Economy of Colombia
Encyclopedia
Colombia
has a free market economy with major commercial and investment ties to the United States
. Transition from a highly regulated economy has been underway for more than a decade.
In 1990, the administration of President César Gaviria Trujillo (1990–94) initiated economic liberalism
policies or "apertura economica" and this has continued since then, with tariff reductions, financial deregulation, privatization of state-owned enterprises, and adoption of a more liberal foreign exchange rate. Almost all sectors became open to foreign investment although agricultural products remained protected.
The original idea of his then Minister of Finance, Rudolf Hommes
, was that the country should import agricultural products in which it was not competitive, like maize
, wheat
, cotton
and soybeans and export the ones in which it had an advantage, like fruits and flowers. In ten years, the sector lost 7,000 km² to imports, represented mostly in heavily subsidized agricultural products from the United States
, as a result of this policy, with a critical impact on employment in rural areas. Still, this policy makes food cheaper for the average Colombian than it would be if agricultural trade were more restricted.
Until 1997, Colombia had enjoyed a fairly stable economy. The first five years of liberalization were characterized by high economic growth rates of between 4% and 5%. The Ernesto Samper
administration (1994–98) emphasized social welfare policies which targeted Colombia's lower income population. However, these reforms led to higher government spending which increased the fiscal deficit and public sector debt, the financing of which required higher interest rates. An over-valued peso inherited from the previous administration was maintained.
The economy slowed, and by 1998 GDP growth was only 0.6%. In 1999, the country fell into its first recession since the Great Depression
. The economy shrank by 4.5% with unemployment at over 20%. While unemployment remained at 20% in 2000, GDP growth recovered to 3.1%.
The administration of President Andrés Pastrana Arango
, when it took office on August 7, 1998, faced an economy in crisis, with the difficult internal security situation and global economic turbulence additionally inhibiting confidence. As evidence of a serious recession became clear in 1999, the government took a number of steps. It engaged in a series of controlled devaluations of the peso, followed by a decision to let it float. Colombia also entered into an agreement with the International Monetary Fund
which provided a $2.7 billion guarantee (extended funds facility), while committing the government to budget discipline and structural reforms.
By early 2000 there had been the beginning of an economic recovery, with the export sector leading the way, as it enjoyed the benefit of the more competitive exchange rate, as well as strong prices for petroleum
, Colombia's leading export product. Prices of coffee
, the other principal export product, have been more variable.
Economic growth reached 3.1 % during 2000 and inflation was 9.0% although unemployment has yet to significantly improve. Colombia's international reserves have remained stable at around $8.35 billion, and Colombia has successfully remained in international capital markets. Colombia's total foreign debt at the end of 1999 was $34.5 billion with $14.7 billion in private sector and $19.8 billion in public sector debt. Major international credit rating
organizations have dropped Colombian sovereign debt below investment grade, primarily as a result of large fiscal deficits, which current policies are seeking to close.
Several international financial institutions have praised the economic reforms introduced by former president Álvaro Uribe
(elected August 7, 2002), which include measures designed to reduce the public-sector deficit below 2.5% of GDP in 2004. The government's economic policy and democratic security
strategy have engendered a growing sense of confidence in the economy, particularly within the business sector, and GDP growth in 2003 was among the highest in Latin America
, at over 4%. By 2007, GDP grew over 8%.
Household income or consumption by percentage share:
lowest 10%: 0.8%
highest 10%: 45.9% (2006)
Investment (gross fixed):
24.3% of GDP (2008 est.)
Budget:
revenues: $83.22 billion
expenditures: $82.92 billion; including capital expenditures of $NA (2008 est.)
Central bank discount rate:
11.5% (31 December 2008)
Commercial bank prime lending rate:
15.6% (31 December 2008)
Stock of money:
$21.58 billion (31 December 2008)
Stock of quasi money:
$26.57 billion (31 December 2008)
Stock of domestic credit:
$89.69 billion (31 December 2008)
Market value of publicly traded shares:
$87.03 billion (31 December 2008)
Agriculture - products:
coffee, cut flowers, bananas, rice, tobacco, corn, sugarcane, cocoa beans, oilseed, vegetables; forest products; shrimp
Industries:
textiles, food processing, oil, clothing and footwear, beverages, chemicals, cement; gold, coal, emeralds
Industrial production growth rate:
0.8% (2008 est.)
Electricity - production:
53.6 billion kWh (2007)
Electricity - consumption:
52.8 billion kWh (2007)
Electricity - exports:
876.7 million kWh (2007)
Electricity - imports:
38.4 million kWh (2007)
Oil - production:
588000 oilbbl/d (2008 est.)
Oil - consumption:
267000 oilbbl/d (2007 est.)
Oil - exports:
294000 oilbbl/d (2008 est.)
Oil - imports:
12480 oilbbl/d (2005)
Oil - proved reserves:
1323000000 bbl (210,340,191,285 l) (1 January 2008 est.)
Natural gas - production:
7.22 billion cu m (2006 est.)
Natural gas - consumption:
7.22 billion cu m (2006 est.)
