International Trade and Relations Policy in Colombia

In this paper, I will discuss the International political economy of Colombia and its historical events like trades, war, and debt crisis. The theme of this paper will be focused around International Finance like the World Trade Organization, International Monetary Funds, and International Bank for Reconstruction and Development as Colombia’s economy is relatively good compared to other Latin American countries. After you finish this essay you will learn more about Colombia’s International Economy and historical events and be more informed about what going on today.

Colombia is very different in ideas as far as the economy and have been impacted incredibly by the united stated whether they pursue the American scheme or they become very radical against the United States. Colombia has a free market economy with significant business and as much investment as the United States. Colombia’s economy is directly related to its FDI. An extreme assortment harvest and more natural resources are the key to its economy. Colombia is likewise influenced directly with their Foreign Direct Investment and have move away from charging taxes and quota to expand the FDI. In the mid 1990s, Colombia transformed its economy to liberalize. It gave national treatment to outside investors and raised controls on benefits and capital.

Although Colombia is known for selling and trading a lot of products many people think it’s coffee when actually Colombia’s largest export legally is petroleum, which makes up over a third of the country’s exports, followed by coal, coffee, cut flowers, and gold. Coffee, however, was responsible for pushing Colombia toward a manufacturing based economy. After the War of a Thousand Days, which ended in 1902, Colombia’s coffee boom pushed the country to seek better transportation and manufacturing mechanisms. Which leads me to my next topic, Colombia is known as the land of the white candy. The economy in Colombia is so bad that people are willing to go to extremes to survive. Cocaine is one of the worlds largest money-making drugs that it's almost impossible to keep off of the streets. In fact, O`Connor says, “The cocaine industry is so big that in the early 1990s it represented more than half of the value of net direct foreign investment in the country”.

Colombia's largest unlawful product cocaine was dove into many years of dread in the 1980s when Pablo Escobar and the Medellin drug cartel rose to control. As Escobar drove his campaign of violence and narco dealing, selecting a multitude of juvenile professional killers, Medellin turned into the most fierce city on the planet, with nearly 400 crimes for each 100,000 people in the mid 1990s. Ruined kids in the barrios of Medellin ended up constrained into lives of wrongdoing. Even the death of Pablo Escobar in 1993, while symbolic, did little to moderate the wave of war, as the pendulum was already set in motion. When one drug lord fell, another rose to take its place. As of late 2002 the government was compelled to deploy a helicopter gunships and soldiers in the barrios with an end goal to recover some control back from the city. “To put it in a word: fear. Medellin was living in fear”. Sergio Fajardo, mayor of Medellin from 2004-2007, faced the daunting task of revitalizing Medellin. The sad thing is ever since cocaine has been on the market including all the wars and regulations in Colombia the market for cocaine is flourishing more than it has ever been. This “Everlasting War” is still in effect and spreading like wildfire.

Many countries have periods of war. Even though developed countries are economically stable, they have wars in order to defend their territories, their economies, and their citizens. Colombia is one country that has had guerrilla warfare for the last 58 years, and private vigilante groups for the last thirty years. Colombia struggle fighting through wars from as early as the War of Independence (1811-1819) to the Colombia Civil War (1964-Present).These factors have had a disastrous effect on the economy of the nation. The standard of living, price of commodities, and business are some aspects that have been impacted badly by these circumstances. The first economic effect that war has had on Colombia is the steep decline in the standard of living. Illegal groups, guerrilla, and paramilitary forces control many rural areas where the army has a weak presence or no presence at all. The second economic effect that the war has had on Colombia is the rising price of basic necessities. The principal impact of this war was a drastic reduction in agricultural production. Therefore, the price of food rose daily.

Many farm products are imported for higher prices. The government established “the family basket”, which consists only of basic indispensable products in order to control the price of those products. This war has not only affected the standard of living and the price of basic goods but has had an adverse impact on business also. The land where guerrilla and paramilitary groups operate is completely devalued. Many companies were closed because the farmers who provided these companies abandoned their farms. Many city people became unemployed and had to get money in different ways. One of the most vital businesses in Colombia many years ago was tourism, but the tourist industry declined because this war created a dangerous atmosphere for foreign tourists. In summary, the standard of living among Colombian people, the cost of basic goods, and the business community have been enormously affected by the persistent war fueled by the narco-guerrilla and paramilitary groups.

Colombia figured out how to support foreign debt during the debt crisis of the 1980s. Normal growth was not extremely high, but, in contrast to other territorial economies, no sharp recession occurred either. Moreover, inflation was steady at moderate levels. On the down side, in the late 1980s Colombia had horrid prospects for efficiency development. The expansion of the labor force and increases in the capital stock caused financial development,however both factors were abused very inefficiently. The government and the international financial institutions, particularly the World Bank, concluded that the dull performance and hopeless prospects for productivity growth to a great extent mirrored the economy's inadequate exposure to foreign competitors and the predominance of government intervention in the economy.

In addition, the expanding internal conflict, in which guerrilla groups, paramilitaries, and drug cartels were major factors, had negative economic effects, primarily by uprooting legal and profitable agricultural activities. The insecurity fostered gigantic investments in parts inconducive to economic efficiency,for example, such as low-thickness cows raising on a portion of Colombia's most beneficial land, and made a truly horrible condition for local and, particularly, foreign investors. In conclusion, Colombia is severely struggling in economy being affected by the debt crisis, dealing with business, farmers, and tourism all evacuating the country due to high violence and drug lords running everyone out the city.