Colombia’s adaptive strategy
Colombia, just like Peru have adopted adaptive strategy, where they obtain resources in attempt to benefit from others to increase there primary goods. Doing so, encourages direct foreign investment, which brings positive reactions to state investments, taxes, and upgrading infrastructure.
When other national and transnational companies had paid their dues (taxes and resource gathering), they are able to use Colombia’s resources and are able to do so in large-scale operations. Focusing towards the macroeconomic framework Colombia uses, the main ideologies are to bring in targeting inflation regimes, a more feasible exchange rate, fiscal rulings for the government, as well as a medium-term fiscal framework.
Decreasing poverty rates
Other then financial gain, the population has started to decrease poverty rates. With Colombia being the third most populated country in Latin America, Poverty rate had dropped substantially. In a eight year range, from 2004 to 2008, poverty had decreased from 47% to 32%. A 15% drop-off from a country filled with war and poverty, is a big step in the economic growth Colombia seeks to gain. As well as poverty being cut, unemployment rates have dropped. From 2002 through 2013, the unemployment rate started at 15.6% falling to just over 8%. Public debt reduced to under 3% of the GDP. As well as a 30.4% increase in GDP in the first quarter, with tax revenues raising, and increased security, Colombia has established a legitimate economic reform. The added civilian icons who came in to power, they created and established a political regime that focused on regressing political opposition and making the economy internationalized. The alterations to the economy generated a positive outlook and business environment for transnational corporations.
Economic and institutional reforms
The transnational elites of Colombia were to create economic and institutional reform, to send Colombia into globalization. Doing so to send stress to implement human rights and democratic reform. With the new reform, the elites had also pushed to develop neoliberal policies. Which had granted the country with new openings of greater investments, more privately state owned companies, a consistent labor market and a decrease on tariffs of their imported goods.
Colombia today, is currently ranked 6 regionally, behind the powerhouses of Canada, United States, and Uruguay, as well as holding the oldest democracy in Latin America. Within there economy, the trade is the most important aspect. Their import and export value combined equates to 35% of their total GDP. (https://www.heritage.org/index/country/colombia) With reforms constantly placed, the financial pillar in Colombia is prospering. Developing capital markets by generating more flexibility in tariffs and trade barriers. In Colombia, they are involved in 12 free trade agreements (FTAs), including the United States-Colombia Free Trade Agreement, EU-Colombia, and Pacific Alliance Agreement. Colombia heavily relies on these agreements to boost their economy growth. Colombia’s main exports include but are not limited to petroleum, oil, nickel, gold, fruits, clothing and coffee. While importing industrial and transformational equipment, chemicals, fuel and electricity.
The imports are key to Colombia’s growth because they don’t have the means and resources to create machinery and electricity. In the US-Colombia FTA, going to effect May 15, 2012, had kick started their growth. In 2011, investments rose 12.5%, reaching $15.3 billion dollars. With 82% of the funding directed to oil and mining, Colombia main exports. Colombia is ranked fifth in the world for coal exports, brining in roughly $6.8 billion per year, worth 6.2% of the total coal export. (http://www.worldstopexports.com/coal-exports-country/) With an increase of almost 80% increase of goods exported, Colombias tide had started to shift. The US good exports following the FTA with Colombia valued at $1.1 billion per year. With the US exporting $12 billion worth of goods to Colombia. In 2017, the economy of Colombia had started to fall, due to the market price of oil and oil production falling. With there economy growing 4.7% annually, it reached only %1.8 in 2017. With this downward rate, Colombia has to look ahead for the future.
Colombia’s economy in 2019-2020
Looking ahead for Colombia’s economy, in 2019-2020 they expect to increase over this time incrementally. By administering help by private consumption, recovering non oil exports, enlarged prices of oil and to adhere to the fourth generation infrastructure program. With Colombia’s commitments of fiscal spending, nearly doubling in numbers from 2014 through 2017. ($873 million to $1.68 billion.
In Colombia’s GDP, 45.6% of it is made of Commerce, Government, and Manufacturing. As Colombia’s Finance, Energy, Oil and Mining only make up 13.1% of the GDP. (https://data.colombiareports.com/colombia-gdp-statistics/) After the drug war during the powerful cartel era, their efforts to revitalize their country can bring in growth from investments mainly focused on the energy and agriculture sectors. Colombia does not fund these as much as its bigger portions, is because of the goal to bring their economy to par with other powerful countries. They are focusing on the “money makers”, putting their efforts into the best sellers instead of everything. Relying on direct investments to pick up the slack for the other sectors of their GDP. Open markets and trade freedom in Colombia makes international enterprises wanting to join the country. Although, financially Colombia looks like a place to increase your profits, Colombia still faces a disadvantage from informality and their high rate of inequality.
Hofstede’s Uncertainty Avoidance score
Colombia scored an 80 on Hofstede’s Uncertainty Avoidance. Which is a high score, based on the fact that they want to control their own future. They are not going to leave it as “whatever happens, happens”. Colombia is a collective culture with very low individualism, which makes the opinions and decisions for the country. The very little amount shows that Colombia has no opposition for its actions from the population. Doing so allows the government to increase production, trading and investments, without the population rioting and trying to overthrow the Government. As Colombia had faced many problems, they are starting to find the solutions.
Future of Culumbia
Economic and political reform swooped over Colombia following the cartel era, Colombia had gathered a new economy. They have increased there imports, exports, trade, government and investments, Colombia had set its sight for new goals and to improve more. They have eradicated the harmful past they once faced, to look ahead into the future. Becoming a country of high standards, forcing their way up the list, their economy looks to establish a consistent annual growth and establishing a governmental presence that no group wants to oppose. Colombia has seen darker days, but as of today, the future looks bright for Colombia to pull together and become a powerhouse country in the future.