Natural gas - exports:
0 cu m (2007 est.)
Natural gas - imports:
0 cu m (2007 est.)
Natural gas - proved reserves:
122.9 billion cu m (1 January 2008 est.)
Current account balance:
$-6.761 billion (2008 est.)
Exchange rates:
Colombian pesos (COP) per US dollar - 2,243.6 (2008), 2,013.8 (2007), 2,358.6 (2006), 2,320.75 (2005), 2,628.61 (2004)
Source:
Source:
s and energy resources. It has the largest coal
reserves in Latin America, and is second to Brazil
in hydroelectric potential. Estimates of petroleum
reserves in 1995 were 3.1 Goilbbl. It also possesses significant amounts of nickel
, gold
, silver
, platinum
, and emeralds.
The discovery of 2 Goilbbl of high-quality oil at the Cusiana and Cupiagua fields, about 200 kilometres (124.3 mi) east of Bogotá
, has enabled Colombia to become a net oil exporter since 1986. The Transandino pipeline
transports oil from Orito
in the Department of Putumayo to the Pacific port of Tumaco
in the Department of Nariño. Total crude oil production averages 620 koilbbl/d; about 184 koilbbl/d is exported. The Pastrana government has significantly liberalized its petroleum investment policies, leading to an increase in exploration activity. Refining capacity cannot satisfy domestic demand, so some refined products, especially gasoline
, must be imported. Plans for the construction of a new refinery are under development.
While Colombia has vast hydroelectric potential, a prolonged drought in 1992 forced severe electricity rationing throughout the country until mid-1993. The consequences of the drought on electricity-generating capacity caused the government to commission the construction or upgrading of 10 thermoelectric power plants. Half will be coal-fired, and half will be fired by natural gas
. The government also has begun awarding bids for the construction of a natural gas pipeline system that will extend from the country's extensive gas fields to its major population centers. Plans call for this project to make natural gas available to millions of Colombian households by the middle of the next decade.
As of 2004, Colombia has become a net energy exporter, exporting electricity to Ecuador
and developing connections to Peru
, Venezuela
and Panama
to export to those markets as well. The Trans-Caribbean pipeline connecting western Venezuela to Panama through Colombia is also under construction, thanks to cooperation between presidents Álvaro Uribe
of Colombia, Martín Torrijos
of Panama and Hugo Chávez
of Venezuela. The pipeline will be inaugurated by October 2007.
(ELN) and, more recently, the Revolutionary Armed Forces of Colombia
(FARC). The bombings, which have occurred on average once every 5 days, have caused substantial environmental damage, often in fragile rain forests and jungles, as well as causing significant loss of life. In April 1999 in Cartagena de Indias, Clinton's Secretary of Energy Bill Richardson spoke before investors from the United States, Canada and other countries. He expressed his government's willingness to use military aid to support the investment that they and their allies were going to make in Colombia, especially in strategically important sectors like mining and energy.
In 2002 there were 170 attacks on the 2nd largest pipeline, which travels 780 km from the Caño Limón
to the Atlantic port of Coveñas. The pipeline was out of operation for 266 days of that year. The government estimates that these bombings reduced the gross domestic productP of Colombia by 0.5%. The government of the United States
increased military aid, in 2003, to Colombia to assist in the effort to defend the pipeline. Occidental Petroleum
privately contracted mercenaries who flew Skymaster
planes, from AirScan
International Inc., to patrol the Cano Limon-Covenas pipeline. Many of these operations used helicopters, equipment and weapons provided by the U.S. military and anti-narcotics aid programs.
Mining and natural exploitation has had environmental consequences. The region of Guajira is undergoing an accelerated desertification with the disappearances of forests, land, and water sources, due to the increase in coal production.
Social consequences or lack of development in resource rich areas is common. 11 million Colombians survive on less than one dollar a day. Over 65% of these live in mining zones. There are 3.5 million children out of school, and the most critical situation is in the mining zone of Choco, Bolivar, and Sucre.
Economic consequences of privatization and liberal institutions have meant changes in taxation to attract foreign investment. Colombia will lose another $800 million over the next 90 years that Glencore International operates in El Cerrejon
Zona Media, if the company continues to produce coal at a rate of 5 million tons/year, because of the reduction of the royalty tax from 10-15% to .04%. If the company, as is plausible, doubles or triples its production, the losses will be proportionally greater. The operational losses from the three large mining projects (El Cerrejon, La Loma
, operated by Drummond, and Montelíbano
, which produces ferronickel) for Colombia to more than 12 billion.
Coal production has grown rapidly, from 22.7 million tons in 1994 to 50.0 million tons in 2003. Over 90% of this amount was exported, making Colombia the world's sixth largest coal exporter, behind Australia
, the People's Republic of China
, Indonesia
, South Africa
and Russia
. From the mid-1980s the center of coal production was the Cerrejón
mines in the Guajira department. However, the growth in output at La Loma in neighboring Cesar
mean that this department has been the leader in coal production since 2004. Production in other departments, including Boyacá
, Cundinamarca
and Norte de Santander, forms about 13% of the total. The coal industry is largely controlled by international mining companies, including a consortium of BHP Billiton
, Anglo American and Glencore International at Cerrejón, and Drummond Company
at La Loma, which is undergoing a lawsuit in the U.S. District Court in Alabama for union assassinations and alleged paramilitary links.
known as "la apertura" was adopted by the government as an open trade strategy. Although the analysis of the results are not clear, the fact is that the agricultural sector was severely impacted by this policy.
