Term Paper on "Economy of Colombia Is the North Westernmost"

Term Paper 5 pages (1727 words) Sources: 14

[EXCERPT] . . . .

Economy of Colombia

Colombia is the north westernmost country in South America. It is bordered to the south by Ecuador and to the east by Venezuela. The Atlantic Ocean lies to the north and the Pacific Ocean lies to the west of Colombia and it is the fourth largest nation in South America. With its diverse climates, Colombia is the second most populated South American country next to Brazil. However, the Colombian population is not evenly distributed. The majority of the population lives in the mountainous cities around the capital of Bogota. With this intense congregation of people in one area, the economy of Colombia is poor and unstable. This paper will attempt to explain why the economy has fluctuated during the last thirty years and give examples of life in Colombia as a result of an ever-changing economy.

After experiencing decades of steady growth (average GDP growth exceeded 4% in the 1970-1998 period), Colombia experienced a recession in 1999 (the first full year of negative growth since 1929), and the recovery from that recession was long and painful. Colombia's economy suffers from weak domestic and foreign demand, austere government budgets, and serious internal armed conflicts." (Wikipedia).

In 1999, Colombia suffered a recession as a result of low world oil prices, reduced export demand, and increased guerilla violence throughout the country. This caused an increase in unemployment, increased drug usage and sales, and devaluation of the Colombian peso. In 1999 at the time of the recession approximately 17.7% of the Colombia people were living at or below the national poverty line. (www.geographic.org).

As a result of the 1999 Colombian recession, unemployment quickly rose. There were more people in Colombia than jobs. Many companies closed because they could not afford to pay their employees. In the year 2000, the unemployment rate in Colombia reached 20%. (www.geographic.org).This rate did not stay at 20% for long because of the unstability in the Colombian economy, by 2006 the unemployment rate had improved and was at 13% which also decreased poverty and gained confidence among the people in foreign and domestic affairs. "Unemployment, which stood at 12.1% as of April 2006, is the lowest since 2001, and poverty decreased from 58% in 2002 to 49%. All these indicators, added to a reduced insecurity, have fostered greater confidence among domestic and foreign investors." (The Worldbank). Although the Colombian economy and employment rates have improved over the past five years since the recession, many Colombian citizens still feel the effects of the crashing economy of 1999. Many still do not have employment nor a means of living and are forced to turn to illegal drug activity as a way to earn money for their families.

Drugs in Colombia have always been a problem. Colombia is known for its production of marijuana and cocaine and is known to be one of the world leaders in marijuana and cocaine production and trafficking. In addition to high unemployment rates during the Colombian recession, drug trafficking and usage also increased. Marijuana and cocaine are among the two most prevalent drugs that are trafficked from Colombia to various parts of the world, including the United States. "Colombia is the major coca producer and cocaine exporter in the world." (Isacson) Because of the failing economy, many people turned to drug trafficking as a way to make money. The people of Colombia cultivated and sold drugs to earn money for their families. Naturally, the drug trafficking as caused increased violence on the streets of Bogota and many other cities throughout out Colombia. The increased trafficking lead to increased guerilla warfare and violence. Violence in modern Colombia takes place in many forms. Such as crime, guerrilla activities, and attacks committed by drug traffickers. Violence has become so widespread and common in Colombia from the increased drug trafficking that many people have now become numb to it. Drug trafficking is now known as a way of life in Colombia and many people fall victim to it, especially young children who are forced to live in the streets as orphans or runaways. This problem is portrayed in the movie, "Vendedora de Rosas" which was published in 1998.

Coffee and cocaine are two of Colombia's most cultivated plants. "Nowadays, when someone thinks of Colombia, they unfortunately almost always think of two things, coffee and cocaine (with its associated guerilla warfare). It is true that during the last 50 years these two products, one legal, and the other not, have been great monetary contributors to the Colombian economy. Coffee is Colombia's principal agricultural product, and it is also the country's second largest export. The production of coffee uses 300,000 farms and employs almost one million people (Steiner). Conversely, cocaine is a completely illegal product, but it earns almost twice as much money as coffee (Steiner). Also, in contrast with the production of coffee, cocaine uses fewer employees but earns more money (Steiner).

Colombia's economy has improved over the course of the last two years. "The economy continues to improve thanks to austere government budgets, focused efforts to reduce public debt levels, an export-oriented growth strategy, and an improved security situation in the country." (CIA - Word Book) Under the rule of President Uribe, many Colombian citizens have regained confidence in government decisions and policies. "The government's economic policy and democratic security strategy have engendered a growing sense of confidence in the economy, particularly within the business sector." (CIA-World Book) The economy continues to improve despite the last couple of years, by having an increased number of government budgets, increases number of efforts to reduce the public debt levels, and an export oriented growth focus. Some of the negative aspects of the economic problems range from to changing the current pension system, reducing high unemployment and the need to fix the declining oil production. On the positive side, some of the changes being done are reducing the public deficit which is now below 2.5%. Also, coffee prices were at an all time low and have begun to rise again. Colombia makes most of their money from various exports, such as coffee, petroleum, iron, steel, fruits and drugs.

The failing Colombian economy of 1999 affected millions of Colombian citizens. The suffering of these citizens is clearly portrayed in Victor Gaviria's 1998 film "La Vendedora de Rosas" a year before the actual recession occurred. In this movie, a thirteen-year-old girl named Monica is forced to live on the streets of Bogota, Colombia after the death of her grandmother amongst other young orphaned children and runaways. These young people must find ways to deal with the struggles of everyday life while surviving the dangers of the streets.

Set mostly over two nights, from the evening of the 23rd of December to its tragic denouement at midnight on Christmas Eve, the story follows the fortunes of a group of girls in their early teens, all separated from their families and making a living for themselves in the rough, selling roses in late-night clubs, sometimes selling their bodies, hanging out with the drug-vending teenage boys, stealing money to buy new clothes, food, and other things, and sniffing glue to fill the desperate emptiness with passing visions of lost family and friends. The protagonist is M. nica, an orphaned girl who had been looked after by her old grandmother until she had died, leaving the young girl destitute.

This movie is a clear picture of life in the streets of Colombia before, during and after the great recession of 1999. Poverty, homelessness, crime, and drugs have long been major problems that many Colombian people have faced on a daily basis. As "Vendedora de Rosas" portrays, Colombia is a country wrought with poverty, corruption, and violence. It has gained recognition for its drug trafficking and life in the streets.

In conclusion, the Colombian economy has been similar to a roller coaster ride over the last 30-40 years. After many years of stability from the 1980s until the 1990s, Colombia suffered a great recession in 1999. However, over the course of the last two years, the economy has slowly begun to improve. The failing economy in 1999 was a result of increased drug problems and trafficking, low world oil prices, reduced export demand, and increased guerilla violence throughout the country. These issues forced an unemployment rate of 20% and forced many people, including teenagers into poverty and homelessness. This is clearly portrayed in Victor Gaviria's 1998 film, "Vendedora de Rosas." This movie shows how teenagers who are either orphaned or are runaways live in the Colombian streets and are forced to sell roses in night clubs in order to survive. It shows how the Colombian economy affected their lives and how the issues brought forth by the economy effects the country as a whole.

References

1. Barajas, A., R. Steiner and N. Salazar (2000) "The impact of liberalization and foreign investment in Colombia's financial sector" Journal of Development Economics, vol. 63, 157-196.

2. Carrasquilla, A. (2001) "Econom'a y Constituci n: Hacia un Enfoque Estrategico," mimeo, Universidad… READ MORE

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