the two fashions of develpment - population project

The Two Fashions of Development6

University of Texas at Austin, Online Database, 2008University of Texas at Austin, Online Database, 2008

Table 1: General DemographicsColombiaGermany

Total Population47,662,00080,900,000

Rate of Natural Increase (RNI)1.3%-0.2%

Fertility Rate 2.31.4

Infant Mortality Rate18.03.3

Gross National Income per capita (GNI PPP)Population Reference Bureau, Online Database, 2013

$11,890$44,540

Table 2: Urban DemographicsColombiaGermany

Percent UrbanPopulation Reference Bureau, Online Database, 2013

76%73%

Most Populated Cities: Colombia20102015Germany20102015

Bogota8,500,0009,521,000Berlin3,450,0003,489,000

Medellin3,594,0004,019,000Hamburg1,786,0001,818,000

CaliUnited Nations, Department of Economic and Social Affairs, Population Division. World Population Prospects, Online Database, 2012

2,401,0002,627,000Munich1,349,0001,401,000

Data from United Nations Data Retrieval System, Online Database, 1996

Data from United Nations, Department of Economic and Social Affairs, Population Division. World Population Prospects, Online Database, 2012





Today Germany stands as the fifth largest economy in the world, with a GDP of more than USD 3.4 trillion in 2013, and is Europes leading exporter (51% of GDP in 2013). Germany has developed one of the worlds most robust manufacturing industries with a variety that extends from refined metals, vehicles and machinery to food, pharmaceuticals and high-tech products. After the fall of the Berlin Wall and the reunification of Germany, several European funds assisted the once struggling country with the sum of 3 billion euros that were used for subsidizing productive investments and the related infrastructure, small and medium-sized enterprises (SMEs), research, technological development and innovation, as well as for the protection and improvement of environment, as well as improving economic competitiveness and labor market integration (Simon 2009). As stated by Corvinus University of Budapest Professor of Economics Gyrgy Simon, the fundamental elements for German economic success in the past decade also include the creation of an effective system of vocational training for the youth, which in the course of time would skyrocket the countrys human capital and consolidate one of todays most prosperous labor markets in the world. According to Richard Anderson from BBC, German labor reforms that enhanced employment protection laid the foundation for a stable and flexible job market and while unemployment in the US and the rest of Europe burst through the ceiling, Germanys jobless number barely flinched (Anderson 2012). Another reason argued in the article for current German economic stability was the austerity towards the Euro credit bubble in the late 1990s, where most countries incurred in a copious amount of debt, given the low inflation and decreasing prices of commodities, that later crippled their economies and paved the way for crisis. However, one of Germanys main economic challenges is none other than salvaging the European Union from the recession they timely anticipated. Market Watch columnist Satyajit Das claims that any attempt to recover the Euro zone would cost Germany from 750 billion to 1.5 trillion euros, a liability the government is currently debating to undergo (Das 2013). In the same article, the author states also that German dependency on the EU has intensified, as recent data shows a growing amount of imports from neighboring countries and a widening trade deficit with emerging markets in China, Japan and Russia (Das 2013). Another major issue arises from the conjuncture of the increasing domestic energy demand and the Crimea crisis, where Russia, one of Germanys largest trade partners, plays the antagonist role in front of the international community. Natural gas accounts for 11% of Germanys total energy consumption of which Russia provides 30%. And, after the nuclear plant disaster following the earthquake in 2011 in Fukushima, Japan, followed by the Germans shutting down several nuclear power generators, Russias input has taken greater importance (Eddy 2014). Under the circumstances of increasing energy demand and prices while overcoming rough diplomatic conditions with a key supplier, the German economy faces a bumpy ride in the future.Even though Colombia remains a less developed country (LDC), it has experienced a constant and promising economic growth over the last 15 years. According to the World Bank, the Colombian GDP has surpassed the worlds during most of the last decade and now stands among the fastest growing global economies. Six months ago, Colombian Minister of Finance Mauricio