A first approach to the impact of
the real exchange rate on industrial
sectors in Colombia
Lya Paola Sierra and Karina Manrique L.
ABSTRACT
Much has been said about possible symptoms of Dutch disease in Colombia in the wake
of a marked upsurge in commodity prices and the significant real appreciation of the
national currency. This paper examines whether the real effective exchange rate had an
impact on industry during the period 2000-2010. Specifically, it evaluates the effect of
the appreciation of the real exchange rate on the value added of 63 industrial sectors
in Colombia using the Arellano and Bond (1991) generalized method of moments (GMM)
estimator. Overall, our results confirm a negative relationship between real exchange rate
appreciation and industry. The analysis showed that real exchange rate appreciation had
a significant impact on the value added of 21 sectors: a negative effect for 18 sectors
and a positive effect for 3 sectors.
KEYWORDS
Currency instability, industry, industrial development, competitiveness, econometric models, statistical
data, Colombia
JEL CLASSIFICATION
O24, L60, F31
AUTHORS
Lya Paola Sierra is an assistant professor at the Department of Economics of the Pontiical Javeriana
University in Cali, Colombia. lyap@javerianacali.edu.co
Karina Manrique L. is a Professor with the industrial engineering curriculum project at the Francisco José
de Caldas District University in Bogota, Colombia. kmanriquel@udistrital.edu.co
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I
Introduction
In 2003, the Colombian currency began one of the most
marked periods of real appreciation in the country’s recent
history. Apart from the decrease recorded during one year
owing to the global inancial crisis, the real exchange
rate appreciated by 51% in the period 2003-2011. This
is the seventh highest rate of real appreciation out of a
group of 95 countries, according to a World Bank index
of real exchange rates.
One factor that contributed to the appreciation was
the dramatic increase in oil prices during the period. Since
oil makes up about half of the country’s total exports, the
275% rise in real oil prices resulted in windfall proits
and pushed up the nominal exchange rate.
The real exchange rate can influence the
competitiveness of industrial products in international
markets. As the Colombian peso appreciates in real terms
it drives up the prices of local goods with respect to those
from the rest of the world. This makes Colombian products
less competitive than their overseas competitors and
may have a negative impact on output and employment
in sectors that produce tradable goods. In response to
this problem, newspapers and journals, encouraged
by the industrial sector, have recently issued warnings
about the possible contagion of the Dutch disease in
Colombia. The possible effects on manufacturing of
this real appreciation of the exchange rate in Colombia
have motivated this research, which sets out to determine
the effect of the real exchange rate on industrial value
added for the period 2000-2010.
We used data for 63 sectors from the Annual
Manufacturing Survey, along with macroeconomic
data, to conduct estimations using the Arellano and
Bond (1991) generalized method of moments (gmm)
estimator. We used cross-departmental, cross-sectoral
information to evaluate the impact of real appreciation
on each of the industrial sectors in Colombia.
The rest of the paper is organized as follows: in the
next section, we briely review the relevant literature;
in section III we review the data and the econometric
approach used in the study; in section IV we present the
results of the model; and lastly, conclusions are drawn
in section V.
II
Literature review
The real appreciation of the peso against the dollar since
2003 (see igure 1) has raised fears among politicians and
the industrial sector of de-industrialization in Colombia.
As the period of appreciation coincided with the great
upsurge in real oil prices (see igure 2) —a major
export for Colombia— national newspapers started to
debate whether Colombia was already suffering from
symptoms of Dutch disease.1 Many economic analysts
have written columns on this subject and the President
of Colombia even made a reference to the topic in a
Lya Paola Sierra gratefully acknowledges the inancial support
received from the Pontiical Javeriana University in Cali.
1 Other possible causes of the real appreciation of the exchange rate
could have included the positive trends in foreign direct investment,
the increased privatization of State agencies and, externally, excess
liquidity in the United States and Europe.
keynote speech given at the headquarters of the Economic
Commission for Latin America and the Caribbean (eclac)
in Chile:
“We are trying to attract investors to sectors other than
oil and mining because we are now facing a prelude
to the Dutch disease owing to the concentration of
investment in these sectors.”
President Juan Manuel Santos, 17 August 2011.
However, despite the media interest in the subject,
few articles have been written on the possible symptoms
of Dutch disease caused by the recent real appreciation
of the currency in Colombia.
Dutch disease refers to the fallout caused by windfall
proits from a resource discovery (Corden and Neary,
1982; Corden, 1984; Beverelli, Dell’Erba and Rocha,
2011), a resource price boom (Egert and Leonard, 2008;
Algieri, 2011; Poncela, Senra and Sierra, 2012), an
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FIGURE 1
Colombia: real effective exchange rate index, 1990-2011
(Index 2005 = 100)
130
120
110
100
90
80
2009
2010
2011
2008
2009
2010
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
60
1990
70
Source: World Bank.
FIGURE 2
Annual average Brent crude oil spot prices, 1990-2010
(Dollars per barrel)
100
90
80
70
60
50
40
30
20
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
1990
10
Source: Energy Information Administration.
upsurge in remittances (Acosta, Lartey and Mandelman,
2009; Guha, 2013) or higher capital inlows in the form
of foreign aid or foreign direct investment (Lartey, 2011;
Arellano and others, 2005; Prati and Tressel, 2005).2
The term “Dutch disease” is attributed to an article in
2
Buiter and Purvis (1983) examine the relative importance of different
shocks as causes of de-industrialization, by looking at the impact on
the real exchange rate of factors including higher oil prices, a domestic
oil discovery and monetary disinlation.
The Economist in 1977, which described the detrimental
impact on the industrial sector in the Netherlands following
the discovery of major gas deposits in the North Sea.