In 1991 and 1992, the government passed laws to stimulate foreign investment in nearly all sectors of the economy. The only activities closed to foreign direct investment are defense and national security, disposal of hazardous wastes, and real estate—the last of these restrictions is intended to hinder money laundering. Colombia established a special entity—CoInvertir—to assist foreigners in making investments in the country. Foreign investment flows for 1999 were $4.4 billion, down from $4.8 billion in 1998.
Major foreign investment projects underway include the $6 billion development of the Cusiana and Cupiagua oil fields, development of coal fields in the north of the country, and the recently concluded licensing for establishment of cellular telephone service. The United States accounted for 26.5% of the total $19.4 billion stock of nonpetroleum foreign direct investment in Colombia at the end of 1998.
On October 21, 1995, under the International Emergency Economic Powers Act (IEEPA), President Clinton signed an Executive Order barring U.S. entities from any commercial or financial transactions with four Colombian drug kingpins and with individuals and companies associated with the traffic in narcotics, as designated by the Secretary of the Treasury in consultation with the Secretary of State and the Attorney General. The list of designated individuals and companies is amendeded periodically and is maintained by the Office of Foreign Asset Control at the Department of the Treasury, tel. (202) 622-0077 (ask for Document #1900). The document also is available at the Department of Treasury web site.
Colombia is the United States' fifth-largest export market in Latin America—behind Mexico, Brazil, Venezuela, and Argentina—and the 26th-largest market for U.S. products worldwide. The United States is Colombia's principal trading partner, with two-way trade from November 1999 through November 2000 exceeding $9.5 billion--$3.5 billion U.S. exports and $6.0 billion U.S. imports. Colombia benefits from duty-free entry—for a 10-year period, through 2001—for certain of its exports to the United States under the Andean Trade Preferences Act. Colombia improved protection of intellectual property rights through the adoption of three Andean Pact decisions in 1993 and 1994, but the U.S. remains concerned over deficiencies in licensing, patent regulations, and copyright protection.
The petroleum and natural gas coal mining, chemical, and manufacturing industries attract the greatest U.S. investment interest. U.S. investment accounted for 37.8% ($4.2 billion) of the total $11.2 billion in foreign direct investment at the end of 1997, excluding petroleum and portfolio investment. Worker rights and benefits in the U.S.-dominated sectors are more favorable than general working conditions. Examples include shorter-than-average working hours, higher wages, and compliance with health and safety standards above the national average.
Cacao beans, sugarcane
, coconut
s, banana
s, plantain
s, rice
, cotton
, tobacco
, cassava
, and most of the nation's beef cattle are produced in the hot regions from sea level to 1,000 meters elevation. The temperate regions—between 1,000 and 2,000 meters—are better suited for coffee
and coca
; certain flowers; maize
and other vegetables; and fruits such as citrus
, pear
s, pineapple
s, and tomato
es. The cooler elevations—between 2,000 and 3,000 meter—produce wheat
, barley
, potato
es, cold-climate vegetables, flowers, dairy
cattle, and poultry
.
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
has a free market economy with major commercial and investment ties to the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Transition from a highly regulated economy has been underway for more than a decade.
In 1990, the administration of President César Gaviria Trujillo (1990–94) initiated economic liberalism
Economic liberalism
Economic liberalism is the ideological belief in giving all people economic freedom, and as such granting people with more basis to control their own lives and make their own mistakes. It is an economic philosophy that supports and promotes individual liberty and choice in economic matters and...
policies or "apertura economica" and this has continued since then, with tariff reductions, financial deregulation, privatization of state-owned enterprises, and adoption of a more liberal foreign exchange rate. Almost all sectors became open to foreign investment although agricultural products remained protected.
The original idea of his then Minister of Finance, Rudolf Hommes
Rudolf Hommes
Rudolf Hommes Rodríguez is a Colombian politician and economist, mostly known for serving a term as Minister of Finance and Public Credit under the administration of President César Gaviria, and during this period he introduced many liberal policies in Colombia's Economy...
, was that the country should import agricultural products in which it was not competitive, like maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
, wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
, cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
and soybeans and export the ones in which it had an advantage, like fruits and flowers. In ten years, the sector lost 7,000 km² to imports, represented mostly in heavily subsidized agricultural products from the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, as a result of this policy, with a critical impact on employment in rural areas. Still, this policy makes food cheaper for the average Colombian than it would be if agricultural trade were more restricted.
