Industry of Colombia
The share of the industry of Colombia in the country's gross domestic product (GDP) has shifted significantly in the last few decades. Data from the World Bank show that between 1965 and 1989 the share of industry—including construction, manufacturing, and mining—increased from 27 percent to 38 percent of GDP. However, since then the share has fallen considerably, down to approximately 29 percent of GDP in 2007. This pattern is about the average for middle-income countries.[1]
Government policy
The spirit of the
Before 1990 it was common to have
Trade organizations
The National Association of Industrialists (Asociación Nacional de Empresarios de Colombia, or ANDI), the country's most important entrepreneurial organization, represents more than 650 member firms from a variety of sectors, including the manufacturing, financial, agro-industrial, and services sectors. Since its creation in 1944, ANDI has been actively promoting the strengthening and competitiveness of private enterprise, state-owned companies, and public organizations. In addition to taking a leading role among manufacturing organizations in Colombia, ANDI actively lobbies the executive and legislative branches of government. Besides representing its members at regional, national, and international levels, ANDI is also a leader among business organizations in Colombia.[1]
Construction
Colombia's construction sector has represented between 5 and 7 percent of GDP and between 5 and 6 percent of total employment in recent decades. About 60 percent of the population owns homes. However,
The construction sector boomed between 1990 and 1994 because of a combination of factors, including greater competition and fewer restrictions in the financial markets, increased capital inflows, relaxed regulation and supervision of financial institutions, and a loose monetary policy. The resulting housing-price hike, with increases of 70 percent in real terms between 1990 and 1994, also led to significant mortgage expansion during those years.[1]
With the financial market reforms at the beginning of the 1990s, mortgage companies faced stiffer competition from other financial institutions, and, in order to compete on equal terms, demanded the indexation of the UPAC to prevailing interest rates. Moreover, as real interest rates increased sharply in the second half of the 1990s, among other things as a response to the Asian and Russian economic crises when the value of housing assets began falling, many mortgage holders were exposed to negative equity, eventually losing their homes.[1]
The lack of demand and the excess supply of houses precipitated a sharp fall in real prices. In 1998 house prices had dropped to 1991 levels. This situation further depressed the quality of mortgages and loan guarantees in general, leading to a bust in the housing market between 1997 and 2000. The UPAC was replaced in 2000 by the real value unit (unidad de valor real), which is indexed—just as the UPAC initially was—to inflation rather than to interest rates. Since then there has been a slow recovery of housing prices and an even slower recovery of mortgage volume.[1]
Innovations in housing finance have included Colombian Titling, an institution that turns mortgages into capital-market instruments in order to improve the liquidity of mortgage lenders. Such instruments also improve the matching between the duration of loans and the commitment of resources received by mortgage-lending institutions. Colombian Titling is part-owned by several domestic financial groups, as well as by the International Finance Corporation, an organization of the World Bank Group.[1]
Infrastructure construction in recent years has focused on electricity projects and urban mass-transportation systems. Because of fiscal constraints, the government has promoted greater involvement of the private sector in maintaining and developing infrastructure.[1]
The production of cement and other non-metallic building products, which have a share of 4 percent in manufacturing output and employment, is closely linked to the changes in the construction sector. In Colombia cement output is highly concentrated, with three main economic groups controlling more than 90 percent of total output. The cement sector survived the housing crises between 1996 and 2000 by reorienting production toward export markets, including the United States. As a result, in 2003 Colombia provided 5 to 6 percent of U.S. imports of cement and
Manufacturing
A key feature of Colombian manufacturing has been the high concentration of location and ownership. Some 30 percent of output in 2005 was produced in Bogotá, 15 percent in Medellín, 11 percent in Cali, 7 percent in Cartagena, and 5 percent in Barranquilla. Thus, these five cities produced 68 percent of the nation's total manufacturing output.[1]
Three main Colombian economic groups control a significant share of manufacturing output: the
Colombia has three official sizes of smaller companies: micro (those with fewer than 11 workers), small (with 11 to 49 employees), and medium (with 50 to 199 employees). These smaller firms produce 28 percent of Colombia's output and hire 46 percent of the workers in manufacturing. In 2006, the most important manufacturing sector by value of output was refined petroleum products, followed by chemicals and chemical products, beverages, basic iron and steel products, and milled and prepared animal-food products. In 2005 the most important manufacturing sector for employment was textiles and clothing, followed by chemicals and chemical products, plastic products, cement and other non-metallic goods, and beverages.[1]
Colombia's textile industry represented 9 percent of output and 23 percent of employment in manufactures in 2005, although the share in output has been falling steadily since 1990. Between 2001 and 2003, Colombia was a net importer of textile inputs, while it was a net exporter of apparel. The United States is the main export market for Colombian textiles and apparel, followed by the members of the Andean Community and Mexico. The sector has been one of the main beneficiaries of the Andean Trade Preference Act and the Andean Trade Promotion and Drug Eradication Act. The United States extended these trade preferences to Colombia and other Andean countries because of their continuing fight against the production and distribution of illegal drugs. Colombia's designer clothing is a segment of the industry that has received international recognition in recent years.[1]
Colombia's chemical industry is composed mainly of
Two main economic groups have had control of the largest shares in the beverages market, which in 2005 represented 9 percent of manufacturing GDP and 3 percent of employment in manufacturing. The Ardila Lülle Organization is the largest producer of soft drinks and the Santo Domingo Group, of beer. The Santo Domingo Group had a controlling stake in
In 2005, paper, paper products, lithography, and printing accounted for about 7 percent of Colombia's manufacturing output and 8 percent of manufacturing employment. Input production of pulp and paper is highly concentrated in a few firms, while book publishing is more dispersed. Colombia is a net importer of pulp and paper and has been a net exporter of printed products for many years.[1]
Vehicle assembly and vehicle components represent 2 percent of manufacturing GDP and employment, and those shares have been falling in recent years. Colombia has automobile-assembly plants linked to
See also
- Petroleum industry of Colombia
- Economy of Colombia