The number of forcibly displaced persons has increased substantially since the early 2000s and has more than doubled in the last decade. Responding to the needs of forcibly displaced persons requires comprehensive legal and policy frameworks and evidence-based programmes that promote durable solutions, including sustainable movements out of poverty and their successful integration into hosting communities. In this paper, we review the dynamics of forced displacement in Colombia, the country with the largest number of internally displaced persons worldwide, and the progression of legal and policy frameworks that have been implemented since the late 1990s. We also review over two decades of research on the economic, social, and psychological consequences of forced displacement following an asset-based poverty trap framework that allows us to understand how forced displacement can alter poverty dynamics across time and generations. Throughout the review, we draw lessons for other contexts and countries affected by forced displacement and refugee flows.