Until 1997, Colombia had enjoyed a fairly stable economy. The first five years of liberalization were characterized by high economic growth rates of between 4% and 5%. The Ernesto Samper
Ernesto Samper
Ernesto Samper Pizano is a Colombian politician. He served as the President of Colombia from August 7, 1994 to August 7, 1998, representing the Liberal Party. He was involved in the 8000 process scandal, which takes its name from the folio number assigned to it by the chief prosecutor's office...
administration (1994–98) emphasized social welfare policies which targeted Colombia's lower income population. However, these reforms led to higher government spending which increased the fiscal deficit and public sector debt, the financing of which required higher interest rates. An over-valued peso inherited from the previous administration was maintained.
The economy slowed, and by 1998 GDP growth was only 0.6%. In 1999, the country fell into its first recession since the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
. The economy shrank by 4.5% with unemployment at over 20%. While unemployment remained at 20% in 2000, GDP growth recovered to 3.1%.
The administration of President Andrés Pastrana Arango
Andrés Pastrana Arango
Andrés Pastrana Arango was the President of Colombia from 1998 to 2002, following in the footsteps of his father, Misael Pastrana, who was president from 1970 to 1974.-Early years:...
, when it took office on August 7, 1998, faced an economy in crisis, with the difficult internal security situation and global economic turbulence additionally inhibiting confidence. As evidence of a serious recession became clear in 1999, the government took a number of steps. It engaged in a series of controlled devaluations of the peso, followed by a decision to let it float. Colombia also entered into an agreement with the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
which provided a $2.7 billion guarantee (extended funds facility), while committing the government to budget discipline and structural reforms.
By early 2000 there had been the beginning of an economic recovery, with the export sector leading the way, as it enjoyed the benefit of the more competitive exchange rate, as well as strong prices for petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
, Colombia's leading export product. Prices of coffee
Coffee
Coffee is a brewed beverage with a dark,init brooo acidic flavor prepared from the roasted seeds of the coffee plant, colloquially called coffee beans. The beans are found in coffee cherries, which grow on trees cultivated in over 70 countries, primarily in equatorial Latin America, Southeast Asia,...
, the other principal export product, have been more variable.
Economic growth reached 3.1 % during 2000 and inflation was 9.0% although unemployment has yet to significantly improve. Colombia's international reserves have remained stable at around $8.35 billion, and Colombia has successfully remained in international capital markets. Colombia's total foreign debt at the end of 1999 was $34.5 billion with $14.7 billion in private sector and $19.8 billion in public sector debt. Major international credit rating
Credit rating
A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by a credit rating agency of the debt issuers likelihood of default. Credit ratings are...
organizations have dropped Colombian sovereign debt below investment grade, primarily as a result of large fiscal deficits, which current policies are seeking to close.
Several international financial institutions have praised the economic reforms introduced by former president Álvaro Uribe
Álvaro Uribe
Alvaro Uribe Vélez was the 58th President of Colombia, from 2002 to 2010. In August 2010 he was appointed Vice-chairman of the UN panel investigating the Gaza flotilla raid....
(elected August 7, 2002), which include measures designed to reduce the public-sector deficit below 2.5% of GDP in 2004. The government's economic policy and democratic security
Democratic security
Democratic security or Democratic security policy refers to a Colombian security policy implemented during the administration of President Álvaro Uribe...
strategy have engendered a growing sense of confidence in the economy, particularly within the business sector, and GDP growth in 2003 was among the highest in Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
, at over 4%. By 2007, GDP grew over 8%.
Statistics
Economy - overview
Colombia's economy has experienced positive growth over the past three years despite a serious armed conflict. The economy continues to improve in part because of austere government budgets, focused efforts to reduce public debt levels, an export-oriented growth strategy, an improved security situation in the country, and high commodity prices. Ongoing economic problems facing President Uribe range from reforming the pension system to reducing high unemployment, and to achieving congressional passage of a fiscal transfers reform. New exploration is needed to offset declining oil production. International and domestic financial analysts note with concern the growing central government deficit, which hovers at 5% of GDP. However, the government's economic policy and democratic security strategy have engendered a growing sense of confidence in the economy, particularly within the business sector.Household income or consumption by percentage share:
lowest 10%: 0.8%
highest 10%: 45.9% (2006)
Investment (gross fixed):
24.3% of GDP (2008 est.)
Budget:
revenues: $83.22 billion
expenditures: $82.92 billion; including capital expenditures of $NA (2008 est.)
Central bank discount rate:
11.5% (31 December 2008)
Commercial bank prime lending rate:
15.6% (31 December 2008)
Stock of money:
$21.58 billion (31 December 2008)
Stock of quasi money:
$26.57 billion (31 December 2008)
Stock of domestic credit:
$89.69 billion (31 December 2008)
Market value of publicly traded shares:
$87.03 billion (31 December 2008)
Agriculture - products:
coffee, cut flowers, bananas, rice, tobacco, corn, sugarcane, cocoa beans, oilseed, vegetables; forest products; shrimp
Industries:
textiles, food processing, oil, clothing and footwear, beverages, chemicals, cement; gold, coal, emeralds
Industrial production growth rate:
0.8% (2008 est.)
