The Spaniards arrived in the area in the early 16th century. In 1717 the Spanish crown established the Viceroyalty of New Granada, made up of the present-day states of Venezuela, Colombia, Panama and Ecuador. Following independence in 1813, the Republic of Greater Colombia was formed in 1819. Despite Colombia's commitment to democratic institutions, periods of widespread and violent conflict have been common in the nation's history. A four-decade long conflict between government forces and anti-government insurgent groups, principally the Revolutionary Armed Forces of Colombia (FARC) heavily funded by the drug trade, escalated during the 1990s.
With a population of more than 45 million, Colombia is one of the largest countries in South America, and is endowed with significant natural resources. It has substantial oil reserves and is a major producer of gold, silver, emeralds, platinum and coal. But decades-long violent conflict has had an adverse impact on the economy. Despite strong growth in recent years, about half of the population still lives below the poverty line.
Colombia experienced accelerating growth between 2002 and 2007, chiefly due to improvements in domestic security, rising commodity prices, and to President URIBE's promarket economic policies. Foreign direct investment reached a record $10 billion in 2008. A series of policies enhanced Colombia's investment climate:
President URIBE's pro-market measures; pro-business reforms in the oil and gas sectors; and export-led growth fueled mainly by the Andean Trade Promotion and Drug Eradication Act.
Inequality, underemployment, and narco-trafficking remain significant challenges, and Colombia's infrastructure requires major improvements to sustain economic expansion. Because of the global financial crisis and weakening demand for Colombia's exports, Colombia's economy grew only 2.6% in 2008, and contracted slightly in 2009. In response, the URIBE administration cut capital controls, arranged for emergency credit lines from multilateral institutions, and promoted investment incentives, such as Colombia's modernized free trade zone mechanism, legal stability contracts, and new bilateral investment treaties and trade agreements.
The government also encouraged exporters to diversify their customer base beyond the United States and Venezuela, traditionally Colombia's largest trading partners. The government is pursuing free trade agreements with European and Asian partners and awaits the approval of a Canadian trade accord by Canada's parliament. In 2009, China replaced Venezuela as Colombia's number two trading partner, largely because of Venezuela's decision to limit the entry of Colombian products. The business sector remains concerned about the impact of the global recession on Colombia's economy, Venezuela's trade restrictions on Colombian exports, an appreciating domestic currency, and the pending US Congressional approval of the US-Colombia Trade Promotion Agreement.
Monetary unit : 1 Colombian peso = 100 centavos
Main exports : Petroleum, coffee, coal, gold, bananas, cut flowers, chemicals, emeralds, cotton products, sugar, livestock
GDP : $401 billion (2009 est.)
GNI per capita: US $4,660 (World Bank, 2008)
Labor force : 21.3 million (2008 est.)
Labor force - by occupation : agriculture : 22.4% industry: 18.8% services: 58.8% (2005 est.)
Unemployment rate : 11.3% (2008 est.)
Population below poverty line : 49.2% (2005)
Household income or consumption by percentage share : lowest 10%: 0.8% highest 10%: 45.9% (2006)
Inflation rate (consumer prices) : 7% (2008 est.)
Investment (gross fixed) : 24.3% of GDP (2008 est.)
Budget : revenues : $83.22 billion expenditures: $82.92 billion; including capital expenditures of $NA (2008 est.)
Public debt : - 42.8% of GDP (2008 est.)Central bank discount rate: 11.5% (31 December 2008)