May 30, 2007

Colombia Sees an Upsurge in Investing, and a Chance for Change

by Laura Starita

Mention Colombia in conversation and most people will immediately think of it as the world’s top cocaine producer.  Some may recall that it has been embroiled in a bloody civil war for half a century. The only positive many can think of is good coffee. Those associations are why Colombia is never mentioned with Brazil as an up-and-coming South American economic power.

A recent BusinessWeek article, though, points out that investment in Colombia is on the upswing. Its economy is growing at a rate of nearly 7 percent – two points faster than Latin America as a whole – and inflation is less than a third of what it was 10 years ago, a reasonable 5 percent. The country is getting safer, contributing to a 500-percent increase in tourism in recent years. In 2005, the Colombian stock exchange grew 125 percent, and one of the many planned IPOs is the country’s major coffee concern, good news for local coffee growers. These early investors may be signaling a move toward national stability.

But there is a long way to go. War has left millions of people displaced, disabled or both; non-coca agriculture threatened; infrastructure damaged or destroyed; and impoverished youth vulnerable to recruitment into guerrilla, paramilitary or narcotics trafficking groups. But business investment is critical step in the right direction. Growing businesses create jobs and demand for better infrastructure – roads, schools, water and sanitation systems – that can yield alternatives to conflict for the poorest Colombians and enable them to build a prosperous future.

BusinessWeek: Extreme Investing: Inside Colombia