Colombia

About
Colombia, officially the Republic of Colombia (Spanish: Repblica de Colombia) is a South
American country with territories in North America. The Caribbean Sea borders Colombia on
the north, Panama on the northwest, Ecuador, and Peru on the south, Venezuela on the
east, Brazil on the southeast, and the Pacific Ocean on the west. It has 32 departments,
including the Capital District of Bogotá, the country's largest city. Colombia 2020 population
is estimated at 50,882,891 people at mid-year according to UN data.
Colombia is a member of major global and regional organizations such as the United
Nations, the World Trade Organization, the Organization for Economic Co-operation, and
Development (OECD), the Organization of American States, the Pacific Alliance, and the
Andean Group, as well as a NATO Global Partner. Colombia has the third-largest economy in
South America, with macroeconomic stability and optimistic long-term growth prospects.
Colombia has a free-market economy, which means that the prices of products and services
are set by the market. Colombia belongs to the Andean Group (ANCOM).
Economy:
According to official World Bank data and forecasts from Trading Economics, Colombia's
Gross Domestic Product (GDP) was worth 323.80 billion dollars in 2019.
Colombia's GDP accounts for 0.27 percent of the global economy. The Gross Domestic
Product per capita in Colombia was last recorded at 7842.90 US dollars in 2019.
When adjusted for purchasing power parity, Colombia's Gross Domestic Product per capita
was last estimated at 14730.88 US dollars in 2019. (PPP). Colombia's GDP per capita, when
adjusted for Purchasing Power Parity, equals 83 percent of the global average.
GDP From Manufacturing in Colombia increased to 27220.27 COP Billion in the fourth
quarter of 2020 from 25010.15 COP Billion in the third quarter of 2020.
The average value for Colombia during that period was 0.688 points with a minimum of
0.557 points in 1980 and a maximum of 0.767 points in 2020.
In 2019, the average inflation rate in Colombia amounted to about 3.52 percent compared
to the previous year.
In 2019, the national debt of Colombia amounted to approximately 52.29 percent of the
GDP.
The problem of income inequality in Colombia is undeniable. Inequality of wealth is a
product of income distribution and poverty. Colombia's government has proposed economic
and social reforms. The reforms, on the other hand, benefited corporations at the detriment
of the working class, indigenous communities, youth, women, and ethnic groups. In recent
years, the divide between the rich and poor has become more noticeable.
 According to the World Bank, in 2017, only 10% of Colombia’s population received 39% of
Columbia’s income. Compared to men, women earn 13-23% less for the same jobs. A lack of
flexibility in working arrangements directly affects female labour workers. Because of
Colombia's inequality, only 10% of the population succeeds, while the rest struggles to make
ends meet due to unliveable wages and working conditions. The working class or low-
income workers, as well as those who are most disadvantaged in society, are all affected
differently by this inequality: Children.
In the latest reports, Colombia Population reached 50.91 million people in Dec 2020.
Colombia Labour Productivity dropped by 3.06 % YoY in Dec 2020, compared with a growth
of 5.03 % in the previous quarter. Its Unemployment Rate dropped to 15.77 % in Sep 2020.
The country's Labour Force Participation Rate increased to 61.66 % in Dec 2020.
The Global Competitiveness index is composed of 12 pillars of competitiveness: Institutions,
Infrastructure, ICT adoption, Macroeconomic stability, Health, Skills, Product market, Labour
market, Financial system, market size, Business, dynamism, and Innovation capability. data
for Colombia from 2018 to 2019. The average value for Colombia during that period was
62.15 points with a minimum of 61.6 points in 2018 and a maximum of 62.7 points in 2019.
Cost of starting a business (The indicator includes all official fees and fees for legal or
professional services if such services are required by law. The company law, the commercial
code, and specific regulations and fee schedules are used as sources for calculating costs.
The indicator excludes bribes), % of income per capita, 2003 - 2019: For that indicator, we
provide data for Colombia from 2003 to 2019. The average value for Colombia during that
period was 15.28 percent of per capita GNI with a minimum of 7.5 percent of per capita GNI
in 2013 and a maximum of 28 percent of per capita GNI in 2003.
Technology
Two-wheeler market:
Colombia had managed to achieve becoming second largest market, becoming a hub for an
industry in the Latin America, during pre-Covid19. The Covid-19 outbreak made the situation
worse. The government was forced to close/shutdown all their commercial and industrial
activities for an entire year. In 2020 they reported downfall after 3 years of continuous
growth.
The motorcycle industry had become a key factor for private mobility instead just lifestyle
sector. Motorcycle industry has high demand. They have 1:5 ratio of vehicles(motorcycles)
in Colombia. This explains why two wheelers is very much important factor for Colombians,
for lifestyle, transportation as well as working.
There are 6 manufacturers in Colombia, operates with a partnership with top International
firm viz, Honda, KTM, Kymco, Yamaha, Suzuki, Hero manufacturing for both domestic and
international market. Colombia stand 4th largest in motorcycle market after Brazil, Mexico,
and Argentina, in Latin America. There was consistent market growth till 2014, overall sales
hit highest level in the market (6,94,800 units). It is considered as the production hub for the
Latin America by many Asian producers.
Political & Social
Colombia is a democratic country having Presidential system. Few parts of the country had
endangered the lives of advocates due to increased violence by few illegal groups in the country.
They are committed to macro-economic stability. But many negative conditions of International
economy affected the stability. The country respects the opinion of plurality. In 2016, a historic
peace accord ended the 50-year armed conflict between the Colombian government and the
Revolutionary Armed Forces of Colombia (FARC). But implementing the accord—which means
cementing the agreement into national legislation and ensuring its provisions reach all corners of the
country equitably—remains difficult. The Colombian government has also sought various avenues of
cease-fires and peace processes with a smaller insurgency, the National Liberation Army (ELN).
Impunity for past abuses, barriers to land restitution for displaced people, limits on reproductive
rights, and extreme poverty and isolation faced by indigenous communities remain important
human rights concerns in Colombia. The index of Political Stability and Absence of
Violence/Terrorism measures perceptions of the likelihood that the government will be destabilized
or overthrown by unconstitutional or violent means, including politically motivated violence and
terrorism. The index is an average of several other indexes from the Economist Intelligence Unit, the
World Economic Forum, and the Political Risk Services, among others. The average value for
Colombia during that (1996-2019) period was -1.53 points with a minimum of -2.37 points in 2003
and a maximum of -0.77 points in 2017 (-2.5 weak; 2.5 strong).