Corden and Neary (1982) formulated the core theoretical
model of Dutch disease. They used a Salter-Swan
framework (Salter, 1959; Swan, 1960) to describe how
windfall proits in a country can cause real appreciation
followed by reductions in competitiveness and output in
the non-resource tradable sector. A resource boom may
lead to a real appreciation through two channels. First,
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newfound wealth can lead to higher rates of national
absorption, through spending either by the government
or directly by the owners of the factors. This increase
in demand drives up the prices of non-tradable goods,
forcing real appreciation. Second, the nominal exchange
rate can appreciate in a lexible exchange rate regime
owing to burgeoning inlows to the country. Given the
traditional real exchange rate equation (see equation
(1)), where the real exchange rate (Q) is represented in
the equation as the price of domestic goods (P) relative
to those from abroad (P*) adjusted by the nominal
exchange rate (S), both forces lead to real exchange rate
appreciation. Corden and Neary (1982) referred to this
as the “spending effect”.
Q = S*
P
P*
(1)
Taking logs, the real exchange rate is also denoted as:
qt = st + pt − p *t
(2)
Here, st is the log of the foreign currency price of
domestic currency (United States dollars per Colombian
peso), pt and p *t are the logs of the national and foreign
country price indices, respectively. In this deinition of
the real exchange rate, an increase in qt means a real
appreciation of the local currency and a decrease in qt
relects a real depreciation.
Apart from the “spending effect”, Corden and
Neary (1982) describe a “resource movement effect”,
referring to the reallocation of factors, especially labour,
from the manufacturing sector to the booming resource
sector. The reduction of labour in the manufacturing
sector contributes to the de-industrialization process.
The literature seems to point to a clear causal link
between a resource boom and a real appreciation of the
national currency. However, the subsequent link between
real appreciation and relative de-industrialization remains
unclear (see Magud and Sosa (2010) for a judicious
review of the literature on Dutch disease). In fact, a
theoretical article by Buiter and Purvis (1983) posits
that a resource boom might have a positive effect on
manufacturing on the basis of the coexistence of real
appreciation and an upsurge in growth. Manufacturing
is thus contemporaneously inluenced by appreciation,
which shrinks international competitiveness, and local
demand for manufacturing, which pushes up sales. Since
Colombia, which is a small economy, takes the world
price of manufactures as a constant, manufacturing
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output could be maintained through the higher domestic
demand associated with the resource boom. That is,
losses in competitiveness would be compensated by
gains in domestic demand.
Moreover, real appreciation can potentially increase
competitive pressures and force industrial restructuring,
which can in turn boost productivity. The effect of the
real exchange rate on manufacturing output depends
on the exposure of industries to international markets.
Industries that export most of their output, for example,
might see their proits fall as they lose competitiveness
in periods of real appreciation. Whereas industries that
import most of their intermediate inputs could beneit
from local currency appreciation, since real appreciation
tends to make these inputs cheaper. To summarize, a
real appreciation shock has an ambiguous effect on
proitability and industrial performance. Some of the
papers that examine the real exchange rate and industrial
performance include Burgess and Knetter (1998); Campa
and Goldberg (1995 and 2001); Goldberg, Tracy and
Aaronson (1999); Goldberg (1993); Campbell and
Lapham (2004); Ekholm, Moxnes and Ulltveit-Moe
(2012), and Berman, Martin and Mayer (2012).
Although the relationship between the real exchange
rate and industrial output remains unclear, there appears
to be strongly supported cross-country statistical evidence
that overvalued currencies are associated with slow
growth, especially in less developed countries (Rajan
and Subramanian, 2011; Rodrik, 2008, and Berg, Ostry
and Zettelmeyer, 2012). Tradable sectors, particularly
those in manufacturing, seem to be the link between
the real exchange rate and economic growth. Rodrik
(2008), for example, shows that the bigger a tradable
industrial sector is in a less developed country, the more
overvaluation hurts growth.
In the case of Colombia, there are few articles
that examine the real exchange rate in relation to
manufacturing performance. The article bearing the
closest resemblance to this study is Echavarría and
Arbeláez (2003), who measured the effect of the
exchange rate on investment, sales and profits in
Colombian companies in 1994-2002. Unlike our article,
however, Echavarría and Arbeláez (2003) took into
account a devaluation period in a irm-level analysis,
which included only manufacturing irms. Carranza
and Moreno (2013) analysed the vertical industrial
chain of Colombia for the period 1990-2010, evaluating
possible industrialization, but did not specifically
assess the effect of the exchange rate on industry. Other
studies addressing the subject include Clavijo (1990),
which evaluated the effect of the real exchange rate on
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productivity, and Rhenals and Saldarriaga (2007), which
explored the relationship between the real exchange
rate and Colombia’s economic growth. In this paper we
concentrate exclusively on the effects of the Colombian
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real exchange rate on manufacturing value added.
Further research should be carried out to evaluate the
potential impact of a resource boom on economic growth
in Colombia.
III
Econometric approach and data
1.
Data
We used annual data from the Annual Manufacturing
Survey conducted by the National Administrative
Department of Statistics (dane) of Colombia. The
survey contains information on 63 industrial sectors in
23 departments (geographical areas) in Colombia from
2000 to 2010. The names of the sectors are listed in annex
1. We used variables from the Annual Manufacturing
Survey such as employment, number of irms per industry
and wages paid to personnel.
In addition, we used data on macroeconomic
variables such as the real effective exchange rate from
the International Monetary Fund, the per capita income
for each department from dane and the lending rate
from the central bank of Colombia. We constructed the
ratio of imported intermediate goods, which takes into
account the ratio of industrial intermediate imports to
total intermediate goods, with a view to controlling for
each industry’s openness to foreign markets.3
As a irst look at the evolution of the sectors from
2000 to 2010, we grouped the data using the two-digit
numerical codes of the International Standard Industrial
Classiication of All Economic Activities (isic) adapted
for Colombia by dane (see annex 2). According to this
information, the sector with the greatest value added
in 2000 was the manufacture of food products and
beverages, followed by the manufacture of chemicals
and chemical products; the manufacture of coke, reined
petroleum products and nuclear fuel; the manufacture
of furniture; and the manufacture of other non-metallic
mineral products. From 2000 to 2010, the top two sectors,
food and chemicals, saw their share in the total value
added slide from 28% to 27% and from 16% to 14%,
respectively. Likewise, the contribution to total value
added of the manufacture of other non-metallic mineral
3
All data have been log-transformed.
products contracted from 7.5% to 7.2%. By contrast, the
manufacture of furniture and the manufacture of coke
and reined petroleum products increased their share in
total value added between 2000 and 2010. The furniture
sector accounted for 7.7% of total value added in 2000,
increasing to 8.7% in 2010, and the manufacture of coke
and reined petroleum products saw the largest increase
in the whole sample of sectors, from 7.9% to 12.8%.