Electricity - production:
53.6 billion kWh (2007)
Electricity - consumption:
52.8 billion kWh (2007)
Electricity - exports:
876.7 million kWh (2007)
Electricity - imports:
38.4 million kWh (2007)
Oil - production:
588000 oilbbl/d (2008 est.)
Oil - consumption:
267000 oilbbl/d (2007 est.)
Oil - exports:
294000 oilbbl/d (2008 est.)
Oil - imports:
12480 oilbbl/d (2005)
Oil - proved reserves:
1323000000 bbl (210,340,191,285 l) (1 January 2008 est.)
Natural gas - production:
7.22 billion cu m (2006 est.)
Natural gas - consumption:
7.22 billion cu m (2006 est.)
Natural gas - exports:
0 cu m (2007 est.)
Natural gas - imports:
0 cu m (2007 est.)
Natural gas - proved reserves:
122.9 billion cu m (1 January 2008 est.)
Current account balance:
$-6.761 billion (2008 est.)
Exchange rates:
Colombian pesos (COP) per US dollar - 2,243.6 (2008), 2,013.8 (2007), 2,358.6 (2006), 2,320.75 (2005), 2,628.61 (2004)
Source:
Economic growth
| Quarterly | Growth |
|---|---|
| 2005 - I | 4.92% |
| 2005 - II | 6.26% |
| 2005 - III | 5.89% |
| 2005 - IV | 1.99% |
| 2005 | 4.765% |
| 2006 - I | 5.52% |
| 2006 - II | 5.89% |
| 2006 - III | 7.74% |
| 2006 - IV | 8.42% |
| 2006 | 6.8925% |
| 2007 - I | 8.23% |
| 2007 - II | 6.97% |
Source:
Mining and energy
Colombia is well-endowed with mineralMineral
A mineral is a naturally occurring solid chemical substance formed through biogeochemical processes, having characteristic chemical composition, highly ordered atomic structure, and specific physical properties. By comparison, a rock is an aggregate of minerals and/or mineraloids and does not...
s and energy resources. It has the largest coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
reserves in Latin America, and is second to Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
in hydroelectric potential. Estimates of petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
reserves in 1995 were 3.1 Goilbbl. It also possesses significant amounts of nickel
Nickel
Nickel is a chemical element with the chemical symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel belongs to the transition metals and is hard and ductile...
, gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, platinum
Platinum
Platinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is a dense, malleable, ductile, precious, gray-white transition metal...
, and emeralds.
The discovery of 2 Goilbbl of high-quality oil at the Cusiana and Cupiagua fields, about 200 kilometres (124.3 mi) east of Bogotá
Bogotá
Bogotá, Distrito Capital , from 1991 to 2000 called Santa Fé de Bogotá, is the capital, and largest city, of Colombia. It is also designated by the national constitution as the capital of the department of Cundinamarca, even though the city of Bogotá now comprises an independent Capital district...
, has enabled Colombia to become a net oil exporter since 1986. The Transandino pipeline
Transandino pipeline
The Transandino pipeline is a long crude oil pipeline, which transports oil from Orito, in the Department of Putumayo, to the Pacific port of Tumaco in the Department of Nariño, Colombia. The pipeline was built in 1969 with diameters of , and . There are four pump stations and four reduce...
transports oil from Orito
Orito
Orito is a town and municipality located in the Putumayo Department, Republic of Colombia....
in the Department of Putumayo to the Pacific port of Tumaco
Tumaco
Tumaco is a port city and municipality in the Nariño Department, Colombia, by the Pacific Ocean. It is located on the southwestern of Colombia, near to border with Ecuador, and enjoys of hot tropical climate...
in the Department of Nariño. Total crude oil production averages 620 koilbbl/d; about 184 koilbbl/d is exported. The Pastrana government has significantly liberalized its petroleum investment policies, leading to an increase in exploration activity. Refining capacity cannot satisfy domestic demand, so some refined products, especially gasoline
Gasoline
Gasoline , or petrol , is a toxic, translucent, petroleum-derived liquid that is primarily used as a fuel in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain...
, must be imported. Plans for the construction of a new refinery are under development.
While Colombia has vast hydroelectric potential, a prolonged drought in 1992 forced severe electricity rationing throughout the country until mid-1993. The consequences of the drought on electricity-generating capacity caused the government to commission the construction or upgrading of 10 thermoelectric power plants. Half will be coal-fired, and half will be fired by natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
. The government also has begun awarding bids for the construction of a natural gas pipeline system that will extend from the country's extensive gas fields to its major population centers. Plans call for this project to make natural gas available to millions of Colombian households by the middle of the next decade.
As of 2004, Colombia has become a net energy exporter, exporting electricity to Ecuador
Ecuador
Ecuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...
and developing connections to Peru
Peru
Peru , officially the Republic of Peru , is a country in western South America. It is bordered on the north by Ecuador and Colombia, on the east by Brazil, on the southeast by Bolivia, on the south by Chile, and on the west by the Pacific Ocean....
, Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
and Panama
Panama
Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...
to export to those markets as well. The Trans-Caribbean pipeline connecting western Venezuela to Panama through Colombia is also under construction, thanks to cooperation between presidents Álvaro Uribe
Álvaro Uribe
Alvaro Uribe Vélez was the 58th President of Colombia, from 2002 to 2010. In August 2010 he was appointed Vice-chairman of the UN panel investigating the Gaza flotilla raid....
of Colombia, Martín Torrijos
Martín Torrijos
Martín Erasto Torrijos Espino is a Panamanian politician and the former President of the Republic of Panama.Torrijos was elected President on May 2, 2004...
of Panama and Hugo Chávez
Hugo Chávez
Hugo Rafael Chávez Frías is the 56th and current President of Venezuela, having held that position since 1999. He was formerly the leader of the Fifth Republic Movement political party from its foundation in 1997 until 2007, when he became the leader of the United Socialist Party of Venezuela...
of Venezuela. The pipeline will be inaugurated by October 2007.
Human rights abuse in mining zones
The oil pipelines are a frequent target of extortion and bombing campaigns by the National Liberation ArmyNational Liberation Army (Colombia)
National Liberation Army is a revolutionary, avowed Marxist guerrilla group that has been operating in several regions of Colombia since 1964....
(ELN) and, more recently, the Revolutionary Armed Forces of Colombia
Revolutionary Armed Forces of Colombia
The Revolutionary Armed Forces of Colombia – People's Army is a Marxist–Leninist revolutionary guerrilla organization based in Colombia which is involved in the ongoing Colombian armed conflict, currently involved in drug dealing and crimes against the civilians..FARC-EP is a peasant army which...
(FARC). The bombings, which have occurred on average once every 5 days, have caused substantial environmental damage, often in fragile rain forests and jungles, as well as causing significant loss of life. In April 1999 in Cartagena de Indias, Clinton's Secretary of Energy Bill Richardson spoke before investors from the United States, Canada and other countries. He expressed his government's willingness to use military aid to support the investment that they and their allies were going to make in Colombia, especially in strategically important sectors like mining and energy.
In 2002 there were 170 attacks on the 2nd largest pipeline, which travels 780 km from the Caño Limón
Caño Limón
The Caño Limón – Coveñas pipeline is a crude oil pipeline in Colombia from the Caño Limón oilfield in the municipalities of Arauca and Arauquita in Arauca Department on the border of Venezuela to Coveñas on Colombia's Caribbean coastline. It is jointly owned by the state oil firm Ecopetrol, and...
to the Atlantic port of Coveñas. The pipeline was out of operation for 266 days of that year. The government estimates that these bombings reduced the gross domestic productP of Colombia by 0.5%. The government of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
increased military aid, in 2003, to Colombia to assist in the effort to defend the pipeline. Occidental Petroleum
Occidental Petroleum
Occidental Petroleum Corporation is a California-based oil and gas exploration and production company with operations in the United States, the Middle East, North Africa, and South America...
privately contracted mercenaries who flew Skymaster
Skymaster
Skymaster may refer to*An airline**Skymaster Airlines*Several aircraft**Cessna Skymaster**Douglas C-54 Skymaster**Cessna O-2 Skymaster*A satellite company**Skymaster *A comic book character**Skrullian skymaster*An amusement ride...
planes, from AirScan
AirScan
AirScan, Inc. is a private military contractor that specializes in airborne surveillance and security.- History :AirScan Inc. was formed in 1984 by former US Air Commandos Walter Holloway and John Mansur with high standards of recruitment. They have been specializing in airborne surveillance,...
International Inc., to patrol the Cano Limon-Covenas pipeline. Many of these operations used helicopters, equipment and weapons provided by the U.S. military and anti-narcotics aid programs.
Mining and natural exploitation has had environmental consequences. The region of Guajira is undergoing an accelerated desertification with the disappearances of forests, land, and water sources, due to the increase in coal production.
Social consequences or lack of development in resource rich areas is common. 11 million Colombians survive on less than one dollar a day. Over 65% of these live in mining zones. There are 3.5 million children out of school, and the most critical situation is in the mining zone of Choco, Bolivar, and Sucre.
Economic consequences of privatization and liberal institutions have meant changes in taxation to attract foreign investment. Colombia will lose another $800 million over the next 90 years that Glencore International operates in El Cerrejon
Cerrejón
Cerrejón is a coal mine located in the Guajira department in the north of Colombia. It is the largest mining operation in Colombia and among the largest open-pit coal mines in the world. The legal entity managing the Cerrejón operation is known as Carbones del Cerrejón Ltd...
Zona Media, if the company continues to produce coal at a rate of 5 million tons/year, because of the reduction of the royalty tax from 10-15% to .04%. If the company, as is plausible, doubles or triples its production, the losses will be proportionally greater. The operational losses from the three large mining projects (El Cerrejon, La Loma
La Loma
La Loma is a town in the Coclé province of Panama.- Sources :* – World-Gazetteer.com...
