Project

Student

Evelyn Thatiana Bernal Castelblanco

COD: 11717016

Teacher:

Edwin Rolando Romero Gutierrez

Universidad de Boyacá

Faculty of administrative and accounting sciences

Management and international business

English VI

Tunja, Boyacá

2020

Research question
 How is the covid-19 affecting foreign investment and what measures is

Colombia taking?

General Objective

● To Analyze the current situation of foreign investment in Colombia in times of

covid-19.

Specifics Objectives

● To find the sectors that might have been affected by this situation (covid-19).

● To show Procolombia and the country brand is important to help in the growth of

these investments.

● Evaluate the importance of foreign investment in Colombia.

SUMMARY
Foreign investment in Colombia is considered as the investment of capital from abroad in
Colombian territory, including Colombian free zones, by non-residents in Colombia
(Decree 2080 of 2000, article 1). For Colombia has always been essential have this external
capital investment dado its predominantly industrial, foreign direct investment is associated
with long term resources, creating jobs stably well as being an important asset for
development, competitiveness and growth , The analysis of the impact of FDI has been
approached from the perspective of the theory of economic growth and industrial
organization, that is to say from the sectoral point of view and the affectation of these by
the global situation due to covid-19, therefore It is important to appoint Colombia Marca
País as it is one of the institutions that It is created as a joint effort between the National
Government and the private sector to show the dedication, hard work and passion that
projects us as a better place before the world and makes us a place of real events, a country
for investment. The country brand is an entity of the National Government, which in turn is
a segmentation of Procolombia, whose trustor is the Ministry of Industry, Commerce and
Tourism (Procolombia, 2016).

FDI has a positive effect on the receiving economies. This situation is especially relevant in
growing economies that due to their low level of development do not have sufficient
savings capacity to finance capital formation, or do not have a sufficiently developed
financial and capital market to channel the resources necessary to do so, such as Colombia.
In this sense, in many cases FDI becomes an invaluable source of expansion of the
productive capacity of the receiving economies, in addition to its help in technological
growth, The works of Findlay (1978), Wang (1990) and Aitken and Harrison (1993) show
that FDI is one of the main channels through which technology diffusion can be made to
developing countries.

External investment in Colombia 2020

Foreign direct investment (FDI) in Colombia reached the highest figure in 2019 in the last

six years, by US$14.493 million according to the Balance of Payments of the Bank of the
Republic, registering an increase of 25.6% compared to 2018. For this reason is more

important know the situation Current of the country because the FDI generally raises the

productivity of the receiving economy. Also generates jobs, these companies, which have

more experience, better technologies and more sophisticated capital, show greater

productivity than their local competitors, multinationals generally pay better wages than

local businesses, raising the income of the population.

The negative impact of the Covid-19 feel stronger in the automotive, airline and energy

industry. This epidemic is detrimental to investment in a country, shocks to consumer

demand and the economic impact of supply chain outages will affect the outlook in other

countries and investors.

Why does foreign investment keep an eye on Colombia? There are quite a few factors for

Colombia to become an opportunity for foreign companies for example, its strategic

location makes Colombia a perfect opportunity or intermediary for exports, in addition to

the skilled labor, it makes investors not hesitate to include in their development plans the

expansion of their companies in Colombia.

However, things change when companies and in this case multinationals are affected by

diseases, wars, among other events, since some companies decide to leave the country,

mostly affecting their workers, who are left without jobs, affecting the income of

Colombians therefore an economic imbalance is seen as a result, in this case we can take as

a reference the internal situation that the country was experiencing in its time with drug

trafficking where the low external investment was evidenced by the complex situation that

the country had, It is important to see how the country brand works to highlight the facts
that attract tourists, investors and buyers who are finally convinced that Colombia is their

best option, that was how on September 7, 2012, during a match for the Colombia National

Team in Barranquilla, Born Brand Colombia Country to communicate those facts that make

us the answer to the world and thus put aside the image of armed conflicts, drug trafficking,

among other things, with which investors referred to Colombia. Country brand was

born in the perfect year where Colombia was looking for investment, with this cause the

National Government which in turn is a segmentation of Procolombia, whose trustor is the

Ministry of Industry, Commerce and Tourism is vital to get these investors.