As we can see from this information, industrial
value added is concentrated in a small number of sectors
in Colombia. The top ive sectors accounted for 67%
of total value added in 2000, and by 2010 their share
had risen to 70%.
2.
The model
We propose the following model:
ydst = b0 + b1 wdst + b2 it + b3 qt + b4 IIRdst + fit
ydst = a0 + b2 qt Ds + b3 rgdpdt + b2 it
+ b4 wdst + b6 IIRdst + fit
Ds =
/
23
(3)
(4)
Di
1
where
.
The variable y represents the value added of
industrial sector s in department d, in year t. The real
exchange rate is represented by the variable qt and Ds
is a dummy per industry. The rest of the variables are:
real per capita income for each department, rgdpdt,
real wage per industry wdst, real interest rate, it, and the
variable IIRdst representing the intermediate input ratio.
In equation (3) we aim to measure the overall impact
of the real exchange rate on the industry in general.
The marginal effect of luctuations in the real effective
exchange rate, whether real appreciation or depreciation,
on each industry is captured by parameter β 2 in
equation (4).
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We are aware of some known identiication problems
regarding the estimation, such as the multi-causality of
industrial value added and the real exchange rate, as well
as the possibility of multicollinearity between dependent
variables. In order to address these problems, we estimated
a dynamic linear panel data model, using the ArellanoBond gmm estimator. The advantage of this model is that
it relaxes the strong exogeneity assumption, allowing
the explanatory variables to be correlated with the error
term. The strategy is to use the lags of the variables as
instruments. A brief analysis of the characteristics and
assumptions of this model is shown below.
Consider a model that includes the lag of the
dependent variable, Yit as a regressor (the dynamics
introduced in the model are given by this feature). The
basic dynamic autoregressive model panel data can be
represented as follows:
Yit = aYi, t - 1 + X'it b + hi + uit
(5)
where t = 1,…,T.
X'it is the row vector of observed explanatory
variables for individual i at time t; β is the vector of
parameters to be estimated; ηi represents the time invariant
individual effect and uit, represents the idiosyncratic errors.
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In equation (5), as in equations (3) and (4), lags
of the dependent variable are taken as explanatory
variables. This fact introduces bias to the estimation by
ordinary least squares (ols), since these violate the strict
exogeneity assumption. To tackle this issue Anderson and
Hsiao (1981) and Arellano and Bond (1991) suggested
differencing the model and then using instrumental
variables estimations.
DYit = aDYi, t - 1 + DX'it b + Dvit
(6)
By transforming the regressors by irst-differencing,
as shown in equation (6), the ixed speciic effect, ηi, is
removed, because it does not vary with time. We follow
Arellano and Bond (1991) and use the gmm estimator,
which takes into account the passing information from
Y and X as instruments.
As a robustness check, we also estimated the
Arellano and Bover (1995) system gmm estimator.
According to these authors, if the autoregressive process
is persistent, or when T (number of years) is small, then
the lagged levels are weak instruments. They proposed
using additional moment conditions in which lagged
differences of the dependent variable are orthogonal to
levels of the disturbances.
IV
Estimation results
Before looking at the results disaggregated by industrial
sector, we irst show the results for equation (3), which
give an initial overview of the effect of the real exchange
rate on industry.4
We obtained estimates of equation (3). We report
the results for the two-step gmm estimator for both the
irst-differenced equation and the system equation.
We take as instruments the lagged levels dated t-2 and
earlier. As additional instruments, we take the lagged
differences dated t-1. The estimation results are reported in
annex 3. Annex table A.3.1 provides estimates for equation
(3) using the irst-differences gmm and the system gmm
estimator. The results in column (2) are controlled
4 In this section we refer to the sectors listed in table A.1.1 of annex
1, disaggregated at the three-digit level of the International Standard
Industrial Classiication of All Economic Activities (isic), Rev. 3,
adapted for Colombia by dane.
for departmental per capita income, whereas those in
column (1) are not. The lower part of table A.3.1 includes
the results of the Sargan test and Arellano-Bond test
used to evaluate the overidentifying conditions and the
serial correlation in the irst-differenced disturbances.
The results show that fluctuations in the real
exchange rate signiicantly affect the industrial sector in
general. In fact, a 1% appreciation of the real exchange
rate produces a 0.29% decrease in value added, ceteris
paribus, in both the irst-differences and system gmm
estimations. The real appreciation of the Colombian peso
creates a loss of competiveness in international markets
since local prices are higher than those of international
competitors. Also, domestic consumers replace expensive
national goods with cheaper imports.
When departmental per capita income is controlled
for, the results of the estimations for equation (3)
show that the real exchange rate has slightly less of an
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impact on the value added of the industrial sector. An
appreciation of 1% generates a reduction in the value
added of 0.26% in both the irst-differences and system
gmm estimations (columns numbered (2) in table A.3.1).
Interestingly, even though there is a negative effect of an
appreciation in the same year, we found that industrial
value added is affected signiicantly and in a positive
way by the lag of the real exchange rate.
With respect to the results disaggregated by
industrial sector corresponding to equation (4), as with
previous estimations, we report results for the two-step
gmm estimator for the irst-differenced equation, using
as instruments the lagged levels dated t-2 and earlier.
