Introduction
The purpose of this paper is to analysis the feasibility and risks of a United States foreign direct investment (FDI) into the country of Colombia based on the major current social/cultural, political, and economic environments
Cultural Environment
Cultural Climate Colombia is a Latin American country that has a population of 47.5 million people. The primary language spoken by the people is Spanish and they are a Christian country. Colombia is “The fourth largest country in South America and one of the continent's most populous nations, Colombia has substantial oil reserves and is a major producer of gold, silver, emeralds, platinum and coal.” With these natural resources, the country is ripe for business. However, there is a large drug cartel presence that is a barrier to business success in the country. The country is a large producer of the coca plant which is used to make cocaine. There are “64,500 farming families living off of coca”. The growth of the plant takes place in the remote areas of the country and there is no state regulation of the growth of the plant. The drug cartels use the money made from producing this cocaine to fund a guerilla army that fights against the state when they try to take a
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186). The Andean Group is also working towards standardization of legislation regarding foreign investment, trademarks, royalties, and the like (Higgins and Higgins, 1979). FDI in Colombia began to increase with the creation of a national FDI-promotion agency, the Colombia Investment Corporation which later merged with Proexpo (Hudson, 2010, p. 187). The United States currently funds the majority of the Foreign Direct Investments in Colombia. In 2011 $15 billion dollars were invested in Colombia via FDI’s due to their economic stability (Embassy of Colombia Washington D.C.,
Another dimension to the predicament in Colombia is the drug problem. Colombia is the largest producer and provider of cocaine in the world. This problem, however, is not separate to the armed conflict. In the recent past decades, control over the drug business in Colombia has shifted from drug cartel organizations such as the notorious Medellin Cartel, to both the
The United States has preserved a long-standing relationship with Colombia and is patiently waiting to see the outcome. Colombia is a key geopolitical space in South America due of its numerous population, variety of valuable resources, deeply rooted criminal and drug trafficking structures, and its extensive border with Venezuela. In view of possible economic and social collapses in Venezuela, Colombia must remain a point of regional stability. Since 1999, the United States has invested $10 billion in economic and security assistance to Colombia. “Plan Colombia”, with steady bipartisan support, remains a major U.S. foreign policy achievement. Instituted in 2000 by the Clinton administration, the United States supported the initiative by committing $1.3 billion in foreign aid and up to five hundred military personnel to train Colombian forces. “Plan Colombia” dedicated 51% to institutional and social development, 32% for fighting the drug trade, and 17% for
To begin describing how has been the growth and progress of FDI in Mexico it is important to define FDI itself. According to the OECD Economic Outlook of 2003, Foreign Direct Investment is “an activity in which an investor resident in one country obtains a lasting interest in, and a significant influence on the management of, an entity resident in another country. This may involve either creating an entirely new enterprise or, more typically, changing the ownership of existing enterprises (via mergers and acquisitions)” (157).
The major conflict in Colombia is the civil war with insurgent groups, as time went the conflict worsens and new issues were added a result to the civil war in Colombian such as drug traffic, paramilitaries, common crime, poverty, and unemployment. However, the civil war in Colombia affects directly the U.S government interest; as a consequence, that, the insurgent groups in Colombia have as a major financial resource the drug traffic. Therefore, the high position of Colombia in the global production of cocaine and heroin has long been a U.S major concern to its national interest, since U.S has been one of the most cocaine consumers, affecting most of youth population and enriching the Colombian’s illicit groups.
Violence in modern Colombia takes place in many forms. The three major categories are crime, guerrilla activities, and attacks committed by drug traffickers. Violence has become so widespread and common in Colombia that many people have now become numb to it. The Colombian economy has also benefited from the illicit drug trade; however violent it may be. During the 1970s, Colombia became well known, as one of the world’s most important drug processing, production, and distribution centers for marijuana and cocaine.
