On paper, the opportunity seems obvious. as washington increases pressure on us companies to bring production back from china, a close us ally with a well-qualified workforce, relatively low costs, a bilateral free trade agreement and major cities less than three hours by plane from miami is eager to welcome them.
In practice, converting that opportunity into reality is much harder. a country of 50m people long dependent on exports of oil, coal, coffee and other commodities, colombia has never had a big export-oriented manufacturing sector. as it tries to build one, it lacks the sophisticated base that mexico has built in the past 25 years under the auspices of the north american free trade agreement (nafta) and it cannot replicate mexicos close geographical proximity to the us.
Andrs velasco, dean of the school of public policy at the london school of economics and a former finance minister of chile, says that for any country, creating an export-focused manufacturing industry from scratch is extremely hard, because it required a whole ecosystem of interconnected suppliers and skills. "the country uniquely positioned to benefit from nearshoring in the americas is mexico, he says. "if you are making car parts in china, you can make them in mexico instead. but it's difficult to go from zero to 20. colombia is near zero right now [in manufacturing]."
Bogot commissioned a study several years ago from a team of latin america economists in the us on how it could industrialise, recallsmauricio crdenas, a former colombian finance minister and a visiting professor at columbia university in new york.
It said that if you were in one sector already, it was easier to move up the value chain, he says. for example, if you are in paint already, then you could potentially go to petrochemicals and plastics.
However, such opportunities are limited by the small size of colombias existing industrial base. it lacks, for example, the electronics expertise which mexico has accumulated during years of assembling computers and televisions.
Trade and industry minister jos manuel restrepo is nonetheless confident that colombia can compete with mexico. this is a country which from the start of this government has declared itself... in favour of the private sector and pro-business, he says.
Where colombia has been successful already is in attracting companies that outsource business processes, such as call centres. the french digital giant teleperformance has 27 offices in colombia and plans to hire another 10,000 staff there. in september, us retail giant amazon said it would hire 2,000 more staff in colombia, mainly for service roles dealing with customers across the americas. the company opened a regional hub in bogot in 2018.
Colombia has been the perennial superstar in our market in the last three to four years, says kirk laughlin, founder and managing director of nearshore americas, a consultancy in the technology services industry. mr laughlin cites the countrys close alliance with the us, the strong work ethic of its population and a supportive government as key advantages.
There should be other opportunities for colombia to diversify its exports. its latin american peers, notably mexico, brazil, peru and chile, have built big agro-industries around the export of fruit but colombia has lagged behind, despite a natural abundance of varieties.
The government has made a big push recently to cultivate avocados as an export crop but its target of $100m of exports this year pales by comparison with the $2.8bn sold abroad last year by mexico, the worlds top avocado grower.
Analysts say the main reason for colombias historic neglect of agriculture was a long-running guerrilla conflict, which scared away investors for decades, until a peace agreement in 2016. during the violence, much of the farmland was used for cattle grazing and there was little investment. coffee, long the mainstay of agricultural exports, is mainly produced by small growers who lack the technology deployed by larger competitors in brazil, the worlds top exporter.
Keenly aware of the need to diversify the economy, the government is trying to encourage foreign investors to relocate to colombia. in august, president ivn duque hosted a visit from an us delegation led by national security adviser robert obrien, and there was an announcement afterwards that colombia would take part in an american reshoring initiative.
Obrien said: we want colombia to be one of the pilot countries in this process of back to the americas, says mr restrepo, who was at the event. obviously we are interested in taking part in this us programme. but our near shoring is not limited solely to the us.
It remains to be seen whether back to the americas will herald a new wave of industrialisation in the continent or a significant relocation of jobs from asia to colombia. but there is a fresh urgency to the governments long-cherished aspiration of nearshoring.
Colombia is trying to discover a new model. this is imperative because the covid crisis has made it even more clear that a model based on oil and coal will run out and will run out sooner than had been expected, says mr crdenas.
This is not a hypothetical or theoretical topic, but a very urgent one. this economy needs new motors.