Colombia is one such country that has used the current benign conditions to improve public finances but that does not mean that all the pieces of an economic growth formula are in place. The country has the same pitiful loans to gross domestic product (GDP) ratio of 25% that it had in the 1970s.

“The financial sector has a structural problem in that the ratio of credit to GDP is the same today as in 1975. It’s a very low number and it’s stagnant,” Colombia’s finance minister, Alberto Carrasquilla, tells me at the Inter-American Development Bank annual meeting in Belo Horizonte in Brazil.

Reforms that are being considered by the government to address this problem include strengthening property rights – the critical point about emerging market reform that is always being advanced by Hernando de Soto, the head of the Lima-based think tank Liberty and Democracy Institute. He argues that while property rights are inadequate, poor people cannot participate properly in economic progress.

Mr de Soto’s latest take on the right and left in politics is that the right understands property rights but does not care about the poor; the left cares about the poor but does not understand property rights. Successful governments will be those of the centre that can appreciate the whole picture.


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