ECONOMY

Colombia is primarily an agrarian nation, and its agricultural sector once was dependent on coffee as its principal cash crop. However, the country successfully diversified its economy beginning in the late 1980s when international coffee prices declined. In 1991 the government implemented sweeping economic reform measures, which opened the economy to international trade and investment and helped the economy expand. It continued to grow until the late 1990s with the rapid development of oil and coal and increased prices for coffee.

By the end of the 20th century, however, Colombia had fallen into a recession due to a combination of low world oil prices, reduced export demand, and diminished investment flow. Moreover, domestic growth and foreign investment were hindered by an inadequate energy and transportation infrastructure and by the widespread violence stemming from drug trafficking and guerrilla insurgencies. The Bank of the Republic raised interest rates and tightened its monetary policy to defend the Colombian peso against worsening trade and fiscal deficits. In addition the country’s unemployment rate rose to almost 20 percent by the end of the 1990s. The economy began to recover in the early 2000s as the government cut spending. A wealth tax of 1 percent was introduced in 2002 to reduce the deficit and secure loans from the International Monetary Fund. The unemployment rate began to fall.

The central government budget included revenues of $10.7 billion (1999) and expenditures of $16.2 billion (1999). The gross domestic product (GDP) in 2002 was $80.9 billion, or about $1,850 per capita. Not included in these official statistics is the economic impact of coca cultivation and the illegal drug trade, including cocaine, marijuana, and opium.

A) Agriculture

Coffee is still Colombia’s principal crop, although Colombia was recently surpassed by Vietnam as the second largest coffee producer in the world after Brazil. Colombia remains the world’s leading producer of mild coffee, but in the mid-1990s petroleum became the country’s largest source of foreign income. In the mid-1970s coffee accounted for 80 percent of Colombia’s export earnings; by the early 2000s coffee brought in less than 10 percent of export earnings. High production costs and low international prices combined to reduce the earnings of Colombian coffee growers.

Coffee is cultivated chiefly on mountain slopes from about 900 to 1,800 m (about 3,000 to 6,000 ft) above sea level, principally in the departments of Caldas, Antioquia, Cundinamarca, Norte de Santander, Tolima, and Santander. More than 150,000 mainly small coffee plantations extend over approximately 1 million hectares (approximately 2.5 million acres). Coffee output totaled 702,000 metric tons in 2003, with most of the exported coffee going to the United States.

While coffee is Colombia’s leading agricultural product, the country’s diverse climate and topography permit cultivation of a wide variety of other crops. Annual production of principal cash crops in addition to coffee includes cacao beans (47,000 metric tons), sugarcane (36.6 million), tobacco (29,000), cotton (100,000), bananas, and cut flowers. Chief food crops are rice (2.5 million), cassava (1.8 million), potatoes (2.9 million), and plantains. Plants producing pita, sisal, and hemp fibers, used in the manufacture of cordage and coarse sacking material, are also cultivated. The livestock included cattle, hogs, sheep, and horses.

The production of drug-related crops took on significant proportions starting in the 1970s with the cultivation of marijuana. Although Colombia has become notorious for its cocaine supply, the processing of coca leaves was more significant than actual coca plant cultivation in the country until the mid-1990s. As the supply of coca, primarily from Peru and Bolivia, was disrupted, coca growing in Colombia increased significantly. Opium poppies, used to make heroin, also became a significant source of revenue despite government efforts to stop their cultivation. It was estimated that from 1980 to 1995 the value of illegal drug exports amounted to almost half the value of Colombia’s legal exports.

B Forestry and Fishing

Much of the forestland of Colombia is inaccessible because of poor transportation facilities; however, the tropical forest contains many commercially valuable species including mahogany and cedar. Trees harvested in Colombia in 2002 provided 9.6 million cubic meters (338 million cubic feet) of timber. Much of the wood is used as fuel.

The coastal waters and many rivers and lakes of Colombia provide a variety of fish, notably trout, tarpon, sailfish, and tuna. The total catch in 2001 was 190,000 metric tons. About one-quarter of the annual catch consists of freshwater species of fish.

C) Mining

Petroleum and coal are Colombia’s chief mining products. Other minerals extracted include gold, silver, emeralds, platinum, copper, nickel, and natural gas. The national petroleum company, Empresa Colombiana de Petróleos (ECOPETROL, Colombian Petroleum Company), controls petroleum operations along with several foreign-owned concessions. Production of crude petroleum is centered in the Magdalena River valley, about 650 km (about 400 mi) from the Caribbean, and in the region between the Cordillera Oriental and Venezuela. New oil reserves discovered 200 km (120 mi) east of Bogotá were expected to provide Colombia with energy self-sufficiency, as well as the means for significant exports, well into the 21st century. Much of Colombia’s oil is shipped to Curaçao for refining. Oil production rose from only 100,000 barrels per day in the early 1980s to 616,408 barrels per day in 2001.
Colombia is also one of the world’s leading exporters of coal. Two-thirds of an annual production of 43.4 million metric tons comes from a single open-pit mine, the world’s largest, on the Guajira Peninsula. Some 5.7 billion cu m (201 billion cu ft) of natural gas was produced in 2001.

