It is the Colombia that attracted record levels of foreign investment and whose economy grew nearly 6 percent last year, that was awarded investment-grade status and can borrow more cheaply than some countries in Western Europe.
It is also a country that is finally starting to mirror neighbors such as Brazil by undergoing an expansion of the middle class that could make it an important consumer market. Colombia is the third-most populous country in Latin America, with 46 million people.
Finance Minister Juan Carlos Echeverry, who recalled how he was constantly peppered with questions about drug trafficking when he studied in New York in the 1990s, said he now tries to lure foreign investors with talk about “the Colombian miracle.”
The economic and demographic trend lines, he said, show that Colombia in a few years will surpass Argentina to become South America’s second-largest economy.
“People want to come to Colombia,” said Echeverry, who was a teaching assistant to Ben S. Bernanke, the U.S. Federal Reserve chairman, when he was working on his doctorate in economics at New York University in the 1990s. “There has been this humongous, tectonic change of stereotype of Colombia, to promised land from wasteland.”
Most Colombians do not see it as a stereotype: In the 1980s and early ’90s, cocaine kingpin Pablo Escobar and his henchmen assassinated policemen and high government officials and even detonated a bomb on an airliner. A dozen years ago, some policymakers worried that a potent rebel group could take power, wealthy and educated Colombians fled the country and the economy struggled.
The changes since are readily seen in revamped airports, construction sites in big cities and billion-dollar business deals by Colombian companies that trade on the New York Stock Exchange. Following trends set by Brazil and Chile, Colombian companies are expanding abroad.
Last year, for instance, Suramericana, a Bogota-based conglomerate, beat out insurance heavyweights such as Metropolitan Life and Prudential to take control of ING’s operations in several Latin American countries, a deal worth $3.7 billion. Nutresa, a food conglomerate, has gained an important foothold in the Caribbean and now has 30,000 workers. And with new acquisitions in Mexico and Chile, the venerable paper and printing company Carvajal has become the second-biggest company of its kind in Latin America.
“Colombia has started to become a protagonist in Latin America,” said Suramericana’s chief executive, David Bojanini. “Those are companies that have operated at a high level for some years but have recently focused on becoming world class to compete in a globalized world.”
Money and technology are flowing in, a sharp shift from a decade ago, when Colombia was engulfed in conflict and less than $2 billion in foreign direct investment would arrive in a year. Last year, foreign investment reached $14.5 billion, a record, and officials say it may be $16 billion or $17 billion this year.
“There is a tremendous demand from foreign investors to come to Colombia,” President Juan Manuel Santos said in a recent interview at the presidential palace. “We are the Latin American country with more foreign investment in relative terms. And there is more every day.”
At Frontier Strategy Group, a Washington-based company that helps multinational companies invest in Latin America, the focus has lately been on Colombia, along with economic stalwarts in the region, such as Chile.
Clinton Carter, head of Latin America research, said that there is still “an outdated mentality” about Colombia but that it is becoming easier to convince investors of the country’s possibilities. Frontier Strategy Group works with more than 200 Fortune 500 companies, the majority of which have substantial investments in Latin America.
Carter ticked off the advantages of Colombia: a free-trade agreement with the United States, its location in the center of the hemisphere, institutions that are more stable than in some neighboring countries and a well-trained workforce.
“It’s a sophisticated business community that places a premium on education,” Carter said.
ThyssenKrupp Elevator, a division of the German conglomerate, said Colombia is now its fastest-growing market in Latin America. The company is installing elevators and escalators in the country’s airport projects and newly built malls and is bidding on other projects, said Stuart Prior, the Texas-based chief operating officer of ThyssenKrupp Elevator.
“It’s a place we decided 10 or 12 years ago to invest in, and each year it got better and better,” he said. “We saw this coming five or six years ago.”
An expanding middle class
There remains, of course, another Colombia, one of want and violence.
Colombia is among the most inequitable countries in a region with the world’s highest income inequality.
And although the Marxist guerrillas here have been weakened, they still are a threat in remote states despite a long military offensive against them partly funded by successive U.S. administrations. In some regions, violence by drug traffickers or little-known but well-armed militias remains numbingly common.
But economists and government officials say that Colombia is lifting people from poverty and that the middle class is fast expanding. The evidence is plain to see — Colombians bought six times as many cars last year as a decade ago and also are stocking up on appliances and computers.
“It means that the Colombian families are capitalizing and that they have a higher income,” said Luis Carlos Villegas, director of the National Association of Entrepreneurs of Colombia. “I think the best income they ever had in our history.”
Santos said that nearly 1 million jobs were created in the past year and that a range of tax and other reforms are designed to cut into the income gap.
“If they work,” the president said of the policies, “then there is going to be a tremendous source of growth here in Colombia’s internal market.”
Among the companies taking advantage of the new economic climate is B.D. Promoters, a Spanish developer that is building a project in downtown Bogota that will include a mall, offices, a hotel and two towers, one of them 66 stories high.
Emilio Borrella, director of the company’s operations in Colombia and a native of Barcelona, said the company believes its project and others nearby will serve as a catalyst in the city center’s ongoing revival.
Speaking as he watched construction crews at work, Borrella said he and his colleagues from Spain, whose economy grew fast a generation ago, had “an incredible sense of deja vu” when they started working here.
“We had been searching for projects to develop all over Eastern Europe,” said Borrella, whose company came here in 2008. “But there was nothing that made us feel right. In Colombia, we didn’t even have to think twice. All we had to do was land and take a look.”