Monday, February 22, 2010

Colombia and Chile Trade is Booming

Semana has an article on Chile's economic relationship with Colombia.

According to the article the main "detonant" has been the Free Trade agreement signed between Chile and Colombia last year, which is a "latest generation" type treaty, that includes "more than commerce" into areas like "services and state purchasing".

As a result Chilean companies have entered Colombia, with Colombia becoming one of the main "destinations for Chilean direct investment in the world displacing Argentina, the past two years.." In 2008 "Colombia was the third recipient" of Chilean direct investment and in 2009 the fourth after Peru, Brasil, and Uruguay" according to Semana. It estimates the amount of FDI from Chile at 6141 million dollars, 13 percent of Chiles total external investment according to the article. And it says it in such varied areas as financial services, health, transport, forestry, paper manufacturing.

Bilateral commerce "has doubled annualy in the past three years reaching 2800 million dollars in 2008, though it decreased in 2009 due to the global crisis."

After the US, "Chile was the second destination of Colombian exports", supplanting Venezuela.

Goes Both Ways..

Colombian companies have also made the leap into Chile. Colombian companies include retailers, health care operators, transportation companies. Just recently Colombian state owned ISA "bought 60% of CINTRA Chile which operates and maintains highways in Chile, from Spanish-owned Ferrovial. In communications, Internexa, whose acquisition of a Chilean company Comunicaciones Intermedias, has given it the "largest fiber optics network in South America".

It seems pretty logical that two countries with relatively large and sophisticated business sectors would increase their trade.

While official "integration" in the continent seems pretty dead on the surface, the truth is that a lot of activity is happening under the radar. Investment, goods and services are flowing out of - and between- Chile, Brazil, Peru, and Colombia, with attendant economies of scale being created. It also shows a healthy diversity of sectors.

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