We evaluated two models: the irst (in column (1) in
table A.3.2) does not take into account the variable of
departmental per capita income, while the second model
(in column (2)) does control for the rgdpt variable.5
We found that the real effective exchange rate
had signiicant marginal effects in 21 industries. Real
appreciation generated a reduction in the value added of
18 of those industries. The manufacturing sectors that were
hit hardest were: television and radio receivers, veneer
sheets, inishing of textiles not produced in the same
production unit, rubber products, non-metallic mineral
products, and sugar mills and reineries. In contrast,
appreciation generated positive effects in the value added of
only three sectors: manufacture of optical instruments and
photographic equipment, publishing and the manufacture
of insulated wire and cable. Annex table A.3.3 contains
a summary of the sectors that are signiicantly affected
by luctuations in the real exchange rate (only the sectors
signiicantly affected by the variable qt in equation (4)).
It is striking that most of the sectors that are
negatively inluenced by the real exchange rate are those
that account for the largest share in industrial value added.
The exception is the manufacture of furniture, which is not
signiicantly affected by real exchange rate luctuations.
Surprisingly, the value added of the manufacture of
reined petroleum products has a negative relationship
with qt, that is, a real appreciation of 1% leads to a loss
in the value added of this sector of about 1.13%.
The speciication tests do not produce evidence
against any model. The Sargan test leads to non-rejection
of the null hypothesis of that model and overidentifying
conditions are correctly speciied. Furthermore, the
autocorrelation tests c1 and c2 (see notes to tables
A.3.1 and A.3.2) are consistent with the structure that
we proposed for the idiosyncratic error term.
5
We also estimated the system gmm model in this equation, however,
the Sargan statistic rejected the different models we proposed.
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In sum, the 18 sectors that are hit by appreciation
account for approximately 53% of total value added, on
average, between 2000 and 2010. Conversely, the three
sectors that beneit from appreciation represent 4% of
total value added (see annex table A.3.4). Our results
show, therefore, that real appreciation is detrimental to the
sectors representing more than half of total manufacturing
value added; however, for the 38 sectors that account
for 44.8% of total manufacturing value added, the real
exchange rate does not have a signiicant effect. This
non-signiicance may have to do with the degree of
openness of the Colombian economy: from 2000 to
2010, trade accounted for a 35% share in total gross
domestic product (gdp) on average. An appreciation
of the real exchange rate erodes the competitiveness of
domestic irms in the international market, which reduces
net exports and shifts part of domestic demand from
domestic goods to foreign goods. As a consequence,
according to the Dutch disease hypothesis, this leads to
a drop in production and employment. However, when
the degree of openness of the economy is not large, as
is the case in Colombia, these effects do not necessarily
spread to all the manufacturing sectors. Moreover, for
manufacturing, the domestic market is more important
than the external market. For the period 2000-2009,
for example, domestic sales represented about 83% of
total manufacturing sales, according to dane. A further
avenue for research would be to evaluate the long-term
impact of the real exchange rate on manufacturing as
the country becomes increasingly open to trade. This
paper should persuade policymakers to consider the
possible impacts of real exchange rate luctuations on
manufacturing in an economy that is wide open to trade.
It is important to note that the share of manufacturing
in gdp for the period 2000-2010 was only 15.4% on
average, while services accounted for 59.3%. Therefore,
we cannot be conclusive about the effects of the real
exchange rate on Colombia’s gdp. In fact, as shown in
igure 3, there was a huge decline in the contribution
of industry to Colombian gdp in the 1990s, coinciding
with the introduction of trade liberalization policies.
In our period of analysis, from 2000 to 2010, industry
recovered to some extent. According to some authors,
such as Echavarría and Villamizar (2006), the deindustrialization process in Colombia started in 1960,
with the decrease in industry’s share of employment,
and in 1970, with the decrease in its share of overall
production. Echavarría and Villamizar (2006), as well as
Poncela, Senra and Sierra (2012), did not ind evidence
of de-industrialization related to Dutch disease in the
long term.
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FIGURE 3
Colombia: share of services and industry in gross domestic product, 1965-2011
(Percentages)
65
60
55
50
45
Services
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
40
Industry
Source: Data Service & Information, [online] http://www.dsidata.com/default/page/slug/about.
V
Conclusions
In view of the national interest in the possible impact
on industry of real appreciation caused by the upsurge
in oil prices after the year 2000, we sought to evaluate
one of the symptoms of the Dutch disease by analysing
the impact of the appreciation of the real effective
exchange rate on the value added of 63 industrial sectors
in Colombia during the period 2000-2010.
We used the annual panel data set of the Annual
Manufacturing Survey carried out by dane, and conducted
estimations using the irst-differenced gmm estimator of
Arellano and Bond (1991).
Our results suggest that the real exchange rate had
a signiicant impact on the industrial sector in general.
We found that the effect was negative: that is, a 1%
appreciation of the real exchange rate produced a decrease
in industrial value added of between 0.26% and 0.29%.
The estimation results for individual industrial
sectors showed that real exchange rate appreciation had
a negative impact on 18 sectors and a positive impact on
3 sectors. It is striking that the real exchange rate had
no signiicant impact on most of the sectors (38) during
the period 2000-2010. The sectors that were affected
most markedly were those with a larger share in total
industrial value added. Overall, the sectors that suffered
as a result of the real appreciation of the Colombian peso
accounted for 53% of total manufacturing value added,
39% of all manufacturing employees and 36% of irms
in the manufacturing sectors.
The results in this paper provide initial insight into
the effects of the real exchange rate on the industrial
sectors in Colombia. Although this article cannot conirm
an acceleration of the de-industrialization process in the
period of study because a large number of sectors were
not affected by the real exchange rate, it gives a list of
sectors that are potentially sensitive to luctuations in
the real exchange rate. Government policy should focus
special attention on these sectors, which are potentially
harmed in periods of appreciation. Measures such as tax
breaks or credit facilities could provide temporary relief
to those sectors. Further research is needed to examine
how the real exchange rate affects other important
variables such as industrial employment, productivity
and number of irms per sector in order to evaluate the
total impact of the real exchange rate on manufacturing.
