fDi Markets Newswire:

Home / Locations / Americas / View from the Americas: Colombia’s challenging next steps

Gregg Wassmansdorf

An influx of Venezuelan migrants and a still-fragile peace deal are just two of the challenges Colombia’s president, Iván Duque, faces. Can he succeed? Gregg Wassmansdorf reports.

With so much attention focused on the trilateral drama of the Nafta renegotiations between the US, Mexico, and Canada – and on US policymaking and politics more generally – it is easy to lose sight of important events elsewhere in the Americas, such as in Colombia. 

The third largest economy in South America with a population of nearly 50 million people, Colombia, like many emerging economies, is presently facing a variety of challenges, contradictions and opportunities.

Each of the seven years from 2011 through 2017 was among the top years for inward FDI in Colombia’s history. Most of this came from the US and Europe, though China is an increasing presence in Colombia for both investment and trade. Along with Colombia’s FDI expansion, there has been good, though not stellar, growth in GDP, a substantial reduction in national poverty and an improved World Bank ranking as a place to do business.

Colombia’s challenges are many, however. Its infrastructure is considered among the worst in Latin America. Corruption is an ongoing difficulty, though its democratic institutions have proven resilient over time. A peace agreement signed in 2016 with the Revolutionary Armed Forces of Colombia ended 52 years of civil conflict but remains at risk of unravelling during the current process of 'transitional justice' and renewed possibilities of renegotiation. 

Securing the benefits of a 'peace dividend' will also be harder because the acreage of land dedicated to coca cultivation for cocaine production has tripled in the past six years. Also, there is neighbouring Venezuela, which continues its economic collapse and is unable to address its own humanitarian crisis. More than 1 million documented migrants have moved from Venezuela to Colombia in the past year, and some estimate the total is twice that. 

These are some of the challenges facing Colombia’s new president, Iván Duque, who was elected in August 2018. A self-described “extreme centrist”, he says that he wants to be “the president of social justice in Colombia”. He also plans to cut business taxes and support private enterprise. If nothing else, he will signal to the world that Colombia plans to be business and investment friendly.

This is important and has historical precedents locally. In 2005, Colombia passed laws to provide legal security and financial protection to investors, and since then has negotiated and passed free-trade agreements with Chile, Canada, the US, the EU, South Korea and others. These business-oriented policies have helped FDI into Colombia rise dramatically, and it is now the third largest destination for FDI in Latin America after Brazil and Mexico. 

Now we will see whether Colombia can successfully find a path forward that balances the many social, environmental and economic challenges it faces.

Gregg Wassmansdorf is senior managing director, consulting, at Newmark Knight Frank, a global real estate firm. He is a member of the Site Selectors Guild.

This article is sourced from fDi Magazine
fDi Magazine

The fDi Report 2018: Free Download

The fDi Report 2018 promobox

Crossborder investment monitor

fDi Markets - Cross border investment monitor

fDi Markets is the only online database tracking crossborder greenfield investment covering all sectors and countries worldwide. It provides real-time monitoring of investment projects, capital investment and job creation with powerful tools to track and profile companies investing overseas.

Click here to find out more about fDi Markets

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.

Click here to find out more about fDi Benchmark

Research report

fDi Intelligence provides customised reports and data research which deliver vital business intelligence to corporations, investment promotion agencies, economic development organisations, consulting firms and research institutions.

Find out more.