Germany and Colombia have traded and made important businesses since Colombia independence, this socioeconomic relations have brought economic progress for both countries. Colombians took technology from Germans to produce iron, to produce chemicals, to surf rivers, to make beer and to fly, most of these events took place before 1950. Germans enjoy main cities in Colombia, some of them decided to live in this tropical country and set business to live on, there are approximately 2,729 Germans in Colombia as residents in 2011, they work and add value to Colombia economy. On the other hand, Germany took advantage in this socioeconomic relation after her unification in 1989 and Colombia economic openness in 1991. Since these years, Germany changed her economic thought and she is making huge investment around the World and Colombia is in this agenda. Moreover the trade balance between these two countries changed dramatically since then. Colombia used to have a favor trade but after Germany unification the trade balance is in favor of Germany. One can be sure that Germany unification is a successful humanity achievement, nowadays Germany is an example to follow in economy management.
Author: Humberto Bernal,
Economist,
e-mail: zhumber@gmail.com
Twitter: Humberto_Bernal
German people started to come to Colombia in important volume few years after her independence and they made huge contributions to Colombian development. Figure 1 shows the volume of Germans residents in Colombia according to local census and World Bank data. In 1843 and 1851 there were 33 and 47 Germans in Colombia as residents, they lived in Bogotá, Medellín and Cali mainly, but they liked to travel around Colombia to look for economic opportunities, for instance Jacobo Wiesner was a German who taught geology through working in mines in Pacho in 1824 (small town close to Bogotá). His mining extraction technique was so important to develop the production of raw materials and hardware stores in Colombia. In 1834 there was other German named Juan Bernardo Elbers who worked so hard to develop ship navigation on Magdalena River, this river is the most important in Colombia, it crosses Colombia and it was taken to put imported and exported merchandise inside the country and in her ports. Other economic sector where Germans contributed for economic development were beer sector through Bavaria at the end of XIX and education through Germany schools, for instance in 1912 they opened “El Colegio Aleman de Barranquilla”. German population between 1900 and 1964 faced an important increase passing from 1,682 German residents in 1928 to 3,893 in 1960. Unfortunately, during WWI and WWII they faced xenophobic environment, it is important to point that most of Germans foreigners during this period had Jewish roots and others were not agree with Third Reich decisions. Some Germans were unfairly black listed and their assent were confined, for example Scadta (AVIANCA) and Bavaria. Scadta was the first big airline in Colombia, it started business in the middle of XX century. As one can see, the contribution of Germans in Colombia was huge during this period.
Figure 1. Germans in Colombia 1843-2011*
(number of people)
*2011: with preliminary information from migration office.
Source: Colombia census, World Bank and Colombia migration office.
From 1970 to 2000 the volume of Germans as residents in Colombia showed a decline, but after this year the volume increased again. This initial reduction of Germans was due to Colombia internal war where guerrilla targeted foreign people as prisoners (kidnaped) and as consequence of drug cartel terrorism. These facts brought high costs in terms of economic development. However, after 2000 the volume of Germans showed an increase to reach approximately 2,729 in 2011. Germans in Colombia enjoy cities such as Bogotá with 41.9% of total Germans residents in Colombia, Cali with 8.0% and Medellín with 3.2%, moreover there are other places where they live such as Chía, Cúcuta, Pereira, Cartagena and San Andres as figure 2 shows. According to gender, 61% are males and 39% are females. Germans in Colombia are 57% single and 65% are less than 65 years old and 12% are juveniles (less than 14 year old), it means they are young people who look for better life conditions in this tropical country. Most of Germans in Colombia have high education, 57% had university studies while 14% have just primary studies. They work as employees with 19% of total Germans in Colombia and 12% as employers, there are others that work as voluntaries and others are retired. Germans like to work in industrial sector, mainly in chemistry sector and education, there are few that work in real estate projects and financial sector. This information comes from the last sample Census in 2005. Unfortunately there are 6 Germans in troubles with Colombia justice in 2013.
Figure 2. Germans residents current location in Colombia
(Share % of total germans in Colombia 2005-2011)
Source: Colombia census and Colombia migration office.
Big Business between Germans and Colombians
Germany and Colombia have important economic relations, they are evidenced through Foreign Direct Investment (FDI) and international trade. In the first case, the value of FDI as stock went from US$158 million at 2012 prices in 1906 (the Index Price was British Petroleum Index) to US$2,526 million in 2012 as figure 3 shows. There were important periods to highlight, for instance the smoothly path from 1914 to 1980 as figure 3 shows, it can explained by difficulty to access to Colombia market through FDI. FDI restrictions were consigned in Law 444 of 1967 that was abolished in 1991. The big investment started in 1991 due to Colombia opened her economy and Germany unification. The number of big firms from this country increased from 20 in 1990 to 51 in 2008, nevertheless in these last years Germans firms have left Colombia to reach 43 in 2012, one tend to think that a better economic condition in close countries and 2008 global crisis pushed these firms to leave Colombia. Those firms that are in Colombia are located in pharmaceutical sector and chemical sector mainly, but there are some in real estate and crude oil exploration. Some of the main German firms in Colombia are Kimberly Clark Colombia (paper-chemistry sector), Bayer S.A (pharmaceutical sector), Daimler Colombia ( vehicles sector), Henkel Colombia ( Make up sector), Servicio técnico pala hidráulicas (crude oil sector), Tintas Gráficas Alemanas (pens and pencils sector), and many others. Most of these firms are located in Bogotá and some in Medellín, Bucaramanga and Cali.
Figure 3. German FDI stock in Colombia 1906-2012
(US$million 2012 chained British Petroleum prices)
Source: Source: Rippy, F. 1948; Twomey, M. 2000; Central Bank Colombia.
In terms of international trade, Germany and Colombia used to have a trade balance in favor of Colombia, but after 1991 this balance changed in favor to Germany. It means that Germany unification in 1989 and Colombia economy openness brought a strong economic growth and progress. The evidence is through high volumes of Germany FDI abroad where Colombia and other countries is a target market and the exports of added value products such as technology, pharmaceutical finished products, aircraft parts, vehicles and medical equipment increase in huge volumes. On the other hand, Colombia exports to Germany fruits such as banana, coffee beans, crude oil, flowers and few tabasco, some basic plastics and sugar, it is evidence of lack of variety of value added products from this tropical country. Trade index between these two countries have shown a decline as figure 4 shows. It can be explained by German local production that have improved their variety of products and lack of Colombia competitiveness, Colombia exported products evaluated in US$781 millions in 1980, but nowadays the value exported by this country to Germany is US$377 million in 2012.
Figure 4. International trade Index* Germany-Colombia 1855-2012
(Exports plus imports from Colombia to Germany divided into total exports plus imports from Colombia, % percentage)
Source: Urrutia (1970), Bureau Of Statistic (DANE) and United Nations Data.
Germany ‘s GDP cycle and Colombia’s GDP cycle used to move in contra-cycle way before 2000, but these cycles started to move in pro-cycle way since this year as figure 5 shows, it means both countries can take investments advantages and business when they are growing. Nevertheless, in the last two quarters of 2013 Germany shows a decline in her economic activity while Colombia is in her up tendency path.
Figure 5. Colombia’s cycle and Germany’s cycle
(1977-2013 quarterly normalized data)
Source: Colombian Central Bank and Germany Central Bank (Deutsche Bundesbank).
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