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ANNEX 1
Table A.1.1
Sectors included in the study
International Standard
Industrial Classiication of
All Economic Activities
(isic) Rev. 3 adapted for
Colombia
Sector
Production, processing and preservation of meat and ish
Processing of fruits, vegetables, oils and fats
Manufacture of dairy products
Production of grain mill products, starches and starch products, and prepared animal feeds
Manufacture of bakery products, macaroni, noodles, couscous and similar farinaceous products
Manufacture of coffee
Sugar mills and reineries
Manufacture of other food products
Manufacture of beverages
Manufacture of tobacco products
Preparation and spinning of textile ibres
Weaving of textiles
Finishing of textiles not produced in the same production unit
Manufacture of other textile products
Manufacture of knitted and crocheted fabrics and articles
Manufacture of wearing apparel, except fur apparel
Tanning and preparation of leather
Manufacture of footwear
Manufacture of travel goods, handbags and similar articles
Sawing, planing and impregnation of wood
Manufacture of veneer sheets, manufacture of plywood, laminboard, particle board
and other panels and boards
Manufacture of builders’ carpentry and joinery
Manufacture of wooden containers
Manufacture of other products of wood, manufacture of articles of cork, straw and plaiting materials
Manufacture of paper, cardboard and paper and cardboard products
Publishing
Printing
Service activities related to printing
Manufacture of coke oven products
Manufacture of reined petroleum products
Manufacture of basic chemicals
Manufacture of other chemical products
Manufacture of synthetic and artiicial ibres
Manufacture of rubber products
Manufacture of plastics products
Manufacture of glass and glass products
Manufacture of non-metallic mineral products n.e.c.
Manufacture of basic iron and steel
Manufacture of basic precious and non-ferrous metals
Manufacture of structural metal products, tanks, reservoirs and steam generators
Manufacture of other fabricated metal products and related metalworking service activities
Manufacture of general purpose machinery
Manufacture of special purpose machinery
Manufacture of domestic appliances n.e.c.
Manufacture of ofice, accounting and computing machinery
Manufacture of electric motors, generators and transformers
Manufacture of electricity distribution and control apparatus
151
152
153
154
155
156
157
158
159
160
171
172
173
174
175
181
191
192
193
201
202
203
204
209
210
221
222
223
231
232
241
242
243
251
252
261
269
271
272
281
289
291
292
293
300
311
312
A FIRST APPROACH TO THE IMPACT OF THE REAL EXCHANGE RATE ON INDUSTRIAL SECTORS IN COLOMBIA •
LYA PAOLA SIERRA AND KARINA MANRIQUE L.
128
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Table A.1.1 (conclusion)
International Standard
Industrial Classiication of
All Economic Activities
(isic) Rev. 3 adapted for
Colombia
Sector
Manufacture of insulated wire and cable
Manufacture of accumulators and electrical batteries
Manufacture of electric lamps and lighting equipment
Manufacture of other electrical equipment n.e.c.
Manufacture of electronic valves and tubes and other electronic components
Manufacture of television and radio receivers, sound or image recording or reproducing
apparatus, and associated goods
Manufacture of medical appliances and instruments and appliances for measuring,
checking, testing, navigating and other purposes, except optical instruments
Manufacture of optical instruments and photographic equipment
Manufacture of motor vehicles and their engines
Manufacture of bodies (coachwork) for motor vehicles; manufacture of trailers and semi-trailers
Manufacture of parts and accessories (auto parts) for motor vehicles and their engines
Building and repairing of ships and boats
Manufacture of aircraft and spacecraft
Manufacture of other transport equipment n.e.c.
Manufacture of furniture
Manufacturing n.e.c.
313
314
315
319
321
323
331
332
341
342
343
351
353
359
361
369
Source: prepared by the authors, on the basis of the International Standard Industrial Classiication of All Economic Activities (isic Rev. 3)
adapted for Colombia, as included in the Annual Manufacturing Survey conducted by the National Administrative Department of Statistics
(dane) of Colombia.
n.e.c.: not elsewhere classiied.
A FIRST APPROACH TO THE IMPACT OF THE REAL EXCHANGE RATE ON INDUSTRIAL SECTORS IN COLOMBIA •
LYA PAOLA SIERRA AND KARINA MANRIQUE L.
ANNEX 2
Industrial sector data
TABLE A.2.1
2000
Manufacture of food products and beverages
2001
2002
2003
2004
2005
2006
2007
2008
2009
Share 2000
Share 2010
(percentages) (percentages)
124 865 969
28.5
0
3 274
3 280
4 421
4 809
5 326
3 258
28 457
0.0
0.0
Manufacture of textiles
1 242 219 1 280 019 1 295 873 1 430 800
1 594 966
1 659 680
1 869 509
1 951 739
1 846 630
1 693 138
15 864 573
4.7
3.4
Manufacture of wearing apparel; dressing
and dyeing of fur
1 215 924 1 360 344 1 443 904 1 626 685
1 816 660
1 938 674
2 143 461
2 088 167
2 218 742
2 018 181
17 870 744
4.6
3.9
Manufacture of tobacco products
7 608 895 8 381 305 9 470 550 9 957 251 10 880 544 11 951 754 13 761 894 15 224 634 18 001 494 19 627 647
2010
1 420
1 134
1 535
27.1
346 945
360 758
392 524
468 904
524 803
519 861
512 624
3 967 757
1.0
0.9
Processing of wood, manufacture of products of wood and
cork, except furniture; manufacture of articles of straw
and plaiting materials
55 213
34 478
44 587
41 910
53 138
56 619
66 181
73 609
84 705
134 435
644 875
0.2
0.1
1 350 012 1 438 933 1 567 476 1 711 585
1 929 763
1 829 561
2 008 245
2 205 896
2 359 955
2 268 686
18 670 111
5.1
4.1
931 382 1 067 624 1 229 704
1 275 004
1 557 755
1 559 679
1 850 557
2 219 561
2 170 731
14 711 050
3.2
3.2
2 121 031 2 482 134 2 761 632 3 642 836
5 291 157
6 612 653
8 579 633
9 413 412 10 001 524
8 318 727
59 224 740
7.9
12.8
13.7
Manufacture of paper, paperboard and paper
and paperboard products
Publishing, printing and reproduction of recorded media
Manufacture of coke, reined petroleum
products and nuclear fuel
849 054
Manufacture of chemicals and chemical products
4 285 615 4 574 087 5 065 855 5 711 664
5 920 572
6 081 515
6 851 308
7 215 348
8 472 098
8 781 966
62 960 026
16.0
Manufacture of rubber and plastics products
1 187 576 1 385 012 1 546 592 1 700 688
1 930 744
2 231 217
2 485 124
2 780 749
2 766 491
2 990 309
21 004 502
4.4
4.6
Manufacture of other non-metallic mineral products
2 004 414 2 250 868 2 551 045 3 055 937
3 208 584
2 903 819
3 776 549
4 535 001
4 590 775
4 442 766
33 319 757
7.5
7.2
538 232
574 607
578 345
808 361
1 158 038
1 254 836
1 351 551
1 296 366
1 631 329
1 369 326
10 560 992
2.0
2.3
617 062
559 232
644 992
747 463
832 751
932 479
1 120 715
1 245 303
1 462 750
1 549 845
9 712 592
2.3
2.1
Manufacture of electrical machinery and apparatus n.e.c.
