Photographer: Alejandra Parra/Bloomberg

Saving Globalization: Colombia's Cardenas Says Focus on Lifting Lives, Not Just Trade

Boosting exports with currency devaluation isn't enough to improve competitiveness

Globalization is under fire in some developed economies. But in parts of the Americas voters are embracing leaders looking to deepen integration and trade. Bloomberg Benchmark is publishing a series of conversations with regional thought-leaders on the topic of globalization. Mauricio Cardenas is Colombia's finance minister under President Juan Manuel Santos, who founded the Social National Unity Party. Bloomberg's David Biller conducted the interview, which was condensed.

What is the biggest challenge for leaders like you in Colombia and Latin America to promote free trade now?

The greatest challenge for a significant number of emerging economies—and Colombia is facing it—is the fall of international commodity prices. We should advance toward a diversified economy that can export value-added products into global production chains. What we’ve seen so far is new opportunities arising in a context of more competitive exchange rates. However, selling abroad and consuming more domestic products are not results that derive automatically from devaluation.

As globalization becomes less popular in developed nations, why in Latin America are we seeing a swing back to more market-oriented candidates?

Colombia is growing at a rate that’s much faster than the region. The success of our growth and our adjustment has been balanced.

We applied measures to control spending as part of a strategy we called Intelligent Austerity, inspired by the Third Way philosophy of responsible macroeconomic management with strong social and development focus.

What is the best way for countries to handle immigration policy in a globalized world, particularly with humanitarian crises prompting waves of refugees?

Colombia had a very successful experience repatriating hundreds of Colombian nationals during the border crises with Venezuela in 2015. The whole government mobilized to receive the migratory inflow, providing help with state services including registration, health care, humanitarian aid and mechanisms to incorporate them into receiving cities.

It is very common in these debates, above all when they deal with free trade and opening of borders, that emotion, doctrinaire or ideological positions be involved. A problem arises when these voices become dominant, not leaving space for evidence and for an orderly assimilation of change.

How can countries distribute gains to the lowest social classes without deficit spending?

Colombia’s Fiscal Rule is a road map to social investment with responsibility. Since the start of President Juan Manuel Santos’s government in 2010, 4.5 million Colombians came out of poverty and almost 2.5 million came from extreme poverty. We did it thanks to a series of policies, job creation and formalization, plus ambitious programs to fight poverty. Today Colombia is a predominantly middle-class country and domestic consumption is the economy’s new engine.

What is your favorite film to demonstrate the success or failure of globalization?

I’d recommend "The Big Short,'" because it is the perfect example of how an interconnected global financial system has great advantages, but also risks that should be considered by governments, investors and other players of the financial system.

I also like "Nahid," by the Iranian director Ida Panahandeh. It shows how a person from anywhere in the world can fight for and aspire to a better life for oneself and one’s children.

 


Read more conversations in the series, with Chile's Ricardo Lagos and Mexico's Pedro Aspe.

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