Roben Farzad has written the cover story for this week's edition of Business Week, and it's extremely interesting to see Colombia, once the cocaine capital of the world, slowly transform itself into a global economic dynamo. Here is an excerpt from his excellent article. To read the full article, CLICK HERE.
This benchmark index of Bogotá's Bolsa de Valores holds rapidly growing components such as Bancolombia and Chocolates. It has surged nearly fourteen fold since its October 2001 low, riding the restoration of peace and security after decades of narco-guerilla-paramilitary violence. And yet distortions remain. Many of the listed companies are cross owned by one another: a structure put in place in the '70s and '80s to make it near impossible for cash-rich criminals to stage hostile buyouts. The Bolsa was consolidated with two other regional exchanges in July 2001.
One year: 14%
Five year: 796%
On a continent whose economic history is the stuff of a blooper reel, Colombia's strong fundamentals stand out. Its $130 billion economy, a world leader in the production of coffee, petroleum, textiles, and flowers, is growing at 6.8% a year, two full points faster than the Latin American Average. In the past 10 years, Columbia slashed its inflation rate from 18% to 5%, and since Uribe was elected, unemployment has dipped from 16% to 13%. The nation has never defaulted on its debt or experienced hyperinflation. And entrepreneurial thinking is spreading. Run a Google geographical-hit query, and you'll see that per capita, nowhere in the world are there more searches for the words "Peter Drucker," the late management guru, than in Bogota. No. 2? Medellin.
Yes, Medellin. Once the murder capital of the world, this city of 2.4 million is regaining its status as a commercial hub, hosting regional offices for a growing roster of multinationals including Philip Morris, Toyota, and Renault, as well as globally minded Colombian companies that make up 70% of the country's stock market value. More high-rises are under construction here than in Manhattan and Los Angeles combined.
...I'm here to find out whether Colombia's fledgling stock market can keep surging, whether its financial and physical infrastructures can accommodate the flood of investment, and whether an equity culture can take hold.
At the center of everything is President Uribe. "We need to rescue international confidence in our country," he tells me in his heavily guarded compound in Bogota's historic center full of Spanish colonial architecture. Access to Uribe is preceded by an hour of security checks and chilling looks from guards holding bayonet-tipped machine guns.
..."We are taking apart what we found : a country that for 30 years was guerilla-dominated, with 20 years of paramilitary presence," he says. "The country is making the transition from terrorist groups that usurped the state to a transparent, institutionalized democracy."