Colombia Economy

Colombia Economy

Business

Colombia is one of the countries of medium economic development within Latin America. Since the beginning of industrialization in the 1930s, Colombia’s economic structure has changed significantly. The importance of agriculture has steadily declined, while industry and especially the service sector have their share of both gross domestic product (GDP) as well as in terms of employees. In contrast to most of the other Latin American countries, Colombia is characterized by continuous economic growth without any serious downturns. The reasons for these macroeconomic successes are, in addition to the favorable supply of raw materials, the neoliberal market economy policy that has been continuously pursued since the 1990s with step-by-step reforms (facilitating foreign investments, privatization, promoting the export economy, releasing exchange rates, dismantling trade barriers). However, the predominantly high growth rates of recent years (2013: 4.7%) have declined significantly due to the lower world market prices for raw materials (2016: 1.96%). Unemployment (2016: 8, 5%) is exacerbated by the still widespread underemployment. Another problem is the extremely unequal distribution of income; a quarter of the population lives in poverty. The fight against corruption, crime and drug trafficking continues to be one of the major challenges facing the emerging market: Colombia is the biggest Cocaine producer in the world.

Foreign trade: Due to the unfavorable price development for raw materials, Colombia was unable to offset its traditionally negative trade balance (import value in 2016: US $ 42.8 billion; export value: US $ 31.4 billion). At the top of the list of legal export goods are oil and petroleum products, hard coal, food and coffee. The main imports are foodstuffs and industrial products (machines, vehicles, electronic and chemical products). The main trading partners are the USA (imports: 27%; exports: 33%), China, Mexico, Panama and India. The money transfers from Colombians, who are mainly active in the USA, and foreign direct investors (2016: US $ 13.7 billion) are important for the foreign exchange balance.

Agriculture

According to smber, agriculture employs around 17% of all employed people. Around 40% of the total area is used for agriculture, mainly as pasture land (mostly cattle farming). The most important market product is coffee, which is mostly grown in small and very small businesses at altitudes between 600 and 1,600 m above sea level; around 83% of the harvest is exported.

In addition to coffee, the small businesses grow potatoes, grain, legumes, fruit and vegetables for self-sufficiency and local market delivery, while the medium-sized and large businesses produce cotton, bananas, tobacco, rice and grapes. The cultivation of cut flowers – Colombia is one of the world’s largest flower exporters – as well as the production of palm oil for the production of agro-diesel have recorded considerable growth. The use as a renewable raw material for the fuel bioethanol offers new perspectives for sugar cane, the cultivation area of ​​which has been declining for years. The illegal cultivation of the drug plant hemp (for marijuana) and the coca bush is of great importance.

Land reform has been called for in Colombia for years: almost two thirds of the total private land area belongs to 0.4% of the landowners, half of the rural population owns no land at all. The discrepancy between the small (subsistence) farms that use traditional methods and the market-oriented, technical medium-sized and large farms is constantly increasing.

Forestry: Forestry plays only a minor role, although around 53% of the country is forested. In addition to wood (2016: 12.6 million m 3), among other things Wild rubber, resins, tannins and balms.

Fisheries: Despite the abundance of fish in inland waters, especially the Río Magdalena, as well as the Pacific and Caribbean coastal waters, fishing is poorly developed. Most of the catch (shrimp, lobster and tuna) is exported to the USA.

Energy industry

In addition to fossil fuels (coal, oil and natural gas), Colombia has a high potential for hydro energy. Around 70% of electrical energy is already generated in hydropower plants. An important growth sector is the production of biofuels.

Industry

Industry (including mining) has a share of 32.6% of GDP. It was created since the 1930s to meet domestic demand for consumer goods and has been used since the mid-1950s, among other things. expanded with the help of foreign investments. The most important branches of industry are the food, textile and chemical industries, as well as petroleum refineries and iron and steel works. About 75% of the industrial plants are located in Bogotá, Medellín, Cali and Barranquilla.

Colombia Economy