Colombia
Economic Issues of Latin America
Latin America is very diverse in ideas of economy and have been influence greatly by the united stated whether they follow the America ideas or they become very leftist and against the United States. Colombia’s economy is relatively good compared to other Latin American countries. It has a free market economy with major commercial and as much investments as the United States. Colombia’s economy is directly related to its FDI. An extreme variety of crops and more natural resources are the key of its economy. Colombia is also affected directly with their Foreign Direct Investment and have move away from charging tariffs and quota to increase FDI.
Foreign Direct Investment affects Colombia’s economy heavily. The government of Colombia welcomes FDI. In the early 1990s, Colombia reformed its economy to liberalize. It gave national treatment to foreign investors and raised controls on profits and capital. Since Colombia fairly imposed same restrictions to both their national investors and the foreign investors, it attracted many foreign investors.
It is important to know trends in FDI in Colombia. See the second graph where it reflects Colombia’s FDI outflows in 2011. This shows more of a general trend shared with other Latin American countries and that Colombia became an important source of FDI abroad, mainly in the region. Back in 2000, Colombia was not a place where foreign investors would invest and its IFDI was quite low compared to other neighbor Latin American countries such as Peru and Venezuela. However, that trend has shifted since 2005 and Colombia’s IFDI started increasing significant amount and by 2008, with Colombia’s IFDI stock rising to US$ 67 billion; it had already s...
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... to be happy when a foreign country decides to invest in Colombia. Colombia is rich with natural resources and will excel if lead by a successful government.
Work Cited
http://colombiareports.co/colombia-fdi-statistics/
http://www.heritage.org/index/country/colombia
http://www.state.gov/e/eb/rls/othr/ics/2013/204622.htm
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD
http://en.wikipedia.org/wiki/Economy_of_Colombia
http://www.bbvaresearch.com/KETD/fbin/mult/1302_ColombiaOutlook_1Q13_tcm348-373665.pdf?ts=28112013
http://www.business-humanrights.org/Links/Repository/318865
http://www.witnessforpeace.org/downloads/Col_Multinationals_factsheet.pdf
http://nacla.org/blog/2011/6/5/multinational-corporations-colombia-land-grab
http://en.wikipedia.org/wiki/Criticism_of_Coca-Cola
http://en.wikipedia.org/wiki/Drummond_Company
“Latin America includes the entire continent of South America, as well as Mexico. Central America, and the Caribbean Islands. Physical geography has played an important role in the economic development of Latin America.” (Doc A and Doc G) Latin America has many unique cultural characteristics, industrial products, agricultural products, and human activity.
When the country of Colombia is mentioned, chances are individuals automatically start composing images of famous actors and musicians that have rooted from Colombia such as Shakira and Sofia Vergara, the excellent reputation Colombian coffee has made across the globe, or even the beautiful Emeralds that surround the astonishing land. Of course all of those things matter, but Colombia is a country that is definitely swept under the rug and under appreciated. Colombia’s history, independence movements, governmental structure, and culture are just a few of the topics that make Colombia so unique.
The fact that majority of the capital funds was in the form of portfolio capital instead of foreign direct investment (FDI) had also worsen the situation. The ratio of portfolio capital to FDI had increased substantially from 1:1.3 in 1990 to 1:6.5 in 1993. Given the volatile nature, portfolio capital tends to respond with greater speed to changes in the environment.
The republic of Colombia has been fighting an internal war for over 50 years. On April 9th 1948, 1:00P.M. The leader of the Liberal Party Jorger Eliecer Gaitan walked out of his office in the downtown area, got shot 3 times and died once he got to the hospital. This day went down in Colombian history as the Bogotazo. Gaitan was a moderate socialist congressman that gave a voice to the middle and lower classes in Colombia. He gave hope to those that had nothing under the right wing elitist government. In 1948 after his death, the era of the Violencia started. A civil war between the Colombian communist party and the farmers against the right wing military conservative government due to the high inflation and unfair assistance to those that
“Plan Colombia.” 1999. Copy from Colombian Embassy to the United States. Center for International Policy Website. http://www.ciponline.org/colombia/plancolombia.htm (Accessed 02/07/14).
Many years of war made Latin America’s economy suffer, and made it almost impossible to be able to recover from their debt. A stable economy was crucial to be able to gain credibility, from other countries so that investments would continue. In Peru, for example the silver mines and machinery where destroyed beyond repair. “Horrendous economic devastation had occurred during the wars of independence. Hardest hit were…Peruvians silver mines. Their shafts flooded, there costly machinery wrecked.” 120(Chasteen ). This made Peru suffer greatly because this was one of their main trades. In Mexico, one of their largest economic struggles was the lack of transportation infrastructure, meaning that Mexico did not have railroads. Mexico also lacked navigable rivers which made it much harder to be able to...
