The Organisation for Economic Co-operation and Development (OECD) has called for a fundamental change in regional growth strategies, urging governments to prioritize investments in talent, infrastructure, and institutional capacity over fiscal incentives and subsidies. The message came at the opening of the OECD Local Development Forum in Barranquilla, Colombia, which gathered more than 3,400 delegates from 95 countries, including representatives from the United Nations, the Organisation of American States (OAS), the Inter-American Development Bank (IDB), the Development Bank of Latin America (CAF), and the Japan International Cooperation Agency (JICA).
Speakers argued that sustainable regional growth cannot be achieved through tax breaks or subsidies that often benefit large investors more than local communities. Lamya Kaddor, vice president of the OECD’s Regional Development Committee, said development depends on strategic investments in infrastructure, technical education, local innovation, and market access. Lamia Kamal-Chaoui, director of the OECD Centre for Entrepreneurship, SMEs, Regions and Cities, stressed that access to qualified talent, strong physical and digital connectivity, and quality public services are far more important than tax cuts when aiming for long-term investment.
Addressing Colombia’s regional gaps
The OECD highlighted that many Colombian regions still rely on fiscal incentives to attract investment without tackling underlying structural issues such as high labor informality, poor infrastructure, and limited institutional capacity. In rural areas, informality exceeds 80%, compared to less than 35% in Bogotá, underscoring the need for tailored regional strategies. Hiroshi Tanaka, an OECD expert on regional policy, noted that replicating generic models is insufficient, calling instead for strengthened local capacities, participatory governance, and investments that create productive linkages.
Data presented at the forum showed that every dollar effectively invested in regional infrastructure can yield up to six times its value in jobs, productivity, and local consumption. The urgency of this approach is heightened by Latin America’s slowing economic growth, projected at 2.1% in 2025 and 2.0% in 2026, lagging behind other emerging economies.
Barranquilla as a case study
Barranquilla was showcased as an example of successful development without heavy reliance on tax discounts. Over the past decade, the city has modernized its port, restored the Mallorquín Swamp, and developed free trade zones specializing in digital services. These efforts have doubled the local business base and reduced labor informality from 55.3% in 2024 to 49.5% in 2025. María Fernanda García, director of Colombia’s National Planning Department, credited the city’s progress to investments in infrastructure, technical education, and business formalization. Vicky Osorio, executive director of ProBarranquilla, said the city’s growth has been comprehensive, integrating sustainability, education, inclusion, and economic development.
The forum also delivered concrete financial commitments, including a $150 million fund for local development projects and a 50 billion COP (approximately USD 13 million) credit from Banco Popular to strengthen Barranquilla’s strategic growth initiatives. With a focus on entrepreneurship, innovation, fair labor markets, digitalization, and the care economy, the OECD Forum aims to help local governments and communities design policies that build more competitive and inclusive economies from the ground up.
