SLINGERLANDS, New York — In 2013, two Colombian advisers for the Inter-American Development Bank co-authored a book about the importance of Colombia’s Orange, or creative, Economy. “The Orange Economy: An Infinite Opportunity” became the manual for understanding the plan to support all economic endeavors in the country based on intellectual property. One of the authors, Felipe Buitrago Restrepo, would go on to become the Minister of Culture in January 2021 at the Ministry of Culture. The other, Iván Duque, became Colombia’s president in 2018.
The Orange Opportunity
The two advisers coined the term “Orange Economy” because they felt the color best represented “culture, creativity and identity.” The term encompasses everything from books and movies to software and advertising. In 2019, Colombia’s Orange Economy accounted for 3.3% of the country’s gross domestic product (GDP). Duque’s vision is to approximately double that by 2022 through a series of policy initiatives and investments in more modern infrastructure. Sizable foreign investment has kicked off progress with modern infrastructure.
Funding the Fourth Great Disruption Period
Harnessing the economic potential of creativity in Colombia is a tall order. One of the Duque administration’s more innovative approaches has been the issuance of “orange bonds.” In November 2018, Bancóldex, Colombia’s premier development bank, sold more than $1 million for creative industries in an auction to 322 international investors. Colombia went on to attract roughly $127 million in foreign direct investments (FDI) specifically for the creative industries that year. This made it the largest recipient in all of Latin America.
Duque considers this vital for diversification and the ability to leave a natural resource-dependent economy for an idea-based economy. In their book, the two predict a fourth disruption period in the global economy where “ideas become the new currency.” Their hope is that Colombia will be at the forefront of this disruption.
These lofty goals are backed by a long line of policy changes. The Orange Law of 2017 made it easier for creative businesses to access credit, invested funds in cultural spaces and paved the way for Bancóldex’s previously mentioned investments. According to Buitrago, the law built on the 1997 General Law for Culture, which had been Colombia’s first policy step toward acknowledging the necessary connection between culture and development. In 2018, Columbia passes a finance bill that exempted creative businesses from shouldering the 33% income tax.
These laws have helped larger cities grow Orange Economies extensively. However, the inclusion of less densely populated areas has proven sluggish. As of 2019, the capital produced “92% of the country’s creative services.” A great deal of work remains to ensure that the Orange Economy grows throughout the country and not only in cities like Bogotá, Medellín and Cali, Colombia.
Perhaps the largest hindrance to the growth of the Orange Economy is Colombia’s historically weak intellectual property (IP) rights. The state of IP rights deterred investment for years and earned the country a place on a U.S. intellectual property watchlist in 2014. As of 2020, Colombia still remains on this list, but progress has been made.
In 2020, the country’s global ranking on the protection of IP rights had improved to 62 out of the 129 countries ranked. Its Intellectual Property Rights score, a measure of copyrights, patents, perception and other markers, had also jumped to approximately 5.5 points in 2020 with an impressive boost in patent protection. These improvements are paramount for attracting continued investment, particularly from the U.S., which remains Columbia’s largest trading partner.
From Oil to Orange
None of these ideas are unique to President Duque’s administration. He has simply prioritized more related policy than previous governments. The goal of boosting the creative economy predates Duque’s government and will likely live on after his tenure ends in 2022.
The importance of this economic diversification is clear as the Colombian economy has never been immune to the plagues of natural resource dependence. Oil accounts for roughly one-fifth of the government’s revenue, leaving it prey to volatility in the market. Oil price crashes and failed dam projects that are “bogged down for years in bureaucracy” all make the case for investment in an ideas economy with new infrastructures like fiber optics, satellites and social networks.
The promulgation of Colombia’s Orange Economy solves problems of access and allows creatives to make a living far beyond the streets of Bogotá, Colombia.
– Scott Mistler-Ferguson