A bright future ahead for Latin America
Leer en Español: Colombia es el segundo destino de inversión chilena
Today Colombia is ranked second for Chilean foreign investment. After the elimination of all border taxes between the two countries the aggregate trade reached 1.53 billion dollars in 2016 and forecasts predict that commerce will increase even further in 2017, which could be seen as a great victory for the Pacific Alliance.
Chile has introduced more than 150 brands to the Colombian market, some big representatives include the department store Falabella and Jumbo supermarkets. Since 1990, the total Chilean investments in Colombia have surpassed the 15 billion dollar mark and 46,000 formal as well as 15,000 temporary jobs have been created.
The trading terms between the South American countries making up the Pacific Alliance, a commercial and economic block, were formed in 2011 by Mexico, Chile, Colombia and Peru, which together are responsible for 50% of South American commerce and whose combined economy accounts for 38% of the regional GDP.
The Pacific Alliance has an enormous future potential as 24% of its 216 million strong population are aged between 15 and 24. The region is also a world leader in internet adoption, being the most connected region on earth.
The Colombian economy is attractive for Chilean and other neighboring investors as the end of the violent conflict with FARC armed forces entails a higher level of legal and political certainty. Said agreement will allow to further exploit Colombia’s tourism and consumption industries while increased levels of income in the South American country will trigger an expansion of its service industry, a great opportunity for both Chile and México.
Since 1990, the total Chilean investments in Colombia have surpassed the 15 billion dollar mark
Chilean economy depends its service sector, which represents 63.6% of it, while 32.4% comes from industry. The nation’s economic engine are its copper, lithium and metal mining operations. On the other hand, the economy’s agro industrial sector represents a mere 4% of its aggregate product, a challenge that has to be addressed with the help of imports from other countries.
One of the key industries that will further boost the Colombian and Chilean trade figures is the pharmaceutical sector. A joint effort between Procolombia and the Pacific Alliance’s business council aims at facilitating the trade of non-formulary drugs, antibiotics and vitamin through a public buying system that could develop a greatly increase pharmaceutical trade between the countries.
Perhaps the most significant opportunity for the future of the Pacific Alliance arises out of the unification of its monetary policy. Based on a project carried out between the United States of America and the European Union, it can be assumed that countries that create free trade agreements behave better if they align their fiscal policies, according to the head of Colombia’s Central Bank, Juan José Echavarría.
One of the ultimate goals of the Pacific Alliance is to create sufficient economic unification in the region in order for larger scale projects to be executed for the benefit of the peoples across the region. Infrastructure projects that further connect the countries of the continent are expected to be planned and developed in the close future, thus creating efficient sources of income to solve the problems surrounding poverty and inequality as well as establishing better trading routes.
Latin American Post | David Eduardo Rodríguez Acevedo
Copy edited by Susana Cicchetto