, operated by Drummond, and Montelíbano
Montelíbano
Montelíbano is a town and municipality located in the Córdoba Department, northern Colombia. It is the seat of the Roman Catholic Diocese of Montelíbano....
, which produces ferronickel) for Colombia to more than 12 billion.
Coal production has grown rapidly, from 22.7 million tons in 1994 to 50.0 million tons in 2003. Over 90% of this amount was exported, making Colombia the world's sixth largest coal exporter, behind Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
, Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
, South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
and Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
. From the mid-1980s the center of coal production was the Cerrejón
Cerrejón
Cerrejón is a coal mine located in the Guajira department in the north of Colombia. It is the largest mining operation in Colombia and among the largest open-pit coal mines in the world. The legal entity managing the Cerrejón operation is known as Carbones del Cerrejón Ltd...
mines in the Guajira department. However, the growth in output at La Loma in neighboring Cesar
Cesar Department
Cesar Department or simply Cesar is a department of Colombia located in the north of the country in the Caribbean region, bordering to the north with the Department of La Guajira, to the west with the Department of Magdalena and Department of Bolivar, to the south with Department of Santander, to...
mean that this department has been the leader in coal production since 2004. Production in other departments, including Boyacá
Boyacá Department
Boyacá is one of the 32 Departments of Colombia, and the remnant of one of the original nine states of the "United States of Colombia".Boyacá is centrally located within Colombia, almost entirely within the mountains of the Eastern Cordillera to the border with Venezuela, although the western end...
, Cundinamarca
Cundinamarca Department
- Origin of the name :The name of Cundinamarca comes from Kundur marqa, an indigenous expression, probably derived from Quechua. Meaning "Condor's Nest", it was used in pre-Columbian times by the natives of the Magdalena Valley to refer to the nearby highlands....
and Norte de Santander, forms about 13% of the total. The coal industry is largely controlled by international mining companies, including a consortium of BHP Billiton
BHP Billiton
BHP Billiton is a global mining, oil and gas company headquartered in Melbourne, Australia and with a major management office in London, United Kingdom...
, Anglo American and Glencore International at Cerrejón, and Drummond Company
Drummond Company
Drummond Company, Inc. is a privately owned company based in Birmingham, Alabama, United States, involved in the mining and processing of coal and coal products. The company was founded in Jasper, Alabama in 1935 by H. E...
at La Loma, which is undergoing a lawsuit in the U.S. District Court in Alabama for union assassinations and alleged paramilitary links.
Foreign investment
In 1990, to attract foreign investors and promote trade, an experiment from the International Monetary FundInternational Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
known as "la apertura" was adopted by the government as an open trade strategy. Although the analysis of the results are not clear, the fact is that the agricultural sector was severely impacted by this policy.
In 1991 and 1992, the government passed laws to stimulate foreign investment in nearly all sectors of the economy. The only activities closed to foreign direct investment are defense and national security, disposal of hazardous wastes, and real estate—the last of these restrictions is intended to hinder money laundering. Colombia established a special entity—CoInvertir—to assist foreigners in making investments in the country. Foreign investment flows for 1999 were $4.4 billion, down from $4.8 billion in 1998.
Major foreign investment projects underway include the $6 billion development of the Cusiana and Cupiagua oil fields, development of coal fields in the north of the country, and the recently concluded licensing for establishment of cellular telephone service. The United States accounted for 26.5% of the total $19.4 billion stock of nonpetroleum foreign direct investment in Colombia at the end of 1998.
On October 21, 1995, under the International Emergency Economic Powers Act (IEEPA), President Clinton signed an Executive Order barring U.S. entities from any commercial or financial transactions with four Colombian drug kingpins and with individuals and companies associated with the traffic in narcotics, as designated by the Secretary of the Treasury in consultation with the Secretary of State and the Attorney General. The list of designated individuals and companies is amendeded periodically and is maintained by the Office of Foreign Asset Control at the Department of the Treasury, tel. (202) 622-0077 (ask for Document #1900). The document also is available at the Department of Treasury web site.
Colombia is the United States' fifth-largest export market in Latin America—behind Mexico, Brazil, Venezuela, and Argentina—and the 26th-largest market for U.S. products worldwide. The United States is Colombia's principal trading partner, with two-way trade from November 1999 through November 2000 exceeding $9.5 billion--$3.5 billion U.S. exports and $6.0 billion U.S. imports. Colombia benefits from duty-free entry—for a 10-year period, through 2001—for certain of its exports to the United States under the Andean Trade Preferences Act. Colombia improved protection of intellectual property rights through the adoption of three Andean Pact decisions in 1993 and 1994, but the U.S. remains concerned over deficiencies in licensing, patent regulations, and copyright protection.
The petroleum and natural gas coal mining, chemical, and manufacturing industries attract the greatest U.S. investment interest. U.S. investment accounted for 37.8% ($4.2 billion) of the total $11.2 billion in foreign direct investment at the end of 1997, excluding petroleum and portfolio investment. Worker rights and benefits in the U.S.-dominated sectors are more favorable than general working conditions. Examples include shorter-than-average working hours, higher wages, and compliance with health and safety standards above the national average.
