IV. Economy

Colombia is primarily an agrarian nation, although it experienced rapid industrial growth in recent decades. In the early 1990s the country undertook an economic reform program that opened its economy to international trade and investment, and it is the only country in Latin America that maintained scheduled payments on loans during a debt crisis in the late 1980s. For these reasons the country enjoys one of the highest credit ratings in the region. Colombia's agricultural sector once was dependent on coffee as its principal cash crop, but has successfully diversified since a decline in international coffee prices in the late 1980s. Its mining sector contributes significantly to the economy, with large deposits of fossil fuels, precious metals, and emeralds, of which Colombia supplies about one-half the world supply. The central government budget included revenues of $11.2 billion (1994) and expenditures of $7.3 billion (1993). The gross domestic product (GDP) in 1997 was $95.7 billion, or about $2,390 per capita. Not included in these official statistics is the economic impact of coca cultivation and the illegal cocaine trade, reportedly with profits worth $300 million annually in the early 1990s.


A. Agriculture

Coffee is Colombia's principal crop. Although Colombia is second only to Brazil in the annual volume of coffee produced and is the world's leading producer of mild coffee, the crop was bypassed by petroleum in the mid-1990s as the country's largest source of foreign income. In the mid-1970s coffee accounted for 80 percent of Colombia's export earnings; by 1995 coffee only brought in 25 percent of the nation's export earnings. High production costs, low international prices, and a worm that destroys coffee beans all combined to drastically reduce the earnings of Colombian coffee growers in the early 1990s. Coffee is cultivated chiefly on mountain slopes between about 900 and 1,800 m (about 3,000 and 6,000 ft) above sea level, principally in the departments of Caldas, Antioquia, Cundinamarca, Norte de Santander, Tolima, and Santander. More than 150,000 coffee plantations, chiefly small, extend over approximately 1 million hectares (approximately 2.5 million acres). Coffee output totaled 720,000 metric tons in 1998, 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 are cacao beans (45,000 metric tons), sugarcane (32 million), tobacco (28,719), cotton (120,000), bananas, and cut flowers. Chief food crops are rice (1.8 million), cassava (1.8 million), potatoes (2,817,830), and plantains. Plants producing pita, sisal, and hemp fibers, used in the manufacture of cordage and coarse sacking material, are also cultivated. In 1998 the livestock population included 28.3 million cattle, 2.5 million hogs, 2.4 million sheep, and 2.4 million horses.

The production of drug-related crops took on significant proportions in the 1970s as more people cultivated marijuana. Although Colombia has become notorious for its cocaine supply, the processing of coca leaves is more significant than the actual coca plant cultivation in the country. Poppies for opium have become a significant source of revenue despite efforts by the government to stop their cultivation. The drug trade increased in the mid-1990s to an estimated 10 percent of the money generated in the economy.


B. Forestry and Fishing

Much of the forestland of Colombia is inaccessible because of poor transportation facilities. The forestland also often has trees of relatively little value. The cut of roundwood in Colombia in 1997 was 20.8 million cu m (733 million cu ft). 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 1996 was 167,080 metric tons. About one-quarter of the annual catch consists of freshwater species of fish.


C. Mining

Petroleum and gold are Colombia's chief mineral products. A number of other minerals are extracted, including silver, emeralds, platinum, copper, nickel, coal, and natural gas. The petroleum operations are under control of a national petroleum company and 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; it amounted to 238 million barrels in 1997. Much of Colombia's oil is shipped to Curaçao for refining. New oil reserves discovered 200 km (125 mi) east of Bogotá are expected to provide Colombia with energy self-sufficiency into the 21st century, with annual extraction from the reserves of 180 million barrels anticipated by the late 1990s. Colombia is one of the world's leading exporters of coal. Two-thirds of an annual production of 32.6 million metric tons comes from a single open-pit mine, the world's largest, on the Guajira Peninsula. Some 6 billion cu m (212 billion cu ft) of natural gas was produced in 1997.

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. Colombia is the leading gold producer of South America, with an output of 18,810 kg (8,532 lb) in 1997. Platinum, discovered in Colombia in 1735, is found in the gold-bearing sands of the San Juan and Atrato river basins. Colombia has the largest platinum deposits in the world, producing about 51,500 troy oz annually. The chief emerald-mining centers are the Muzo and Chiver mines. Still other mineral products are 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, producing for the domestic market. Together, they account for 16 percent of Colombia's yearly national output. Cotton-spinning mills, principally in the cities of Barranquilla, Manizales, Medellín, and Samacá, are important manufacturing establishments. Other industries include the manufacture of foodstuffs, tobacco products, iron and steel, and transportation equipment. Chemical products are becoming increasingly important, and footwear, Panama hats, and glassware are made.


E. Energy

Colombia has many hydroelectric installations, and 70 percent of its electricity was produced by such facilities in 1997. 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 1997 the country's annual output of electricity was 44 billion kilowatt-hours.


F. Currency and Banking


The basic unit of currency is the Colombian peso (1,141 pesos equal U.S.$1; 1997 average). The Bank of the Republic is the sole bank of issue and operates the mint, salt, and emerald monopolies for the government. It also shares responsibility for monetary policy with the government monetary board. More than 25 commercial banking institutions, as well as the 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


The principal export of Colombia is coffee, which typically accounts for about one-sixth of the yearly value of all exports. Petroleum, cotton goods, fresh-cut flowers, bananas, chemicals, sugar, coal, gold, emeralds, and cattle are other leading exports. The most important imports are mechanical and electrical equipment, chemicals, food, and metals. Colombia's annual exports earned $10.6 billion and its imports cost some $13.7 billion in 1996. The United States is Colombia's main trading partner, and Venezuela, Germany, Japan, the Netherlands, Brazil, and Peru also have a significant amount of trade with the country. Colombia is an original member of the Andean Group (1969), which also includes 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 those countries. The ACS, composed of the members of the Caribbean Community and Common Market (CARICOM) and 12 other Latin American nations, was the fourth largest trading bloc in the world in the mid-1990s. In addition, the Andean Group agreed in March 1996 to begin reducing trade barriers among its member nations. These associations assured Colombia an important position in regional trade.


H. Transportation and Communications


The irregular terrain of Colombia makes the construction of roads and railroads costly. Colombia has about 3,154 km (about 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 about 115,564 km (about 71,808 mi), including a part of the Simón Bolívar Highway, linking Caracas, Venezuela, through Bogotá and other Colombian towns, with Quito, Ecuador. Air transport was begun in Colombia in 1919, and the country is now served by domestic and international airlines. In 1946 Colombia, Venezuela, and Ecuador agreed to establish the Great Colombia Merchant Marine; Venezuela withdrew in 1953. The main seaports are Buenaventura, Tumaco, Santa Marta, Barranquilla, and Cartagena

I. Labor

The labor force of Colombia numbers about 17 million. Some 27 percent is engaged in agriculture, forestry, and fishing; 23 percent in industry and mining; and most of the remainder in service industries. More than 1.6 million people are in organized trade unions, mainly the National Union of Colombian Workers (1.2 million members) and the Colombian Confederation of Workers (400,000 members). The right to strike is constitutionally guaranteed to all employees who are not engaged in public utilities.

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