Cultural
Colombians are generally seen as very positive people, described as having a “joie de vivre”
(enjoyment for life). They tend not to linger on negative aspects and are often animated,
charismatic, and cheerful. Colombian society is very hierarchical on the basis of class. This is
the systemic result of colonisation as the Spanish developed a complex ‘casta’ hierarchy that
determined the privilege and socioeconomic standing of racial groups. Today, social
stratifications remain obvious. There is a steeply unequal distribution of wealth throughout
the country. While the middle and working classes are growing and gaining more social
advantage, a small minority continue to hold most of Colombia’s wealth and power.
Interaction between people from different classes may be limited. Some people might mix
company only in the workplace (for example, between businesspeople and those in-service
jobs). This social isolation has meant that Colombians have tended to form strong group
loyalties to their class. Colombia is also one of the most conservative countries in South
America, influenced by its strong respect of the Roman Catholic tradition.
Technology
Inspired by The World Bank’s Doing Business Report, Colombia has made steps towards
improving business regulations. Per the findings, “Colombia is among the many countries
around the world reforming their business regulations to stimulate the private sector and
spur economic growth.” Businesses can register moveable assets such as machinery or even
their own products as collateral. Recently, the Colombian government approved a new
ministry, Ministerio de Ciencia, Tecnología e Innovación. Introducing the Ministry of Science,
Technology, and Innovation means a person will sit on the council of ministers with the goal
of appropriating more resources to develop research projects.
While the new ministry is new, government support is not. iNNPulsa is a government-
supported group that promotes entrepreneurship, innovation, and productivity by offering
grants. The organization has the lofty, though seemingly achievable goal of positioning
Colombia as one of the top three most innovative economies by 2025 and one of the most
competitive economies by 2032. And Medellin is home to Ruta N, a federally sponsored
organization that offers early-stage companies support such as classes, finance
opportunities, promotion opportunities, and networking. The Colombian e-commerce
market exploded in 2015, growing by 64% in one year. Colombia’s e-commerce revenue was
around US$3.1B in 2015, though these numbers have somewhat declined since then.
Legal
The index for Rule of Law captures perceptions of the extent to which agents have
confidence in and abide by the rules of society, and in particular the quality of contract
enforcement, property rights, the police, and the courts, as well as the likelihood of crime
and violence. Rule of law index (-2.5 weak; 2.5 strong), 1996 - 2019: For that indicator, we
provide data for Colombia from 1996 to 2019. The average value for Colombia during that
period was -0.48 points with a minimum of -0.89 points in 2000 and a maximum of -0.26
points in 2011.
Environmental
Colombia has enjoyed impressive economic growth in recent years, but it remains one of
the world’s most unequal countries. Its rich biodiversity and ecosystems are coming under
significant pressure from extractive industries, livestock grazing, road traffic and
urbanisation. Internal armed conflict has undermined the rule of law, exacerbated many
environmental pressures (mainly from illegal mining, cultivation of illicit drug crops and
deforestation), and restricted access to protected areas and the management of natural
resources. Until recently, environmental policies and institutions failed to keep pace with
these pressures, and in some cases have been weakened. However, Colombia’s desire to
become a member of the OECD (The OECD-The Organisation for Economic Co-operation and
Development, conducts in-depth assessments of the environmental policies and
programmes of selected OECD and key partner countries. These Environmental
Performance Reviews (EPRs) identify good practice and make recommendations to
strengthen the reviewed countries’ policies and instruments for promoting green growth) is
also reinforcing the need to bring environmental policies and institutions in line with good
international practices.
PESTLE analysis
Political- They are committed to macro-economic stability
In 2016, a historic peace accord ended the 50-year armed conflict between the Colombian
government and the Revolutionary Armed Forces of Colombia (FARC).
The Colombian government has also sought various avenues of cease-fires and peace
processes with a smaller insurgency, the National Liberation Army (ELN).
The index of Political Stability average value for Colombia during that (1996-2019) period
was -1.53 points with a minimum of -2.37 points in 2003 and a maximum of -0.77 points in
2017 (-2.5 weak; 2.5 strong).
Economic- Colombia's Gross Domestic Product (GDP) was worth 323.80 billion dollars in
2019.
The Gross Domestic Product per capita in Colombia was last recorded at 7842.90 US dollars
in 2019.
When adjusted for purchasing power parity, Colombia's Gross Domestic Product per capita
was last estimated at 14730.88 US dollars in 2019. (PPP).
In 2019, the average inflation rate in Colombia amounted to about 3.52 percent compared
to the previous year.
problem of income inequality
10% of Colombia’s population received 39% of Columbia’s income
Social/Cultural- Colombians are generally seen as very positive people, described as having a
“joie de vivre” (enjoyment for life).
Are often animated, charismatic, and cheerful.
There is a steeply unequal distribution of wealth throughout the country.
Interaction between people from different classes may be limited.
Colombia is also one of the most conservative countries in South America, influenced by its
strong respect of the Roman Catholic tradition.
Technology- Colombia has made steps towards improving business regulations.
Colombian government approved a new ministry, Ministerio de Ciencia, Tecnología e
Innovación. Introducing the Ministry of Science, Technology, and Innovation
iNNPulsa is a government-supported group that promotes entrepreneurship, innovation,
and productivity by offering grants.
The Colombian e-commerce market exploded in 2015, growing by 64% in one year.
Colombia’s e-commerce revenue was around US$3.1B in 2015
Legal- Rule of law index (-2.5 weak; 2.5 strong), 1996 - 2019: For that indicator, we provide
data for Colombia from 1996 to 2019. The average value for Colombia during that period
was -0.48 points with a minimum of -0.89 points in 2000 and a maximum of -0.26 points in
2011.
Environmental- Rich biodiversity and ecosystems are coming under significant pressure from
extractive industries, livestock grazing, road traffic and urbanisation.
Many environmental pressures (mainly from illegal mining, cultivation of illicit drug crops
and deforestation
Colombia’s desire to become a member of the OECD (The OECD-The Organisation for
Economic Co-operation and Development, conducts in-depth assessments of the
environmental policies and programmes of selected OECD and key partner countries.

