Traditionally, Colombia conjures thoughts and images associated with coffee, rhythms of cumbia and not-so-distant memories of illicit trade. The country that was once better known for Juan Valdez is now more closely associated with robust economic growth, substantial oil and hydrocarbon reserves, and a business-friendly environment.
The size of Colombia’s economy, measured in terms of gross domestic product (GDP, the market value of all goods and services), was approximately $333 billion as of December 2011, compared to $98 billion in 2001 — more than doubling in size during the ten-year period. This growth has been predominantly supported by sizable foreign direct investment in the country’s most productive industries, namely mining, oil drilling and services.
Benefits from the nation’s economic growth have also been enjoyed by Colombia’s 47 million people. According to World Bank figures, during the ten-year period, GDP per capita reached $7,099 per person, much higher than the $2,429 registered at the beginning of the decade. Greater consumer wealth has helped to boost a dynamic internal economy as consumption has increased, driven by higher disposable incomes.
None of this would have been possible without the gains in security experienced by the country under various presidential administrations, beginning in the early mid-90s and continuing to today. Colombia, with help from the United States, was able to diminish the security threats posed by narcotrafficking. The nation’s armed forces have also been successful in controlling a larger proportion of the nation’s territory as the Fuerzas Armadas Revolucionarias de Colombia (FARC) is slowly being pushed to the peripheries of the nation’s borders.
Another reason behind Colombia’s economic expansion is the nation’s move toward trade liberalization and a benign view of international investment that have resulted in a set of accommodative policies to encourage and reward foreign investment. Colombia has embarked on a path of opening itself to global trade via free-trade agreements. The country has either signed or is negotiating free-trade agreements with various nations, including Canada, Chile, Mexico, Switzerland, the EU, Venezuela, South Korea, Turkey, Japan and Israel. (The U.S. Congress ratified its free-trade agreement with Colombia in October 2011.) Colombia’s gradual opening, together with aprudent economic and budgetary policy mix, has rendered good results as 2012 growth is projected to reach 4.8 percent and 2013 growth at approximately 5 percent, well above the Latin American average.
Despite all these positives, significant challenges remain.
The country needs to improve its overall competitiveness globally, as it ranked 68th in the 2011-2012 Global Competitiveness Report issued by the World Economic Forum. The same report ranked Colombia as 95th overall out of 143 countries in terms of quality of infrastructure, likely due to the nation’s weak road (ranked as 109th) and rail (ranked 99th) transportation systems. For its part, the government (through the National Infrastructure Agency) is responding to the challenge with a planned $27 billion investment program ($20 billion for roads / $7 billion for rail) and a clear set of rules in the form of new legislation to attract foreign capital.
While dealing with the challenges ahead, the country has begun to put behind its tumultuous past and commenced a new chapter in its history as it seeks prosperity and prominence in the global economy.
By Being Latino Contributor, Amable Bueno. The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to his employer.