Foreign business environment of Columbia

Foreign business environment: Columbia

A. What events (political, economic, and technological) are the most important in recent years that might have impacted the business culture in Colombia?

Individuals who perceive Colombia as still being paralyzed by crime networks and drug cartels are skeptical and bewildered by the notion of a confederation of politicians, business leaders, and academicians visiting the nation. However, in reality, the situation in Colombia is far different from what it was a mere ten years ago.

Colombia’s infamous cruel and powerful drug cartels emerged during the latter part of the seventies era and developed in the subsequent two decades. Specifically, the Cali Cartel and Pablo Escobar’s Medellín Cartel were politically, socially and economically influential in the nation in this period. During the last two decades of the twentieth century, the world regarded the nation as being well on its way to becoming a failure as a state. This conceptualization is inconsistent with Colombia’s present reality: the nation now boasts a sound democracy, a vibrant economy, ongoing social advancement, and the restoration of its stability and security. Though it still has a long way to go, the country is definitely on the right path to progress (Villegas, 2014).
The Colombian economy has progressed along a positive direction during the last 5 years, in spite of the existence of severe armed conflict within the nation. Indeed, its private sector and policymakers count the year 2007 among the best years, economically, of late, after the year 2005. The economy’s continuous improvement is partly ascribed to Colombia’s strict governmental budgets, concentrated efforts at reducing the level of public debt, high commodity rates, a growth strategy that promotes export, and an improvement in domestic security (CIA World Factbook, n.d). The above factors, combined with the US’s firm support and assistance and sustained, extensive social, economic, and political reforms, has worked wonders for the nation. Colombia now boasts a 5% gross domestic product (GDP) growth (averagely) and has successfully created almost 2.5 million jobs in the last 4 years. The country’s investment attractiveness has reached never-before-seen levels with technology giants such as Microsoft, Google, and Facebook considering Colombia a lucrative option to open their innovation centers targeting the development of applications for the lower income population groups (Villegas, 2014).

B. Do you feel that the Colombian economy today is sufficiently robust to support the growth of the clothing manufacturing industry and your company’s entry into the country? Why?

Colombia ranks at 37 on the CPI (Corruption Perceptions Index), which ranks a total of 180 territories and nations based on perceived public sector corruption levels on a 0-100 scale (0 = highly corrupt; 100 = very clean). As compared with its recent performance, the above result is no surprise (Transparency International, 2017). Notwithstanding the aforementioned ranking, Colombia’s economy is sufficiently strong to support the clothing manufacturing sector’s growth. It also enjoys a geographic strategic advantage. The start of the nineties decade saw economic reforms (e.g., tariff cutbacks, financial deregulation, a more flexible exchange rate, and state company privatization) made by the nation’s government to open up its economy to foreign direct investors. Subsequently, Colombia began offering foreign businesspersons investment opportunities for establishing their apparel and textile manufacturing units in the country to replace its textile imports. ParkDale Mills (USA), Polymer Group (USA), Kaltex (Mexico), Coats (UK) and other prominent foreign firms already consider the opportunity lucrative and have opted for investing in the nation by erecting manufacturing units within Colombian free zones. Colombia’s apparel and textile manufacturing sector alone makes up 17 percent of its production sector employment, its 7.5 percent manufacturing GDP (which is 0.8 percent of its overall GDP), and 2.4 percent of the nation’s overall exports. The US, with its 33 percent participation in Colombia’s apparel exports, stands as Colombia’s key commercial partner (Ambastha, 2017; Kilcullen & Mills, 2014).

A decade was all it took for Colombia to transform from a near-collapsed nation to a promising one. The nation’s economic and political transformation, however, has not yet been completed. Continued reforms in the economic sector have a better outlook as compared to the implementation of judicious political reforms that go beyond political engineering. The nation’s competitive advantages render it an attractive textile and apparel industry investment location.



References
Ambastha, M. (2017, October 05). Growth Opportunities in Colombian Textile & Apparel Industry • Stitch Diary. Retrieved April 09, 2018, from http://stitchdiary.com/colombian-textile-apparel-industry/
CIA World Factbook. (n.d.). CIA World Factbook - The best country factbook available online. Retrieved April 09, 2018, from http://www.ciaworldfactbook.us/south-america/colombia.html
Kilcullen, D. & Mills, G. (2014). Colombia: From a political economy of war to an inclusive peace. Daily Maverick. Retrieved April 09, 2018, from https://www.dailymaverick.co.za/article/2014-12-11-colombia-from-a-political-economy-of-war-to-an-inclusive-peace/#.WstCEIhua00
Transparency International. (2017). Corruption Perceptions Index 2017. Retrieved April 09, 2018, from https://www.transparency.org/news/feature/corruption_perceptions_index_2017
Villegas, L. C. (2014, September 19). Technology is driving change in Colombia - The Boston Globe. Retrieved April 09, 2018, from https://www.bostonglobe.com/opinion/2014/09/19/technology-driving-change-colombia/Fz3eABonGaoQD4JO54EDPK/story.html