Cardenas ratified the good news, announcing that the national economy had grown 6.4% over the last quarter with a projected GDP growth of 4.3%, in accordance with the data from the National Administrative Department of Statistics (DANE) and the World Bank. Although encouraging growth might come by the hand of risky volatility and decay, the Colombian economy has shown to be extremely resilient. During the 2008 global economic crisis, while the worlds GDP was reduced by 2%, Colombias GDP growth was 1.7%, showing the strength of the incipient domestic economic sectors. Most of the countrys revenue derives from primary activities, specially the mining of coal and hydrocarbons (oil and natural gas). Colombia has taken great advantage of what British economic historian Victor Bulmer-Thomas denominates as the commodity lottery, which attributes the Colombian economys significant profits to the high world prices of oil and coal, the countrys main exports, in the past years (The Economist 2014). Both growth and resilience have brought upon Colombian territory increasing direct foreign investment, which has not only boosted primary activities, but also expanded the service industry that surrounds these commodities. According to the Central Intelligence Agency (CIA), the annual level of foreign direct investment - notably in the oil and gas sectors - reached a record high of $16.8 billion in 2013, an increase of 7% over 2012. This, along with the current governments neoliberal foreign economic policy and the signing of several Free Trade Agreements with crucial trading partners like the US and China, has allowed Colombia to make the leap to becoming a major Latin-American economic motor. However, drug trafficking and poverty continue to be major economic challenges, and have persistently burdened the country to reach its true potential. Although the illicit narcotics no longer deceivingly pump up the economy as they did in the 80s and early 90s, they still pose a negative externality to the market and to society as they stand in the middle of the armed conflict and still generate income to outlaw groups. Moreover, the internal war against drugs is the main cause of the forced displacement of more than 4 million people (almost 10% of the total population), which is directly associated with increasing poverty. According to the World Bank, Colombias poverty rate (poverty line set at less than $4 per day) in 2012 was 32.7% compared to the regions 26.6%. Both the armed conflict and overall social inequality are the major causes of poverty in Colombia. Another challenge for the Colombian economy is the development of a modern, widespread and efficient infrastructure. In the essay A Normal Latin American Country? A Perspective on Colombian Development, Harvard Professor of Government James Robinson claims that the lack of economic amenities, of which a large portion represents infrastructure, is explained by a matrix of economic and political institutions which did not create the incentives necessary to generate sustained investment and economic progress (Robinson 2005). Hence, the absence of a quality road network or an advanced railroad system is not to blame as much as it is today on the hostile topography, but on the clientelistic if not partisan scope of Colombian politics over economic activity and the deadweight loss it incurs. One last test for the Colombian economy is to develop a more robust industrial base that dissuades the burden on primary mining activities, because, as OGorman mentions, increased crude production causes oil stocks to rapidly dwindle (OGorman 2012).During the last two decades, the German government has treated the availability of quality health care for all of its citizens as a top priority, and thus Germany has today one of the most superior healthcare systems in the world. Germany spends 11.3% of its annual GDP on health while the government accrues 19.1% of its expenses to the same sector, as noted by the World Bank. But, what is truly remarkable of such investment is that German policymakers aimed at extending eligibility, improving benefits, defining quality services, and spreading geographic access to medical services (Altenstetter 2003). According to Altenstetter, even though legislation is controlled by the ruling political party, neither the Christian Democrats nor the Social Democrats ever relaxed control over health insurance by leaving supervision to a junior partner in their coalition; health insurance was too important (Altenstetter 2003). No doubt the World Health Organization (WHO) reports Germany has 36 physicians per 1000 population, one of the highest ratios in the world, and thusly low infant mortality