Gold, mined in Colombia since pre-Columbian times, is found principally in the department of Antioquia and to a lesser extent in the departments of Cauca, Caldas, Nariño, Tolima, and Chocó. Platinum was discovered in Colombia in 1735, and the country has some of the most extensive deposits in the world. Platinum is found in the gold-bearing sands of the San Juan and Atrato river basins. The chief emerald-mining centers are the Muzo and Chivor mines. Other significant mineral products include lead, manganese, zinc, mercury, mica, phosphates, and sulfur.

D) Manufacturing

The manufacturing industries in Colombia, stimulated in the 1950s by the establishment of high protective tariffs on imports, are generally small-scale enterprises. They primarily produce for the domestic market, and they account for 16 percent of Colombia’s annual gross domestic product (GDP). GDP is a measure of the value of all goods and services that a country produces. Cotton-spinning mills, principally in the cities of Barranquilla, Manizales, Medellín, and Samacá, rank as important manufacturing establishments. Other industries include the manufacture of foodstuffs and beverages, clothing and footwear, ceramics, tobacco products, iron and steel, and transportation equipment. Chemical products have become increasingly important.

E) Energy

Colombia has many hydroelectric installations, which produced 73 percent of the nation’s electricity in 2001. A drought in 1992 brought about electricity rationing in much of the country. Consequently the government initiated the construction of new thermoelectric power plants and improved natural gas distribution to urban residences. In 2001 the country’s annual output of electricity was 43 billion kilowatt-hours.

F) Currency and Banking

The basic unit of currency is the Colombian peso (2,504 pesos equal U.S.$1; 2002 average). The Bank of the Republic issues all of the nation’s money and shares responsibility for monetary policy with the government monetary board. More than 25 commercial banking institutions, as well as government development banks and several other official and semiofficial financial institutions, operate in Colombia. Stock exchanges serve Bogotá, Medellín, and Cali.

G) Commerce and Trade

Petroleum ranks as the principal export of Colombia. Other leading exports include coffee, vegetables, chemicals, coal, textiles, fresh-cut flowers, bananas, sugar, gold, emeralds, and cattle. Illegal drugs also rank high among the country’s exports.
The most important imports are mechanical and electrical equipment, chemicals, food, and metals. Colombia’s annual exports earned $11.9 billion and its imports cost some $12.7 billion in 2002. The United States is Colombia’s main trading partner, and Venezuela, Germany, Japan, The Netherlands, Brazil, and Peru also have significant trade with the country.

Colombia is an original member of the Andean Community (1969), an organization that established free trade among its members and works toward regional economic and social cooperation; its members also include Bolivia, Ecuador, Peru, and Venezuela. Colombia entered into two other trade associations in 1995: the Group of Three and the Association of Caribbean States (ACS). The Group of Three, composed of Mexico, Venezuela, and Colombia, aims to phase out trade barriers between these countries. The ACS includes all 25 nations in or along the Caribbean and focuses on regional cooperation and economic integration.

H) Tourism

Colombia offers natural beauty, including beaches along the Caribbean coast, tropical rain forests, the Andes Mountains, and a huge variety of wildlife. The walled port city of Cartagena has many buildings from the Spanish colonial period, including its fortifications. It was declared a World Heritage Site by UNESCO in 1984. Bogotá, the center of Colombia’s cultural life, also has many buildings from Colombia’s colonial past. The Gold Museum in Bogotá features objects made by the indigenous inhabitants of Colombia before the arrival of Europeans. Art in the National Museum ranges from the pre-Columbian period to the present.
Colombia draws more than half a million tourists annually, primarily from the United States and countries in South America. However, reports of violence in rural areas related to guerrilla activity and illegal drug-trafficking have put a damper on the country’s tourism industry.

I )Transportation and Communications

The irregular terrain of Colombia makes the construction of roads and railroads costly. Colombia has 3,154 km (1,960 mi) of operated railroad track. Most of the national railroads are feeder lines to the Magdalena River, the main transport artery of the country, which with the Cauca River is navigable for about 1,500 km (about 900 mi). Colombia has no regular passenger rail service. Roads total 112,988 km (70,207 mi), including a part of the Simón Bolívar Highway, which links Caracas, Venezuela, through Bogotá and other Colombian towns, with Quito, Ecuador. The national airline, Aerovías Nacionales de Colombia (National Airline of Colombia), known as Avianca, was established as the first Latin American airline in 1919. The main seaports are Buenaventura, Tumaco, Santa Marta, Barranquilla, and Cartagena.

J )Labor

The labor force of Colombia numbers about 19 million. Some 22 percent is engaged in agriculture, forestry, and fishing; 18 percent in industry and mining; and most of the remainder in service industries. In 2002 Colombia had an unemployment rate of 17.9 percent. The main trade unions in Colombia are the Confederación Unitaria de Trabajadores (CUT, Unitary Federation of Workers) and the Confederación de Trabajadores Colombianos (CTC, Confederation of Colombian Workers). The right to strike is constitutionally guaranteed to all employees who are not working for public utilities.