-tariff barriers. The average tariff rate is 4.4 percent. Colombia is a part of the Pacific Alliance as well as a few other countries. This alliance allows foreign and domestic investors to be treated equally.
Colombia's economic success story
A peace agreement in Colombia would bring more opportunity for growth, and allow them to be more productive. It would add an additional one to two percent in their GDP growth. After a peace agreement has been made it will allow Colombia to grow at least 6 or 7 percent per year.