Business Versus Business? Grupos and Organized Business in Colombia

Latin American Politics and Society, Spring 2005 by Rettberg, Angelika

A consideration of the historical evolution of organized business as a whole, however, reveals a more nuanced picture. In contrast with the 1940s, 1950s, and 1960s, when business associations wielded considerable power over policy (Bejarano 1985; Rettberg 2001a; Sáenz 1992, 2002), associations today are weaker, less effective, and less representative of their members (Losada 2000; Ocampo 1994; Urrutia 1983). In their glory days, business associations were key partners with government in the implementation of the ISI strategy and the main channel of communication between the state and the business community. Forty years later, business associations are often portrayed as paper tigers, in reference to their loss of aggressive capacity in national politics. Even the once-powerful Coffee Federation is facing severe challenges in the form of growing competition by new producers (such as Vietnam), low international coffee prices, competition from other Colombian export products, and internal financial and accounting difficulties.

Several factors have contributed to this weakening. They include an increasing diversification of the economy since the 1970s, the effects of the market reforms undertaken in the late 1980s and early 1990s, and the consolidation of grupos in the 1990s.2 The emergence of a growing number of sectors and subsectors in the economy has led to the formation of a multiplicity of associations. According to Urrutia (1983, 27), from only 26 associations in 1950, the number grew to 155 by 1980, and in the 1990s to more than 2000. For most associations, the cost of a diversified economy was the dilution of their individual power and increased struggles for government attention and access to members. In conjunction with their voluntary character, Colombian associations are plagued by chronic insolvency (Urrutia 1983; Losada 2000) and by fluctuating membership (Sánchez and Rothlisberger 1989, 82; Rettberg 2000).3

This trend was accentuated in the course of the 1990s market reforms, especially those involving economic liberalization and deregulation (Edwards 1995). The elimination of import licenses and development funds, which the government distributed and for which business associations competed, as well as the creation of an independent central bank that limited access to cheap credit, deprived the associations of their structure of privileges (Revéiz 1997). As a consequence, incentives to belong have decreased.

The Consejo Gremial, the economywicle union of associations that led business opposition to Samper during the 1994-98 period (see table 1), reflects these circumstances. Created in 1991 to provide a common platform for business and government to discuss and coordinate economic policy (Kline 1996), the Consejo Gremial includes some of the largest and oldest associations in the country (Cepeda and Umaña 1994, 93-97). Like its Mexican counterpart, the Consejo Coordinador Empresarial, the Consejo Gremial represents a significant portion of national production (at least 60 percent of production per sector). The Colombian Consejo lacks formal ties to state or executive institutions, however. It has neither official headquarters nor a stable institutional or administrative infrastructure. Its rules require that decisions be unanimous, but highly flexible to accommodate the Consejo Gremial 's heterogeneous composition. In this sense, it is ill suited for cohesive action.