Economic prospect of the Andean Region
Words provided by: IBD Consultancy
The Andean region located in South America attracts well-known business for their international expansion. These are interesting market players which includes the following countries: Ecuador, Peru, Colombia and Bolivia.
The Andean countries, a regional market that means potential economic prospects to invest as these countries offer unique business opportunities within different sectors. During the last years this attractive region have shown their openness to trade worldwide. This region represents a strategic gateway to Latin America.
This important region is called as the Andean Community of Nations (1997) which is a trade block - customs union. Countries voluntarily united to achieve an integral development, more balanced and autonomous through the Andean, South American and Latin American integration. This include social, cultural, economic, environmental and commercial aspects for that integration.
These countries share the same past, possess a varied geography, a vast cultural heritage, breathtaking natural diversity, and an ethnic and linguistic diversity with a rich folklore.
The Andean region has been committed of the continuous improvement of the business environment in order to offer better conditions to increase business and the generation of more entrepreneurial activity. The governments of these countries have been focused on the reduction of inequality and the increase of their economic and social performance.
There is a trade agreement with the European Union with Colombia (1rst August 2013), Peru (1rst March 2013) and Ecuador (1rst January 2017). Bolivia is seeking its accession to that Trade Agreement. Actually, Bolivia is benefited under EU’s Generalised Scheme of Preferences Plus.
Recently, 15th May 2019, the United Kingdom signed a trade agreement with Colombia, Peru and Ecuador which certainly will increase the trade of goods and services. The United Kingdom is the fourth main investor of the European Union in Ecuador. This deal allow that more of the 95% of the exportable offer in the case of Ecuador will enter to the United Kingdom with 0% duties.
The mentioned trade agreements open up these markets, increasing the stability & predictability of trade and investment with the EU, UK and the Andean Region. Additionally, those agreements strengthen the regional market to compete internationally, eliminate and/or reduce duties and generate better conditions for trade through fair rules on non-tariff barriers, competition, transparency and intellectual property rights.
As well as, those agreements determined crucial arrangements for cooperation on competitiveness, innovation, modernization of production, trade facilitation and transfer of technology. As a consequence, the Andean region offers an stable and predictable environment for businesses, which also have mechanisms for disputes settlements and mediation system for non-tariff barriers.
Certainly, the EU is 3rd largest bilateral trading partner and principal investors for the Andean countries. Total trade has been approximate €28.6 billion (2017) increased in 13.5%. The Andean countries export mainly primary products: Agricultural products (55%), fuels & mining products (38%) to the EU; meanwhile, the EU exports manufactured goods: Machinery & transport equipment (42%) and chemical products (23%).
In the case of Ecuador since its accession (Jan 2017) into the EU - Colombia & Peru Trade Agreement, the EU imports from Ecuador increased 11.1% and EU exports to Ecuador increased 37.5% (2016-2017). In relation with the UK, the trade balance with Ecuador is approximate $29 million (2018), which will increase during the following years as a result of the recent signed trade agreement.
Therefore, the Andean region which represent an attractive market of 109 million population, with an approximate GDP of $1,419 billion, an expanding middle class, a dynamic and skilled workforce, lands riches in natural resources and main cities with a modern and strategic infrastructure, among other market aspects; it is bringing more attention from foreign business. Indeed, this is an attractive regional market to invest in strategic sectors which will increase its economic and social development.
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