...es relationship is soaring through trade embargo. The reinforcement of the Colombian National Police force everywhere in Colombia is very secure. People in Colombia are fun loving people willing to teach anyone there culture. Thru trials and error learning from their past the image of Colombia changed for the good.
Brazil is both the largest and most populous country in South America. It is the 5th largest country worldwide in terms of both area (more than 8.5 Mio. km2 ) and habitants (appr. 190 million). The largest city is Sao Paulo which is simultaneously the country's capital; official language is Portuguese. According to the WorldBank classification for countries, Brazil - with a GDP of 1,5 bn. US $ in 2005 and a per capita GPD of appr. 8.500 US - can be considered as an upper middle income country and therefore classified as an industrializing country, aligned with the classification as one of the big emerging markets (BEM) next to Argentina and Mexico. Per capita income is constantly increasing as well as literacy rate (current illiteracy rate 8%). Due to its high population rate (large labour pool), its vast natural resources and its geographical position in the centre of South America, it bears enormous growth potential in the near future. Aligned with an increasing currency stability, international companies have heavily invested in Brazil during the past decade. According to CIA World Factbook, Brazil has the 11th largest PPP in 2004 worldwide and today has a well established middle income economy with wide variations in levels of development. Thus, today Brazil is South America's leading economic power and a regional leader.
The political power has had enormous affect to the Latin American economy. Most of the countries in the Latin America remained colonies for over a long period of time; therefore, they were controlled by the Europeans power. These colonies never thought of development of the Latin American countries, rather all wealth from the colonies was taken out to the home country. This situation is similar to other colonized continents such as Asia and Africa. Almost every colonized country in the world is still in the process of development. These countries were never benefited economically from the colonizers. Therefore, the historic imperialism is still harming countries in the Latin America as well as they are still underdeveloped. According to Marxist theory “The colonies were used as places to invest surplus capital and sell goods from the colonizing countries and as sources of cheap raw materials and cheap labor.”(P165) Therefore, the investors will always get high benefits from their investment; however, the raw materials will get low prices for it. Hence, still Latin American countries face various problems due to the excessive use of natural resources and due to late from the Europeans
I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.
Religion in Latin America has always been tied closely to Catholicism because of the influence of Europeans who came to settle South America, bringing along their Catholic foundation. With the early formations of governments in Latin America, church and state were closely linked. The church had significant influence over what happened in the political realm of the countries’ relations. The case was no different for Colombia. The Catholic church has played a significant role in the history of Colombia, assuming an esteemed status in the country and exercising control over different areas of the government and public affairs, but as time passed its role in power has taken a slight downturn.
Most Latin America countries are known as third world countries because the economic structure still in development. To overcome such judgment the countries had been developing different policies since the 1970s. The policies promise to help the countries to obtain a healthier economy and have an economic growth. The author Franko explains in the book The Puzzles of Latin America Economic Development how the economist Paul Rosenstein “believes that in order to achieve sustained growth, an economy must develop various industries simultaneously, requiring a coordination of investment or a big push.” (pg. 19) But to accomplished economic growth countries need to reduce the government control over the economy and start developing a market-base economy. Market-base economy would not only guarantee positive results of development, but will also create a more stable economy. Mexico is one of the countries that have integrated new policies and other economic change which have been giving the country positive results mainly on its economy.
According to Ernst and Young, Chile is the most globalized economy in Latin America. (Guion, 2012)
...MENT ENCOURAGEMENT OF GLOBAL BUSINESS FOREIGN GOVERNMENT ENCOURAGEMENT Governments also encourage foreign investment. The most important reason to encourage investment is to accelerate the development of an economy. An increasing number of countries are encouraging investments with specific guidelines toward economic goals. MNCs may be expected to create local employment, transfer technology, generate export sales, stimulate growth and development of the local industry. US GOVENRMENT ENCOURAEMENT The US government is motivated for economic as well as political reasons to encourage American firms to seek opportunities in the countries worldwide. It seeks to create a favorable climate for overseas business by providing the assistance by providing the assistance that helps minimize some of the troublesome politically motivated financial risks of doing business abroad.
Foreign direct investment policies in different countries influence the investment into business in a nation by a company of an alternative country.