424 112
498 740
517 303
580 462
684 379
754 396
864 007
957 309
983 698
1 138 936
7 403 344
1.6
1.6
Manufacture of motor vehicles, trailers and semi-trailers
345 235
367 440
387 859
366 266
464 979
585 253
556 724
545 196
719 666
812 536
5 151 153
1.3
1.1
Manufacture of radio, television and communication
equipment and apparatus
32 597
37 065
47 318
47 995
47 234
10 380
13 509
27 181
27 414
18 493
309 188
0.1
0.1
Manufacture of medical, precision and optical instruments,
watches and clocks
58 053
74 692
80 937
88 549
102 238
103 450
114 961
121 966
109 493
142 964
997 303
0.2
0.2
Manufacture of motor vehicles, trailers and semi-trailers
Manufacture of other transport equipment
Manufacture of furniture; manufacturing n.e.c.
371 644
539 818
645 634
586 952
913 087
1 131 345
1 429 111
1 887 402
1 371 686
1 272 541
10 149 219
1.4
2.2
72 707
145 158
106 687
161 908
286 143
413 447
551 619
540 087
493 701
540 704
3 312 162
0.3
0.7
2 055 458 2 271 306 2 601 694 3 171 306
3 834 319
4 053 404
5 614 699
6 888 757
4 968 192
4 730 273
40 189 407
7.7
8.7
129
Source: prepared by the authors, on the basis of the International Standard Industrial Classiication of All Economic Activities (isic Rev. 3) adapted for Colombia, as included in the Annual
Manufacturing Survey conducted by the National Administrative Department of Statistics (dane) of Colombia.
Note: share 2000 and share 2010 correspond to the sector’s share of value added in the total industrial value added for 2000 and 2010, respectively.
n.e.c.: not elsewhere classiied.
2014
Manufacture of basic metals
Manufacture of fabricated metal products, except
machinery and equipment
DECEMBER
284 834
•
285 223
114
271 280
REVIEW
Tanning and dressing of leather; manufacture of footwear;
manufacture of travel accessories, luggage, handbags,
saddlery and harness
CEPAL
A FIRST APPROACH TO THE IMPACT OF THE REAL EXCHANGE RATE ON INDUSTRIAL SECTORS IN COLOMBIA •
LYA PAOLA SIERRA AND KARINA MANRIQUE L.
Colombia: value added of industrial sectors, 2000-2010
(Thousands of Colombian pesos and percentages)
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ANNEX 3
Estimation results
TABLE A.3.1
Colombia: estimation results for equation (3) showing the aggregate impact of the
real effective exchange rate on industrial value added
Generalized method of moments (gmm) estimates
First-differences
(1)
yt-1
0.603
(0.055)a
0.023
(0.019)
0.732
(0.043)a
-0.402
(0.063)a
-0.102
(0.038)b
-0.295
(0.056)a
-0.297
(0.087)b
0.05
(0.067)
-1.00E-08
(6.49E-09)a
yt-2
wt
wt-1
it
it-1
qt
qt-1
IITt
rgdpt
rgdpt-1
cons
Number of observations
Observations per group (average)
Sargan test p-value
c1 (p-value)
c2 (p-value)
1.806
(0.416)a
2 906
7.21
0.1404
0.000
0.2184
System
(2)
0.689
(0.062)a
0.047
(0.023)b
0.758
(0.047)a
-0.439
(0.067)a
-0.126
(0.039)a
-0.361
(0.060)a
-0.269
(0.0893)a
0.165
(0.081)b
-1.14E-08
(6.71E-09)c
0.022
(0.024)
-0.529
(0.176)b
7.084
(1.786)a
2 906
7.21
0.380
0.000
0.354
(1)
0.615
(0.040)a
0.029
(0.017)
0.727
(0.041)a
-0.39
(0.051)a
-0.087
(0.034)b
-0.286
(0.052)a
-0.297
(0.084)a
0.011
(0.064)
-1.12E-08
(0.00)a
3 355
7.712
0.3047
0.000
0.2907
(2)
0.658
(0.038)a
0.049
(0.020)b
0.744
(0.045)a
-0.395
(0.050)a
-0.118
(0.037)b
-0.360
(0.061)a
-0.261
(0.088)b
0.138
(0.076)c
-1.11E-08
(6.37E-09)c
0.02
(0.023)
-0.484
(0.154)b
6.565
(1.622)a
3 355
7.712
0.638
0.000
0.502
Source: prepared by the authors.
p<0.01.
b p<0.05.
c p<0.1.