Porter’s Diamond
Factor conditions

 In addition, after Brazil, Colombia is the second-largest motorcycle producer in the

region, with an annual output of 662,000 units.
 Due to its geographical location, Colombia serves as a gateway for various markets,
being at the forefront of where Central and South America meet, and touching both
the Pacific Ocean and Caribbean sea; such features enable manufacturers to easily
import and export products
 Good size of availability of Labour
 In 2018, Colombia's literacy rate was around 95.09 percent.
 Financial sector appears relatively stable and resilient to potential adverse shocks.
Since the 1999 FSAP, Colombia has recapitalized the banking system, improved
financial legislation, and revamped the supervisory framework.

Firm strategy, Structure, and rivalry

 In Colombia there are six motorcycle manufacturers (the oldest is active since 1942)
which operate assembling in partnership with top international firms, like Honda,
Kawasaki, KTM, Kymco, Victory, Yamaha, Suzuki, Hero producing both for domestic
market and export. They include- AKT motos and Auteco.
 The country has eight assembly companies, of which four are relatively large: GM,
Colmotores; Sofasa, Hino; Motors Manufacturing, and Foton.
 Hero MotoCorp began operations at a new facility, the company’s first plant outside
India, which has been built at an investment of USD 70 million.
  more than one-third of Colombia’s Two wheeler industry consists of domestic
production (CKD) while 63% is imported (CBU), mainly from South Korea, Mexico,
India, Japan, China, and the United States.

Demand conditions

 Colombia was the fifth-largest U.S. export market for vehicles and second-largest
U.S. automotive parts market.
 Local production of vehicles has been decreasing in the past few years. However, the
high percentage of imports represents a good opportunity for import.

Related Industries

 The sector grew 7.7 percent from 2017 to 2018, driven by a better political climate,
highway infrastructure projects
 Auto parts sales totaled USD 4.21 billion in 2018, a 9.5 percent annual increase over
2017
 According to “Colombia Tire Market Forecast & Opportunities, 2022”, the tire
market in Colombia is anticipated to cross $1.5 Billion by 2022