Foreign investment is one of the primary drivers of a developing economy. Colombia’s foreign investment, tourism, and export board, ProColombia, was recently named best-in-class in Latin America, highlighting the growing nation’s dedication to procuring international interest and investment. This is great news for a country that, before the COVID-19 crisis, was set to be one of the world’s top tourist destinations for 2020. ProColombia’s success as an agency is a strong indicator of the country’s bright economic future.
Colombia is the third-largest recipient of foreign direct investment (FDI) in Latin America, with the United States being the largest investor (20.2%), followed by Panama (12.8%) and England (11.3%). FDI in Colombia topped just over $11 billion in 2018, further demonstrating growing global confidence in the South American nation.
In recent years, Colombia has experienced incredibly robust and stable growth, with not a single year posting GDP growth below 2%. It took a global pandemic in the form of Covid-19 to break this trend, and even in the face of such an austere global environment, projections indicate a GDP retraction of just 2.4%. While this constitutes a severe economic downturn, Colombia is a regional bastion compared to neighboring Ecuador, whose projected GDP contraction is 6.3% while Brazil stands to contract 5.3%. Despite the recent global economic shock, Colombia remains an attractive destination for FDI inflows.
The lion’s share of FDI investments flows to sectors such as financial services (20.6%), oil and natural gas (19.4%), and commerce (14.75%). These sectors are vital for any developing economy. However, one proportionally overlooked segment of Colombia’s rapidly developing markets is that of Colombian agriculture, which is ripe for FDI inflows. Colombia’s agricultural sector receives a comparatively paltry 2.5% of FDI and has plenty of room to grow. Agricultural exports from Colombia to the United States increased by 35.5% between 2012 and 2018, highlighting the nation’s dedication to the development of its agricultural market and its stunning upward trajectory.
Colombia’s agricultural outputs are diverse, with cattle comprising 45% of the nation’s production, followed by fruits (15.2%), coffee (9.5%), and flowers (4.2%). Although cattle comprise the most considerable output by volume, local Columbian farmers’ high-quality coffee beans dominate the country’s presence in developed markets around the world. The average size of a farm in Colombia is five acres, with over 95% of agricultural lands controlled by local families. This modest farm size presents unique opportunities for FDI in both sustainability and direct communication with agrarian workers.
An additional benefit that arises from smaller-scale farming is that of sustainability. The vast majority of farmers live on the land they work, thereby incentivizing sustainable practices over large-scale, often ecologically detrimental, agricultural methods. Existing grazing practices, which are often harmful to the ecology of the land, are giving way to more sustainable methods that preserve the soil’s integrity for agricultural purposes and increase milk yields from existing herds.
Sustainability bodes well for both ecology and agricultural FDI in Colombia. While the nation’s budding agricultural sector exports 95% of domestically grown organic products, Colombia produces a meager 0.08% of organic foods consumed globally on an annual basis. These figures demonstrate the need for foreign investment and the massive amount of room available to grow in Colombia’s agricultural export sector.
Geopolitical and domestic security in Colombia is nowhere near as front-and-center issues as they were in the late 1990s. A government peace treaty with the FARC, one of the most prevalent guerrilla groups in South America, has revitalized the economy and primed rural areas for an economic boom. The suppression of other illegal activities, such as extrajudicial farming, has been successful thanks to both governmental and private enterprise initiatives. The private company Federacíon Orgánicos de Colombia met 40% of its total illicit crop replacement goal in 2016 thanks to the use of Amazonian cayenne pepper crops.
Colombia is a diverse nation in almost every sense of the word. FDI inflows to Colombia have empowered many of the country’s economic sectors to modernize in dynamic ways uniquely applicable to her rich landscape. The agricultural industry of Colombia is perhaps the best positioned for future development and presents a substantial opportunity for those in the developed world interested in investing in sustainable agriculture.
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