Up to 58 milligrams(mg) of coca leaf, the derivative of cocaine, is chewed and consumed daily by indigenous men and women of Latin America. Ydang, a Colombian coca farmer, states that he “will sell to anyone who wants to buy”. At every level of drug trafficking, economic and political factors are effected. In Latin American countries, specifically Colombia, Peru, and Bolivia, drug trafficking has been a problem for decades. Despite attempts to hide or deny it, during the twenty year period of 1950 through 1970, all three of these countries political actions and economic policies were impacted.
After a long history of dependence on a few traditional exports, followed by import substitution in the 1960s and 1970s, and a debt crisis in the early 1980s, Costa Rica launched an aggressive attempt at diversifying production and exports in 1985. The new approach to development consisted of two main elements: pursuit of free trade agreements and the attraction of foreign direct investment (FDI). Costa Rica has been remarkably successful in attracting FDI. It is the only country in Latin America where most FDI has gone to manufacturing over the last decade, and it stands out even further for its ability to attract FDI in high-tech sectors.
In Colombia trade and export is what sustains the country’s economy during the battle against the Guerrilla forces. The Economy in Colombia continues to rise also their trade and exports have improved over the years. The top exports of Colombia are Crude Petroleum and coal adding up to about (59 percent of total exports). The main trading
The Foreign Direct Investment is stimulated by diverse macroeconomic factors such as the GDP, GDP per capita and also by the political stability of a country. The US is the country, which receives the more FDI in the world; even tough some other countries recently have increased their FDI considerably in term of growth. The overall quality of the infrastructure in the US
Drugs can be just as addictive as power. Drug trafficking has become a major issue over the past few decades, negatively affecting nation’s economies, rather than benefiting them. In retrospect, Colombia 's economy has recently been impacted directly by drug trafficking. Colombia 's economy is the fifth largest in Latin America, and was known for its stable growth over an extended portion of time. Unfortunately, for the past few decades, any mention of Colombia’s economy has been linked with violence and illegal drug cartel. Towards the ending of the 1990s, Colombia was the principal supplier and contributor to the export of illegal drugs in the Andean area, and this directly debilitated the country 's economy. There has been a vast amount of discussion, in Colombia and all over the world, regarding the exceedingly apparent socio-political and economic effects of this illegal drug traffic (Garcia 277). Drug trafficking in Colombia has negatively affected the nation 's economy.
Colombia is a country that is characterized not only by its natural diversity, but also for its natural resources, geography and multiculturalism. Among the problems faced by the Colombian society, are: drug trafficking, corruption and the lack of education.
Colombia is a country that is characterized not only by its natural diversity, but also for its natural resources, geography and multiculturalism. Among the problems faced by the Colombian society, are: drug trafficking, corruption and the lack of education.
Investments involved in asset transference made by Mexican investors to foreign investors are also considered foreign investments, through them DFI totally or partially acquires Mexican societies already established.
Foreign Direct Investment has recently become increasingly significant in terms of capital inflow and capital formation which contribute largely to a development in Thai economy for the past decades. It has been significantly influenced the
The second objective of this is paper is to briefly discuss the sources of the FDI flowing into the Caribbean region. . Most of the information was collected from the Economic Commission of Latin America and the Caribbean as it is the leading source of information on investment in the region. Foreign Direct Investment into the Caribbean comes from all over the world and not from just the United Kingdom and the United States of America as most would expect. Canada as well as Latin American countries have begun to increase their investments in the region. Additionally, investments originating from the Asia have also been expanding over time with countries such as Japan and Korea capitalizing in the industrial sectors. Additionally, as relationships between China and the English- speaking Caribbean deepen and strengthen, the FDI inflow into the region from China has also multiplied. There is some presence of Indian investment but this is predominantly in countries with a high concentration of Indian descendants such as Trinidad and Tobago. Baroda Bank (India’s International Bank) located in both Trinidad and Tobago as well as the Bahamas is the largest Indian investor but there are other small companies operating as well (ECLAC 2012).