Industry and agriculture
The most industrially diverse member of the five-nation Andean Community, Colombia has four major industrial centers—Bogota, Medellin, Cali, and Barranquilla, each located in a distinct geographical region. Colombia's industries include textiles and clothing, particularly lingerie, leather products, processed foods and beverages, paper and paper products, chemicals and petrochemicals, cement, construction, iron and steel products, and metalworking. Its diverse climate and topography permit the cultivation of a wide variety of crops. In addition, all regions yield forest products, ranging from tropical hardwoods in the hot country to pine and eucalyptus in the colder areas.Cacao beans, sugarcane
Sugarcane
Sugarcane refers to any of six to 37 species of tall perennial grasses of the genus Saccharum . Native to the warm temperate to tropical regions of South Asia, they have stout, jointed, fibrous stalks that are rich in sugar, and measure two to six metres tall...
, coconut
Coconut
The coconut palm, Cocos nucifera, is a member of the family Arecaceae . It is the only accepted species in the genus Cocos. The term coconut can refer to the entire coconut palm, the seed, or the fruit, which is not a botanical nut. The spelling cocoanut is an old-fashioned form of the word...
s, banana
Banana
Banana is the common name for herbaceous plants of the genus Musa and for the fruit they produce. Bananas come in a variety of sizes and colors when ripe, including yellow, purple, and red....
s, plantain
Plantain
Plantain is the common name for herbaceous plants of the genus Musa. The fruit they produce is generally used for cooking, in contrast to the soft, sweet banana...
s, rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
, cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
, tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
, cassava
Cassava
Cassava , also called yuca or manioc, a woody shrub of the Euphorbiaceae native to South America, is extensively cultivated as an annual crop in tropical and subtropical regions for its edible starchy tuberous root, a major source of carbohydrates...
, and most of the nation's beef cattle are produced in the hot regions from sea level to 1,000 meters elevation. The temperate regions—between 1,000 and 2,000 meters—are better suited for coffee
Coffee
Coffee is a brewed beverage with a dark,init brooo acidic flavor prepared from the roasted seeds of the coffee plant, colloquially called coffee beans. The beans are found in coffee cherries, which grow on trees cultivated in over 70 countries, primarily in equatorial Latin America, Southeast Asia,...
and coca
Coca
Coca, Erythroxylum coca, is a plant in the family Erythroxylaceae, native to western South America. The plant plays a significant role in many traditional Andean cultures...
; certain flowers; maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
and other vegetables; and fruits such as citrus
Citrus
Citrus is a common term and genus of flowering plants in the rue family, Rutaceae. Citrus is believed to have originated in the part of Southeast Asia bordered by Northeastern India, Myanmar and the Yunnan province of China...
, pear
Pear
The pear is any of several tree species of genus Pyrus and also the name of the pomaceous fruit of these trees. Several species of pear are valued by humans for their edible fruit, but the fruit of other species is small, hard, and astringent....
s, pineapple
Pineapple
Pineapple is the common name for a tropical plant and its edible fruit, which is actually a multiple fruit consisting of coalesced berries. It was given the name pineapple due to its resemblance to a pine cone. The pineapple is by far the most economically important plant in the Bromeliaceae...
s, and tomato
Tomato
The word "tomato" may refer to the plant or the edible, typically red, fruit which it bears. Originating in South America, the tomato was spread around the world following the Spanish colonization of the Americas, and its many varieties are now widely grown, often in greenhouses in cooler...
es. The cooler elevations—between 2,000 and 3,000 meter—produce wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
, barley
Barley
Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...
, potato
Potato
The potato is a starchy, tuberous crop from the perennial Solanum tuberosum of the Solanaceae family . The word potato may refer to the plant itself as well as the edible tuber. In the region of the Andes, there are some other closely related cultivated potato species...
es, cold-climate vegetables, flowers, dairy
Dairy
A dairy is a business enterprise established for the harvesting of animal milk—mostly from cows or goats, but also from buffalo, sheep, horses or camels —for human consumption. A dairy is typically located on a dedicated dairy farm or section of a multi-purpose farm that is concerned...
cattle, and poultry
Poultry
Poultry are domesticated birds kept by humans for the purpose of producing eggs, meat, and/or feathers. These most typically are members of the superorder Galloanserae , especially the order Galliformes and the family Anatidae , commonly known as "waterfowl"...
.
See also
- ColombiaColombiaColombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
- Colombia Economy report - Official Investment portal
- List of Colombian companies
- Economy of South AmericaEconomy of South AmericaThe economy of South America comprises around 382 million people living in twelve nations and three territories. It contributes 6% of the world's population.-Economic development:...
- Emigration from ColombiaEmigration from ColombiaEmigration from Colombia is determined by economic, social, and security issues linked mainly to the Colombian armed conflict. Emigration from Colombia is one of the largest in volume in Latin America. According to the 2005 Colombian census or DANE, about 3,331,107 Colombian citizens currently...
- A U.S.-Colombia Free Trade Agreement: Strengthening Democracy and Progress in Latin America