In addition to a progressive tax reform, Public Private Partnerships (P3) should be utilized to fund the governmental investments. For education, a Design, Build, Finance, and Operate (DBFO) deal will be developed to finance the reforms. Under the DBFO, the cost of the project is converted into a 20-year lease with annual rental payments equal to 85% of the capitalized cost of the initiative being made to the private investors. Essentially, Colombia’s school system will get to utilize school buildings for a lesser cost than if the government were to build and finance themselves. The developers are responsible for carrying the risk of costs, design, maintenance, operations, and construction, while the school system only needs to supply educators
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In order to accelerate the the GDP growth rate, Colombia must address ever-present income inequality which is a direct result of the lack of long-term education, infrastructure, and progressive tax reforms. With the third largest population in Latin America, Colombia currently rests as the second most unequal country in Latin America. If the issue of income inequality in Colombia is not resolved, the informal economy will continue to seize a portion of income that could be included Colombia’s GDP, limiting the potential growth of the country. Colombia must implement two expansionary fiscal policies in order to increase funding for education and infrastructure development. An investment into education would provide industries with a more innovative workforce. This would in-turn decrease the income inequality as a greater number of employment opportunities would become available with ensuing higher wages, which would detract from the informal economy. Aggregate demand would increase due to the government spending and the economy would experience an increase in GDP. Increasing government spending on infrastructure will also serve to limit the income inequality in Colombia. The informal economy would see a decline with further employment prospectives available. Production costs would also see a decline through the improvement of
In order to accelerate the the GDP growth rate, Colombia must address ever-present income inequality which is a direct result of the lack of long-term education, infrastructure, and progressive tax reforms. With the third largest population in Latin America, Colombia currently rests as the second most unequal country in Latin America. If the issue of income inequality in Colombia is not resolved, the informal economy will continue to seize a portion of income that could be included Colombia’s GDP, limiting the potential growth of the country. Colombia must implement two expansionary fiscal policies in order to increase funding for education and infrastructure development. An investment into education would provide industries with a more innovative workforce. This would in-turn decrease the income inequality as a greater number of employment opportunities would become available with ensuing higher wages, which would detract from the informal economy. Aggregate demand would increase due to the government spending and the economy would experience an increase in GDP. Increasing government spending on infrastructure will also serve to limit the income inequality in Colombia. The informal economy would see a decline with further employment prospectives available. Production costs would also see a decline through the improvement of