After certain stabilization of the regional political environment in the 1990’s, Latin America has become a target of foreign investors. Latin America, economically the most developed of the three developing regions, offers a market of almost 600 million inhabitants. Positive factors such as the reduction of the frequency of military conflicts, the rise of civil governments and the strengthening of democratic institutions create stable conditions for the inflow of foreign capital. Rapidly growing population, functioning public sector, high literacy of the workforce as well as a wide range of natural resources give Latin America all the trumps to become a highly important actor in the international economic competition of the 21st century.
SA Connections focuses on four countries of the Andean region of South America: Colombia, Ecuador, Peru, and Bolivia. The general characteristics of these countries show some common trends. While in the past the revenues from natural resources were used either to finance the military, or to enrich the local aristocratic structures, the current political conditions generate the need for public investment. Thus we have recently been witnessing throughout the region the rise of state programs focused on the development of infrastructure, transport, energetics as well as the environmental sector, which has been producing a strong demand for adequate technology, capital goods, and financial products.
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The economic policies of the individual states in the region are generally described by the effort to enforce an own economic emancipation which would permit the economy to break out of the traditional development model, i.e. from the dependence on exports of raw materials and unprocessed agricultural production. Therefore, the governments support the manufacturing sector and provide incentives for the import of technology and its development in the region as well as incentives for other modern industries which generate high added value.
Current weakening of the positions of the traditional aristocratic clans, resulting from the internal political changes, the opening of the economies to foreign competition, as well as from the liberalization of communication technologies, leads to a disruption of the monopoly structures, the emergence of new economic actors and to the strengthening of the middle class. The growing middle class generates new needs, particularly in the area of consumption and housing, which creates opportunities in sectors such as the development of retail networks, construction, and also in tourism and luxury-oriented services.
Although common characteristics of the countries dominate, there are some significant differences especially at social and political level. While Bolivia and Peru show a high proportion of indigenous populations, Ecuadorian and Colombian populations are mostly of white and mestizo origin, and moreover, Colombia has a considerable minority of Afro Americans. These social features primarily affect cultural and social habits of the people. The differences between the two regions are also apparent in the structure of the distribution of economic activity in the country. While the core of Bolivian and Peruvian economy lies in one or a few cities, Ecuador and Colombia show a growing importance of medium and small cities apart from their traditional economic centers. In general, the region of Bolivia and Peru is socio economically very underdeveloped compared to the region of Ecuador and Colombia.
In the political sphere of the four countries, we can identify two basic ideological courses. Colombia is a pro-Western oriented liberal democracy, while Ecuador, Bolivia and recently even Peru belong to the leftist wing of the Latin American countries practicing the Andean Amazonian capitalism, which is based on a higher participation of state in the national economy. However, we do not expect significant political changes dangerous for foreign capital from these regimes.
2011: According to an investigation made among clients of JP Morgan Chase, Colombia will be in the next three years the second most attractive investment destination in Latin America, after Brazil.
2008: According to the Global Entrepreneurship Monitor, Bolivia has the greatest potential for business development of any country in the world.
World Bank: Colombia has the best protection of foreign investors of all Latin American countries.
2009: According to Price Waterhouse Coopers, Colombia has the most productive workforce in South America.
Major state projects for the construction of road networks. (Colombia)
Port equipment, logistics and distribution, SP, ITS; design and the construction of airports and ports, hydroelectric systems and construction in general. (Colombia)
Construction of a logistics center in Manta. (Ecuador)
Construction of the Technology Park Yachay. (Ecuador)
ENERGY AND MINING
Construction of the refinery in the port of Manta. (Ecuador)
BRTS in large and medium cities. (Colombia)
Construction of a tram line in Cuenca. (Ecuador)
Construction of a subway system in Quito. (Ecuador)
Network of public bicycles in Cuenca. (Ecuador)
Polyethylene bottles recycling project: fabrication of plastic fibers and feathers, Cuenca. (Ecuador)
Ecuador currently invests 500 million USD to build wide infrastructure for water purification.
Housing development, construction of commercial and tourist facilities (houses, residential buildings, commercial buildings, commercial centers, supermarkets, hotels, etc.). (Colombia, Ecuador, Peru, Bolivia)
Red CIDEU: Program aimed at creating a sustainable urban development using Colombian city of Medellin as the model city. (an international project in the region)
Construction of a new slaughterhouse in Cuenca. (Ecuador)
INVESTMENT IN AGRICULTURAL BUSINESS
INVESTMENT IN MANUFACTURING INDUSTRY
In Ecuador tourism receives government support at the national level, in Colombia regionally.
Business Process Outsourcing, Opportunities for Private Equity Funds, Goods and Services of the Oil sector, Hotel Infrastructure and Tourism, Software and IT Services. (Colombia)
The growing middle class in the region raises the growth in demand for consumer goods.
Consumer goods: basic as well as luxury consumer goods (household appliances, sport equipment, food and beverages, household equipment, glassware, crystal, etc.)
The lack of proper infrastructure of heavy engineering along with the current public investment in energy, transport, infrastructure and construction create a strong demand for capital goods such as:
Machinery and equipment for mining and energy industries, logistics, petrochemical industry, agriculture, food and woodworking industries, and construction. Delivery of steel structures (bridges, warehouse facilities), port and logistic facilities.
Almonds, Brazil nuts, soya, sunflower. (Bolivia)
Traditional handmade products:
Panama hats. (Ecuador)
SA Connections s.r.o.
284 01 Kutná Hora
tel: (+420) 721 128 679
Account number: 2700365667/2010
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SA Connections s.r.o.
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SOUTH AMERICA CONNECTIONS, Ltda.
Camino del Tejar, 3-24 y del Paltán
Cuenca - Ecuador
mobile phone: 09830 53643
tel: +593-(0)-995579803 (ECU)
tel: (+420) 607 112 549 (CZ)