After more than four decades of sustained growth, averaging 6.5% per annum, Latin America confronted a period of difficult adjustment as a reaction to severe shocks in the 1970s and 1980s. Most of these shocks were external: oil price increases in 1973-74 and 1979-80; a drastic deterioration in the terms of trade after 1980; and a dramatic rise in world interest rates in 1980-82. The impact of these external forces was sometimes magnified by domestic economic policy. Other 'shocks' were policy-induced and included liberalisation episodes in the 'south-cone' regimes, as well as, borrowing during the 1970s. This paper reviews the effects of external shocks on the Colombian economy, the macro-economic policies adopted as a reaction to them, and their ultimate effect on growth.