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Why Look At Colombia? Has The Country Transformed?

August 27, 2009

When people hear  “Colombia” they still think about drug-fueled violence.  That stain is deep, but fading: data prove that Colombia is radically transforming, perhaps as extensively as Europe after the fall of the Berlin Wall or China after the advent of free markets. 

Compelling statistics paint a story of social transformation through greatly reduced violence, increased economic activity, improved conditions for most (but not all) of the country.   A frequently updated slide show Entitled “The Transformation of a Country” is well-named.  Though prepared by ProExport, part of the Colombian Foreign Trade Ministry, the data are indisputable and explain why Colombia presents remarkable opportunities for business and social justice.  Check out slides describing improvements in unemployment, poverty, wealth and income distribution, violent crime rates, and “business-friendly” reforms. Three main Colombian cities are all safer than Washington, D.C. 

Comparative data shows that many common destinations are doing worse at doing business, or reducing crime and violence, than Colombia, including Mexico, Panama, and Brazil. 

Current data is also available from the CIA World Factbook which says in part: 

The Colombian Government has stepped up efforts to reassert government control throughout the country, and now has a presence in every one of its administrative departments. 

*** 

Colombia has experienced accelerating growth between 2002 and 2007, with expansion above 7% in 2007, chiefly due to advancements in domestic security, to rising commodity prices, and to President URIBE’s  pro-market economic policies. Colombia’s sustained growth helped reduce poverty by 20% and cut unemployment by 25% since 2002. Additionally, investor friendly reforms to Colombia’s hydrocarbon sector and the US-Colombia Trade Promotion Agreement (TPA, also known as the Free Trade Agreement or “TLC” by its Spanish acronym) negotiations have attracted record levels of foreign investment. Inequality, underemployment, and narco-trafficking remain significant challenges, and Colombia’s infrastructure requires significant updating in order to sustain expansion. 

The World Bank annual assessment of the ease of doing business measures every country on earth, and Colombia rose substantially again in the 2010 Doing Business Report.  The Colombia country report demonstrates the various ways in which the country has improved in protecting property, investors, ease of opening businesses and securing permits. 

This is not new news.  In a May 2007 article entitled, a bit extravagantly, “Extreme Investing: Inside Colombia,” BusinessWeek Magazine took a hard look at Colombia, spotting the emerging trend: 

An improbable journey from crime capital to investment hot spot. Can this boom last? 

That same year, the New York Times reported “Medellin Reborn: A Drug Runner’s Stronghold Finds New Life.”  NBC News called it a “A Tale of Two Cities.”  Amity Shlaes, Senior Fellow for Economic History at the Council on Foreign Relations published an op-ed piece on Bloomberg stating, bluntly, “Medellin Wonders What Pelosi, Sweeney are Smoking”: 

Medellín contributed by choosing a reforming mayor, a mathematician with a doctorate from the University of Wisconsin named Sergio Fajardo. Fajardo worked hour by hour with police to recapture the city. He built libraries to show that gangs weren’t the only ones who could help communities. Fajardo also found an ingenious way to transport the stranded hill-side citizens — by ski lift. Today gondolas carrying eight passengers each sway up and down the hill on a wire — a commuter hypotenuse that changes the urban profile. 

Fajardo says funding the concrete-and-wire Metrocable wasn’t so hard: “It’s remarkable how much money there is to spend when you don’t keep it for yourself and your friends.” 

The result of it all is that murders in Medellín dropped. At 29 per 100,000, the city’s homicide rate is lower than Baltimore’s. New peace allowed legitimate businesses, such as fresh flowers and textiles, to expand in Medellín. 

That was all two years ago. Maybe the emerging trend then was not sufficiently convincing, but things have only improved since then, if the data on the ProExport slides is any indication. And these are some compelling indicators of change from 2002-2008: 

  • Unemployment is down 4.2% to 12.5%
  • Population percentage under the poverty line down 13 points (from 57% to 44%) — that is, about an eighth of the entire nation’s population has moved out of poverty and into the lower middle class
  • Income distribution on the GINI scale (1 is worst, 0 is best) improved from .58 to .54
  • The homicide rate in Medellin (29.1), Cartagena (21.8), and Bogota (18.2) are all better than Washington, D.C. (34), Rio de Janeiro (48.3), and San Paolo (55). Mexico is 20.4. Panama is 24.
  • Kidnappings have fallen a whopping 85% and the homicide rate has fallen 50%
  • 214% increase in exports, 397% in foreign direct investment, and a lagging 120% increase in tourism
  • Colombia had the best performance in Latin America in the horrible first quarter of 2009, besting the others with tourism increases, and the smallest shrinkage in foreign direct investment and exports.

In my personal, decade-long experience, what I see and feel in Colombia’s cities today is excitement, productivity, peace, and optimism, tempered by the recognition that such gains are important to lock in through democratic institutions, and to share with the entire population.  The same is true in the rural areas around the cities.  Together that accounts for much of the population, but not all. One cannot ignore the somewhat-political display of the displaced persons camping out in a new park not far from the Presidential Palace — estimates range from 1.8M to 3.5M of internally displaced persons, the worst in most of the world. Still, from taxi-drivers to waiters and waitresses to unemployed actors to executives I have talked to, today’s generation is just plain sick of the drug and paramilitary mafias and FARC kidnappings.  They are committed to development, to business and political policies that continue and expand the transformation.  I base these observations on literally dozens of interviews with politicians of the right and left, family members, foreign investors, business executives, and journalists.  Everywhere, I find courageous people — and very talented ones — are giving this their life’s work, people in and out of business, people on the left, the center, and the right. 

Picture3

Members of Colonel Martinez's Search Bloc celebrate over Pablo Escobar's body on December 2, 1993, in a photograph taken by DEA agent Steve Murphy. Escobar's death ended a fifteen-month effort that cost hundreds of millions of dollars. It was the deathblow to the Medellín cartel.

 

Still, some people can’t get Pablo Escobar out of their minds. He’s dead, okay?  He was killed in 1993 by security forces hunting him after his escape from prison.  Also dead are most of the leaders of the gruesome FARC’. I won’t post any more gruesome pictures unless you make me. 

In the next installment, how much do you know about how things are now in Colombia? What could the press do to improve its original reporting? 

I invite readers to confront and analyze the data and statistics in the ProExport slideshow, post comments  here as to their accuracy, and links to more reliable and accurate information.

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