rates of 3.3 children per 1000 live births and a high average life expectancy of 80 years. However, the rising costs of such a quality medical care, especially due to the more economically efficient but less equitable international health care markets, pose a steep challenge for the future. Given increasing upkeep, the government imposed or negotiated budgets and spending caps at a national and even a sectorial scale in the 1993 and 1999 health reforms (Altenstetter 2003). Although some political groups push for changing the financing of health care from general taxes to revenues and diminish the public cost incidence, this measure would hinder the systems plurality and economic inclusiveness for low income populations. Another issue is the aging population, of which a majority is involved in pensions and retirement plans that generate no inflows for the system and stresses the burden on younger cohorts and public funds. Despite the fact overall health conditions have improved since the 1993 Health Reform, the current system and the health promoting entities (EPS) that conform it have experienced major quality (the service provided) and administrative (the budget) flaws. The reform created a contributive regime in which users had to pay 12% of their monthly wages in healthcare taxes (twice the amount under the previous policy), and a subsidized regime that increased government funding of public health care in proportional manner (Martnez). According to the US Library of Congress, the new scheme has widened population coverage by the social and health security system from 21 percent (pre-1993) to 56% in 2004 and 66% in 2005 (Federal Research Division 2007). Nevertheless, as reported by the World Health Organization, by 2012 there were only 14.7 doctors and 6.2 nurses per 10,000 individuals compared to the regions 20.8 doctors and 45.8 nurses per sample, and it is no wild assertion that given the immense social inequality in Colombia a majority of the these are allocated for the higher income minority. As Dr. Alfredo Pinzn from the Simon Bolivar Public Hospital in Bogota pointed out: the problem is the quality of the care they get: It is not nearly as good as at [private] hospitals that serve for people who are able to pay for health insurance(Webster 2012). This is reflected on the World Health Organization data on life expectancy per income group for 2012, where the upper and high income figure 74 and 78 years while low and lower income, the majority of population, expect to live 62 and 66 years respectively (and consequently have higher mortality rates). Another significant portion of the issue is the administrative flaws that lay hidden under the bureaucratic network of the EPSs, some of which have even escalated to corruption scandals. In 2013, total health expenditures represented 6.8% of Colombias GDP of which 75.8% corresponded to the public sector (Padilla, lvarez, Montoya, Chaparro and Herrera 2011). Nonetheless, the average Colombians medical needs remain unmet too often, both in terms of availability and quality, because of the lethargy of improper administration and corruption. In what concerns diseases, Epidemiology and Control of Malaria in Colombia names Colombia figures alongside with Brazil as the countries with the most reported malaria cases in the continent, accounting for 70% of the cases (Padilla, lvarez, Montoya, Chaparro and Herrera 2011). The article also points out that more than 90% of the malaria cases in Colombia are confined to 70 municipalities (about 7% of the total municipalities of Colombia), with high predominance (85%) in rural areas (Padilla, lvarez, Montoya, Chaparro and Herrera 2011). Even though rural population in Colombia represents around 25% of the total population, the majority of people this sample belong to low or lowest income strata. Therefore, this serves as another example of unequal health care allocations from demographic and economic viewpoints. Even though Germany and Colombia have both a similar percent urban, 73% and 76% respectively, the causes of this demographic arrangement differ. While Colombia is experiencing the second and third stages of the Demographic Transition, a period of time where the country is industrializing and urbanizing, Germany is already a post-industrial developed country in the models fifth stage. Therefore, Colombia high percent urban is due to the incipient industrial and economic growth, while Germany is going through a de-urbanization movement. Colombias major cities are expected to grow significantly in the coming years while population in German metropolis will remain the same or even diminish. Nevertheless, in line with the demographic transition, Colombia