Note: standard errors in parentheses. Sargan test for overidentifying restrictions. c1 and c2 tests for irst and second order correlation in
irst-differenced residuals.
a
A FIRST APPROACH TO THE IMPACT OF THE REAL EXCHANGE RATE ON INDUSTRIAL SECTORS IN COLOMBIA •
LYA PAOLA SIERRA AND KARINA MANRIQUE L.
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131
2014
TABLE A.3.2
Colombia: estimation results for equation (4) showing the disaggregate impact of
the real effective exchange rate on the industrial sectors
(1)
Coeficient
yt-1
yt-2
wt
wt-1
rgdpt
rgdpt-1
rgdpt-2
it
it-1
IITt
qt Ds
Production, processing and preserving of meat and ish
Processing of fruits, vegetables, oils and fats
Manufacture of dairy products
Production of grain mill products, starches and starch products,
and prepared animal feeds
Manufacture of bakery products, macaroni, noodles, couscous
and similar farinaceous products
Manufacture of coffee
Sugar mills and reineries
Manufacture of other food products
Manufacture of beverages
Manufacture of tobacco products
Preparation and spinning of textile ibres
Weaving of textiles
Finishing of textiles not produced in the same production unit
Manufacture of other textile products
Manufacture of knitted and crocheted fabrics and articles
Manufacture of wearing apparel, except fur apparel
Tanning and preparation of leather
Manufacture of footwear
Manufacture of travel goods, handbags and similar articles
Sawing, planing and impregnation of wood
Manufacture of veneer sheets, manufacture of plywood,
laminboard, particle board and other panels and boards
Manufacture of builders’ carpentry and joinery
Manufacture of wooden containers
Manufacture of other products of wood, manufacture of articles
of cork, straw and plaiting materials
Manufacture of paper, cardboard and paper and
cardboard products
Publishing
Printing
Service activities related to printing
Manufacture of reined petroleum products
Manufacture of basic chemicals
Manufacture of other chemical products
Manufacture of rubber products
Manufacture of plastics products
Manufacture of glass and glass products
Manufacture of non-metallic mineral products n.p.c.
Manufacture of basic iron and steel
Manufacture of basic precious and non-ferrous metals
(2)
Standard error
0.579
0.018
0.762
-0.390
(0.054)a
(0.018)
(0.041)a
(0.059)a
-0.109
-0.313
-1.160E-08
Coeficient
Standard error
(0.037)b
(0.057)b
(6.62E-09)a
0.661
0.039
0.765
-0.429
0.027
-0.344
0.062
-0.110
-0.331
-1.340E-08
(0.061)a
(0.021)c
(0.045)a
(0.062)a
(0.023)
(0.208)c
(0.199)
(0.038)a
(0.066)a
(6.870E-09)a
0.224
-0.013
-1.142
(0.482)
(0.340)
(0.482)b
0.256
0.006
-0.984
(0.478)
(0.324)
(0.482)b
0.118
(0.328)
0.240
(0.350)
-0.085
0.420
-1.151
-0.279
-0.045
0.299
-0.825
-0.822
-1.789
-0.107
0.424
0.506
-0.179
-0.538
-0.583
0.228
(0.170)
(0.383)
(0.401)a
(0.289)
(0.366)
(0.354)
(0.521)
(0.329)b
(0.625)a
(0.494)
(0.299)
(0.435)
(0.288)
(0.195)a
(0.558)
(0.802)
-0.075
0.618
-1.203
-0.247
0.154
0.143
-0.836
-0.839
-1.916
-0.041
0.459
0.544
-0.172
-0.545
-0.603
0.205
(0.199)
(0.417)
(0.412)a
(0.262)
(0.379)
(0.473)
(0.537)
(0.343)b
(0.703)a
(0.553)
(0.313)
(0.455)
(0.277)
(0.226)b
(0.610)
(0.802)
-3.681
0.803
-1.258
(0.214)a
(0.509)
(0.364)a
-3.810
0.835
-1.335
(0.184)a
(0.534)
(0.287)a
-0.357
(0.228)
-0.386
(0.180)b
-0.912
0.679
-0.582
-0.536
-1.137
-0.337
-1.033
-1.326
-0.143
0.428
-1.278
-0.726
-0.636
(0.385)b
(0.359)c
(0.257)b
(0.955)
(0.542)b
(0.551)
(0.507)b
(0.389)a
(0.168)
(0.420)
(0.308)a
(0.335)b
(0.868)
-0.850
0.717
-0.675
-0.685
-1.125
-0.146
-0.962
-1.352
-0.128
0.515
-1.227
-0.791
-0.726
(0.398)b
(0.381)c
(0.306)b
(0.981)
(0.519)b
(0.567)
(0.533)c
(0.332)a
(0.155)
(0.441)
(0.315)a
(0.325)b
(0.955)
A FIRST APPROACH TO THE IMPACT OF THE REAL EXCHANGE RATE ON INDUSTRIAL SECTORS IN COLOMBIA •
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Table A.3.2 (conclusion)
(1)
Coeficient
Manufacture of structural metal products, tanks,
reservoirs and steam generators
Manufacture of other fabricated metal products and related
metalworking service activities
Manufacture of general purpose machinery
Manufacture of special purpose machinery
Manufacture of domestic appliances n.p.c.
Manufacture of electric motors, generators and transformers
Manufacture of electricity distribution and control apparatus
Manufacture of insulated wire and cable
Manufacture of accumulators and electrical batteries
Manufacture of electric lamps and lighting equipment
Manufacture of other electrical equipment n.p.c.
Manufacture of electronic valves and tubes and
other electronic components
Manufacture of television and radio receivers, sound or image
recording or reproducing apparatus, and associated goods
Manufacture of medical appliances and instruments and
appliances for measuring, checking, testing, navigating and
other purposes, except optical instruments
Manufacture of optical instruments and photographic equipment
Manufacture of motor vehicles and their engines
Manufacture of bodies (coachwork) for motor vehicles;
manufacture of trailers and semi-trailers
Manufacture of parts and accessories (auto parts) for motor
vehicles and their engines
Building and repairing of ships and boats
Manufacture of aircraft and spacecraft
Manufacture of other transport equipment n.p.c.
