Over the past year, I’ve had the opportunity to visit several cities in Latin America, as I seek to learn more about the region. My most recent visit this month brought me to Cartagena, Colombia. A major trading hub between Spain and its New World colonies, Cartagena was once one of the most prosperous cities in the Americas, the transit point for gold, silver and other goods bound for markets overseas. Interestingly, the paradigm in many ways has changed little since then, with most Latin American economies still heavily reliant on commodity exports ranging from precious metals to agricultural products. As such, much of the region has experienced cycle after cycle of boom and bust, as dictated by global demand for these primary inputs. However, it seems that some countries in the region, like Colombia, are seeking to diversify their economies away from primary industries, increasing their focus on developing service businesses.
Take Cartagena for example- though once a center for the trade of tangible goods, today it is a city best known both for its beautifully preserved old town, as well as the Bocagrande neighborhood, a strip of high-rise hotels and apartments reminiscent of Copacabana or Miami Beach. Attracting tourists from across the Americas (and increasingly further afield), it is certainly one of the cities leading the charge in what has been a boom in tourism in the country in recent years. During a visit to Medellin last year, I encountered a similar situation. Thirty years ago, the city was among the most dangerous in the world, figuratively (and often, literally) held hostage by drug cartels and paramilitary groups. Yet in the decades that followed this dark period in Colombia’s history, investments in infrastructure and education have rendered Medellin a different place entirely. Today, it is a city was brimming with tourists enjoying numerous museums, restaurants and nightlife.
Tourists are not the only ones taking notice, and Medellin is increasingly attracting longer term residents. Young people from Colombia, as well as from around the world, are flocking to the city for its low cost of living, agreeable climate and burgeoning tech scene. Colombia’s IT industry is among the largest in the region, thanks to large investments in the country’s telecommunications infrastructure. In 2012, Citi, in conjunction with the Wall Street Journal and the Urban Land Institute, named Medellin the “Innovative City of the Year”. Overseas investors, both strategic and financial, are building a presence in Colombia, as innovative ideas and startups take root in cities like Medellin. Speaking to locals and transplants alike, there is a general sense of excitement and optimism about the growth prospects of the industry here, and what it could mean for the Colombian economy as a whole.
Though Colombia, like many of its neighbors, still ultimately remains a commodity-oriented economy, the rapid growth of industries like IT and tourism suggest that a meaningful shift is beginning to take shape. As emerging economies come to understand the value of developing intangible resources, I believe countries like Colombia may be able to pursue avenues for sustainable, robust growth.
--- Zach Olson