has fertility rates above the population replacement rate, thus a positive natural increase, whereas Germany has fertility rates way below the replacement rate and is currently experiencing a natural decrease in population. This may generate problems for the European country in the future because population is clustering in the older nonproductive cohorts when the younger productive base of the pyramid is shrinking. Socio-economic issues include not only the inability to replace older generations with younger ones, but also to sustain their economy in the Euros agitated credit ocean and the current costly healthcare system that, ironically, is prolonging the lifespan and therefore the size of the older nonproductive population. Economic differences between Colombia and Germany also follow up with the Demographic Transition theory. On one hand, Colombia remains a less developed country with an economy driven by primary activities and little secondary and tertiary sectors that back them up, especially in the mining industry. On the other hand, Germany poses among the worlds greatest manufacturers of goods of every kind with a gigantic secondary activity base accompanied by a strong exporting power. However, taking health care as an example, Germany has less inequality than Colombia. While the South American country still struggles to provide quality medical assistance with acceptable standards and widespread coverage, Germanys system guarantees the basic needs of its population with economic inclusiveness, greater indemnity and broader accessibility (e.g. physician density). These discrepancies are also the measure of the German governments larger investment in the sector and of the smaller capital losses due to administrative mishandling and corruption, as has occurred in Colombia in the past years.BibliographyAltenstetter, C. "Insights From Health Care In Germany." American Journal of Public Health 93, no. 1 (2003): 38-44. Accessed November 24, 2014. http://www.ncbi.nlm.nih.gov/.Anderson, Richard. "German Economic Strength: The Secrets of Success." BBC News. August 15, 2012. Accessed November 19, 2014. http://www.bbc.com/news/business-18868704.Das, Satyajit. "Germany's Economy Is Not as Strong as Europe Believes." MarketWatch. December 4, 2013. Accessed November 18, 2014. http://www.marketwatch.com/story/germanys-economy-isnt-as-strong-as-europe-believes-2013-12-04.Eddy, Melissa. "German Energy Push Runs Into Problems." The New York Times. March 19, 2014. Accessed November 26, 2014. http://www.nytimes.com/2014/03/20/business/energy-environment/german-energy-push-runs-into-problems.html?_r=0.Federal Research Division. "Country Profile: Colombia." US Library of Congress. February 1, 2007. Accessed November 18, 2014. http://lcweb2.loc.gov/frd/cs/profiles/Colombia.pdf.Martnez, Felix L. "La Reforma." Salud Colombia. http://www.saludcolombia.com/actual/lareform.htm.O'Gorman, Joey. "Colombia Pursues Shale as Oil Stocks Deplete." Colombia Reports. October 18, 2012. Accessed November 22, 2014. http://colombiareports.co/colombia-pursues-shale-as-oil-stocks-deplete/.Padilla, Julio Cesar, Gilberto lvares, Roberto Montoya, Pablo Chaparro, and Scrates Herrera. "Epidemiology and Control of Malaria in Colombia." Scientific Electronic Library Online 106, no. 1 (2011): 114-22. Accessed November 20, 2014. http://www.scielo.br/pdf/mioc/v106s1/15.pdf.Robinson, James A. "A Normal Latin American Country? A Perspective on Colombian Development." Scholars at Harvard, 2005. Accessed November 17, 2014. http://scholar.harvard.edu/jrobinson/files/jr_normalcountry.pdf.Simon, Gyrgy. "Growth, Inflation and Profit Formation in the German Economy." Social Science Research Network, 2009. Accessed November 20, 2014. http://www.ssrn.com/en/.Webster, P. C. "Health in Colombia: A System in Crisis." Canadian Medical Association Journal 184, no. 6 (2012): E289-290. Accessed November 23, 2014. http://www.cmaj.ca/content/184/6/E289."Global Health Observatory Data Repository." World Health Organization. January 1, 2013. Accessed November 18, 2014. http://apps.who.int/gho/data/node.country.country. "Passing the Baton." The Economist. August 2, 2014. Accessed November 16, 2014. http://www.economist.com/news/finance-and-economics/21610305-colombia-overtakes-peru-become-regions-fastest-growing-big-economy-passing. The World Factbook2013-14. Washington, DC: Central Intelligence Agency, 2013 . https://www.cia.gov/library/publications/the-world-factbook/index.html"World DataBank." The World Bank DataBank. Accessed November 17, 2014. http://databank.worldbank.org/data/home.aspx.

the two fashions of develpment - population project

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