Manufacture of furniture
Manufacturing n.p.c.
_cons
Number of observations
Observations per group (average)
Sargan (p-value)
c1 (p-value)
c2 (p-value)
(2)
Standard error
Coeficient
Standard error
-0.770
(0.378)b
-0.819
(0.413)b
-0.336
0.529
0.123
0.048
0.218
-0.588
2.953
0.244
-1.033
0.398
(0.382)
(0.425)
(0.285)
(0.506)
(0.891)
(0.728)
(0.148)a
(0.561)
(0.310)a
(0.340)
-0.348
0.604
0.175
-0.010
0.233
-0.645
3.013
0.330
-1.036
0.405
(0.396)
(0.428)
(0.270)
(0.547)
(0.944)
(0.748)
(0.153)a
(0.352)
(0.340)a
(0.262)
0.931
(0.615)
0.996
(0.681)
-4.076
(0.280)a
-3.831
(0.323)a
-0.981
0.320
0.702
(0.891)
(0.110)a
(0.646)
-1.042
0.380
0.668
(0.972)
(0.094)a
(0.823)
0.643
(0.704)
0.622
(0.736)
-0.349
-3.440
0.212
0.357
0.338
-0.825
1.812
2 906
7.210
0.074
0.000
0.096
(0.388)
(3.111)
(0.412)
(0.261)
(0.396)
(0.318)a
(0.425)a
-0.406
-3.409
-0.272
0.274
0.360
-0.809
4.344
2 906
7.210
0.144
0.000
0.133
(0.450)
(3.203)
(0.318)
(0.301)
(0.408)
(0.330)a
(1.618)a
Source: prepared by the authors.
a p<0.01.
b p<0.05.
c p<0.1.
Note: standard errors in parentheses. Sargan test for overidentifying restrictions. c1 and c2 tests for irst and second order correlation in
irst-differenced residuals.
n.p.c.: not previously classiied.
A FIRST APPROACH TO THE IMPACT OF THE REAL EXCHANGE RATE ON INDUSTRIAL SECTORS IN COLOMBIA •
LYA PAOLA SIERRA AND KARINA MANRIQUE L.
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2014
TABLE A.3.3
Colombia: estimation results for equation (4) for the sectors significantly
affected by the variable
(1)
qt Ds
Manufacture of television and radio receivers, sound or image
recording or reproducing apparatus, and associated goods
Manufacture of veneer sheets, manufacture of plywood,
laminboard, particle board and other panels and boards
Finishing of textiles not produced in the same production unit
Manufacture of rubber products
Manufacture of non-metallic mineral products n.p.c.
Manufacture of wooden containers
Sugar mills and reineries
Manufacture of dairy products
Manufacture of reined petroleum products
Manufacture of other chemical products
Manufacture of electric lamps and lighting equipment
Manufacture of paper, cardboard and paper
and cardboard products
Manufacturing n.p.c.
Weaving of textiles
Manufacture of structural metal products, tanks, reservoirs and
steam generators
Manufacture of basic iron and steel
Printing
Manufacture of footwear
Manufacture of optical instruments and photographic equipment
Publishing
Manufacture of insulated wire and cable
(2)
Coeficient
Standard error
Coeficient
Standard error
-4.076
(0.280)a
-3.831
(0.323)a
-3.681
-1.789
-1.326
-1.278
-1.258
-1.151
-1.142
-1.137
-1.033
-1.033
(0.214)a
(0.625)a
(0.389)a
(0.308)a
(0.364)a
(0.401)a
(0.482)b
(0.542)b
(0.507)b
(0.310)a
-3.810
-1.916
-1.352
-1.227
-1.335
-1.203
-0.984
-1.125
-0.962
-1.036
(0.184)a
(0.703)a
(0.332)a
(0.315)a
(0.287)a
(0.412)a
(0.482)b
(0.519)b
(0.533)c
(0.340)a
-0.912
-0.825
-0.822
(0.385)b
(0.318)a
(0.329)b
-0.850
-0.809
-0.839
(0.398)b
(0.330)a
(0.343)b
-0.770
-0.726
-0.582
-0.538
0.320
0.679
2.953
(0.378)b
(0.335)b
(0.257)b
(0.195)a
(0.110)a
(0.359)c
(0.148)a
-0.819
-0.791
-0.675
-0.545
0.380
0.717
3.013
(0.413)b
(0.325)b
(0.306)b
(0.226)b
(0.094)a
(0.381)c
(0.153)a
Source: prepared by the authors.
a p<0.01.
b p<0.05.
c p<0.1.
Note: we present in this table the signiicantly estimated results for the parameter β2 in equation (3). Standard errors in parentheses. The
shaded rows correspond to the sectors that have been affected positively by the real appreciation of the Colombian peso.
n.p.c.: not previously classiied.
TABLE A.3.4
Colombia: share of value added, employees and firms of the sectors that saw a
significant impact on value added as a result of real exchange rate appreciation
Sectors signiicantly impacted by real
exchange rate appreciation
Negative effect
Positive effect
Percentages of total
Value added
Number of employees
Number of irms
52.7
4.0
38.7
2.1
35.9
5.7
Source: prepared by the authors.
A FIRST APPROACH TO THE IMPACT OF THE REAL EXCHANGE RATE ON INDUSTRIAL SECTORS IN COLOMBIA •
LYA PAOLA SIERRA AND KARINA MANRIQUE L.
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CEPAL
REVIEW
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DECEMBER
2014
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A FIRST APPROACH TO THE IMPACT OF THE REAL EXCHANGE RATE ON INDUSTRIAL SECTORS IN COLOMBIA •
LYA PAOLA SIERRA AND KARINA MANRIQUE L.