14 de Agosto 2017
Bogota is 479 (years old, that is): a balance and some perspectives of one of the best cities to do business in Latin America
The capital continues to develop its economic potential and to excel as a determining factor in the Colombian economy.
Bogota accrues 479 years of history positioned as one of the most important cities in the region. Its economic strength, favorable business environment, skilled workforce and strategic location, among other attributes, have allowed it to stand out above other cities and countries in Latin America.
The city has established itself as the economic engine of Colombia with 25.7% of national GDP - USD 73 billion - which surpasses the GDP of entire countries such as Guatemala (USD 71 billion), Costa Rica (USD 60 billion) and Panama (USD 59 billion). In terms of GDP per capita, Bogota’s, which is USD 9,101, far exceeds the national average in Colombia, which stands at USD 3,203.
As for the distribution of GDP by sector, the city proves to have a diversified economy, mainly associated with service activities that make up 67%, trade 17%, manufacturing with 9% and construction 8%.
This goes hand-in-hand with the important contribution made by the capital to the productive structure of the country. Some 8 million potential consumers live in the city, 16.4% of the national population. Of these people, more than half of the population is middle class, reaching 51.6% in 2016, this percentage has been growing steadily in recent years positioning the city as the largest consumer center of Colombia.
This growth in average incomes creates new challenges in terms of products and services and has led to a sophistication of economic activities in the city to meet this growing demand, moving away from primary and low value-added sectors to specialized manufacturing and services. This process has also helped the growth of Bogota’s economy which in 2016 was 3% above the national economy, with growth of 2.0%, higher than Latin America’s overall negative growth rate of -1.0%. This underscores the economic strength of the capital.
"While in 2006 there were 679, there are now 1,550 foreign capital companies registered; investment growth is evident and reinforces the positioning of Bogota, now projected as a city to undertake, develop productive projects, live and enjoy its multiple attributes. Bogota has become an international benchmark for business, tourism, cultural environment and innovation," says Juan Gabriel Pérez, CEO of Invest in Bogota.
Another fundamental reason for this energy is that Bogota continues to be the main financial center of Colombia and one of the most important in Latin America. 55% of the country’s financial transactions are conducted in the city and it’s home to the Colombia Stock Exchange, currently integrated through MILA with the stock markets of Peru, Mexico and Chile, and with the presence of more than 25 internationally-recognized banks and financial institutions.
Access to markets and the strategic geographical location of the city have also been a determining factor for many companies seeing the city as an excellent platform to attend the extensive local market and satisfy an extensive USD 43 trillion market in the region of more than 1.57 billion people.
El Dorado Airport is currently the top-ranked Latin American terminal area for cargo movement with more than 769,000 tons and the third in passenger movement, carrying about 30 million a year. It now offers direct flights to 44 international destinations and last year routes were opened to Istanbul and Cusco, among others, and Turkish Airlines and Air Europe arrived.
Among the awards received by El Dorado International Airport are the Skytrax award, a ranking in which more than 13 million travelers worldwide evaluate the user experience and the quality of services in different terminals and which, for second consecutive year, chose El Dorado as the best airport in Latin America. Bogota’s capacity as a hub for trade and transit of domestic and international passengers is projected to increase further with the construction of El Dorado 2, the city’s second air terminal. To put into perspective Bogota’s importance and potential as a logistics platform, just remember that the city accounts for 32% of foreign trade.
Besides logistics capabilities, Bogota has managed to provide a stable legal and regulatory framework that encourages and facilitates business activity, so that domestic and foreign companies with high standards of production and services have decided to initiate operations in the city. 23% of the companies that were created in the country in the last year settled in Bogota.
International studies and publications have also noted that the business environment in Bogota has been strengthened and that the city has improved its position relative to its Latin American peers over the past two decades. According to the magazine America Economia, Bogota is the fifth best city in Latin America to do business. Publications such as ATKearney and fDi Magazine have highlighted Bogota as the fifth global city of its ranking and the fifth city of the future in the region, respectively. fDi Magazine also awarded Bogota recognition as the city with the best strategy for attracting investment in Latin America.
This has also increasingly positioned Bogota as a regional hub for business tourism and business events. MasterCard’s Global Destination Cities Index ranked Bogota as the second fastest growing destination for visitors from the region and the eighth with most visitors in Latin America. Bogota receives annually more than 1.2 million foreign visitors, 47% of international visitors entering the country, of which 21% come for business reason, according to Bogota’s Tourism Observatory.
The abundant labor force and skilled human resources is one of many differentiating factors of Bogota. The city has an economically active population of more than 4.6 million people, higher than regional competitors such as Santiago, Quito and Panama City. The 117 colleges graduate annually almost 126,000 students, over 34,000 of whom are post-graduate students. Furthermore, the city concentrates 43% of the Ph.Ds. and 30% of Colombia’s technicians / technologists, and is home to 2 of the top 10 universities in Latin America. More than 1,600 research groups, 38% of the country’s total, are located In Bogota, so entrepreneurs setting up their businesses in Bogota can easily find human talent to support their operations.
Bogota offers great investment opportunities in strategic sectors that have been developed by the city to encourage the arrival of foreign capital, generating technology and knowledge transfer, quality jobs and economic development for the city. The technical and professional, outsourcing (BPO/KPO), software and IT development and creative industries services sector is of particular note; life sciences also, including medical, pharmaceutical and healthcare devices; light manufacturing, processed food and building materials; and infrastructure, highlighting sustainable construction and logistics platforms.
Between 2006 and 2016, Bogota received more than USD 18.3 billion foreign investment in new and expansion projects, mainly in the financial services sector with 14% of the total, communications, also 14% and consumer products with 13%.