Observing the current situation vis-à-vis the covid-19, which most countries live in and in

this case Colombia is increasingly complicated for all sectors of the economy to return to

work soon and as they previously performed, for that reason some companies Nationals

have had to close their doors due to the decision of the National Government with the

decree that forced Colombians to be quarantined in their homes to prevent the covid-19

from spreading in the country. This decree only allows medical personnel, the media,

general cleaning personnel, shopkeepers and banking entities to work and take to the

streets. for example, we have companies such as Bodytech, Cine Colombia, Shopping

centers, Arturo de la calle, among other companies in the country, had to stop working and

therefore many employees, without economic resources from their wages it should be

noted that some companies continued to pay their employees but most don't. Some of these

companies argued their decision based on the large conglomerations of people that

presuppose their services and businesses, due to the complex global economic situation and

their own errors in strategy, have caused the fall of large multinationals from all sectors in
recent a months in Colombia between these Cinepolis, CHC and CFG Fashion

Group,Intercontinental Hotels Group (United Kingdom) .

Pro Colombia in favor of not reducing or affecting their IDE due to foreign direct

investment (FDI) had amounted to US $ 2,913 million, with an increase of 29% compared

to the same period in 2019, with the help of the Ministry of industry and trade put into

practice all their tools to work through mechanisms that allow them to have an approach

with the more than 500 large multinationals that operate in Colombian territory.

Flavia Santoro president of Procolombia indicated that "we are in isolation for the

enlistment, we look to the future with optimism and determination, preparing ourselves to

overcome the health crisis and work on the economic and social reactivation of our country,

for this the contribution of foreign investment will be decisive, as it has been until today ”

(flavia Santoro, 2020).

The offices of all these mechanisms such as Pro-Colombia, Country Brand and other

entities in charge of promoting the FDI with a presence abroad work with potential

investors through virtual tools and telepresence, seeking expand its operations in Colombia

once the current situation is exceeded and to contribute to improving the economic situation

and therefore the Colombians.

The figures from the Exchange Balance and balance of payments would be that we indicate

behavior investment flows in the country during this covid-19 epidemic. Also, it is

important to know that this balance in the first quarter of 2020 according to Flavia

Santoro,president ProColombia says that they reflected the strength macroeconomic and

attractiveness of Colombia as an investment and business destination for investors. "

The performance of FDI in Colombia this is shown by the Balance of Payments, which is

an indicator that in addition to the movement of currencies, this also includes imports from

the country, these reports are published in mid-June where the effects that FDI has

experienced with this pandemic could be evaluated.

However, it is evident to observe the closure of companies and the stoppage of activities
due to the covid-19 contagion situation as mentioned above, in addition to the strong
impact that this situation had on the Colombian economy since among the companies that
pay better wages and they have more employees under their power are companies from
abroad and for obvious reasons they are not at work, affecting Colombians first and their
income obviously, the Center for Economic Studies noted that if the economy recovers
quickly in the second half, it will reach growth of 0.5 percent ; But if the isolation takes
longer, the economy will decline 0.7 percent, and consumption, 0.6. (Anif, 2020).

Finally, it is important to take actions aimed at protecting foreign investment, since

significant amounts of capital, technology, and income for both the country and
Colombians, the national government with the help of the Ministry of Industry and
Commerce is carrying out important work with these sectors of the economy, with the help
its entity Procolombia, it’s president Flavia Santoro and her entire team operate to
accompany the more than 500 multinationals and external investors so that Colombia do
not lose these revenues that year after year Colombia seeks, in addition to its growth and
market evolution, Colombia hopes that this situation does not force multinationals to end
their investments in Colombia looking for both financial strategies and better opportunities
provided through Procolombia.

REFERENCES

● Ómar G. Ahumada Rojas. (2020). El año que no fue para la economía nacional
debido a la pandemia. EL TIEMPO, 2.
● REDACCIÓN EL TIEMPO. (2020,Abril 17). Inversión extranjera creció 29 % en el
primer trimestre de 2020. EL TIEMPO, pp.

● FEDESARROLLO. (2016,Diciembre 15). IMPACTO DE LA INVERSIÓN

EXTRANJERA EN COLOMBIA: SITUACIÓN ACTUAL Y PERSPECTIVAS.
BOGOTÁ: p.5.

● A Garavito, AM Iregui, MT Ramírez . (2012). Inversión Extranjera Directa en

Colombia: Evolución reciente y marco normativo. 2020, de redalyc.org Sitio web:
https://www.banrep.gov.co/sites/default/files/publicaciones/archivos/be_713.pdf

● PROCOLOMBIA . (--). ¿Qué es la Marca País Colombia?. 2020, de ColombiaCO

Sitio web: https://www.colombia.co/marca-colombia/quienes-somos/que-es-la-
marca-pais-colombia/
●