Bogota and CIVETS

This past weekend we were in Bogota on some errands. I like Bogota less and less. Granted, it's got great museums, great restaurants, availability of lots of consumer goods. Sometimes when we go to Bogota we really enjoy it, because we can eat foods that we can't get in our town, or we can see movies that don't make it to our local multiplex. The movies in our town tend toward stupid action, bad comedy, horror, and kid's cartoons, all of which are usually dubbed into Spanish as opposed to subtitles as in the rest of the country. It seems that the managers of our branch don't have a very high opinion of our townspeople's tastes or reading ability.

But this past weekend, as on other recent visits, I was overwhelmed and depressed by many things about Bogota. It's crowded, polluted, noisy, inconvenient to get around. Streets are clogged, public transport is crammed to the brim, and everything is more expensive than in other Colombian cities. I literally got dizzy from walking around in the polluted air of Bogota, something that hasn't happened to me since I first arrived in Colombia over a year ago. Above all, I marvel at and am disgusted by the fact that so many people have chosen to live in Bogota, 8 million to be exact. People crowd into Bogota to do the same things they could have done elsewhere, but now in a much more unpleasant environment, where the cost of living is higher and earnings aren't much higher than in the provinces. Worst of all is the fact that Bogota sucks resources from the rest of the country, because it's the capital and the largest city. So basically Bogota deprives other regions of government funds, infrastructure, and business investment, but for all the resources pumped into Bogota it's still basically ugly, polluted, and unpleasant to live in. And the people who live there are so frantic and harried trying to get through each day that they don't have a moment to stop and consider that life might be better elsewhere.

Despite all of this, I have always noted and appreciated the flourishing of diverse small businesses in Bogota. This past weekend I was walking through a somewhat dilapidated-looking neighborhood that was surprisingly home to various upscale small businesses. There were stretches of styrofoam art design places (they do things like make painted 3D cutouts of Mickey Mouse or Tinkerbell for kids' parties), high-end kitchen decorators, and arts-and-crafts supply stores. All of these businesses are founded on producing or selling real, tangible goods. Even though the cited examples are sort of luxury items whose demand might ebb and flow, they meet real needs for consumers, and production and sales are visibly linked. Growing up in the US, I never got much of a sense of this. I don't know if it's because many of our needs are supplied by large, faceless businesses, or because so much of the real production of US-destined goods occurs outside of the US, but I always felt like our consumer economy was at least one step removed from real life, real needs. Maybe it's because most of our basic needs are already met, so a large share of jobs are simply services that maintain life without producing anything new (teaching, nursing, firefighters). And perhaps this is why new businesses in the States are often predicated on inventing some obscure little gadget that really isn't that necessary. For instance, a friend of mine in Chicago once remarked admiringly about a little plastic clip sold via infomercials that pinches women's bra straps together in the back so their breasts are better supported. He marveled that whoever thought of that idea must have made a lot of money. That might be so, but essentially we're talking about an invention to "improve" the performance of an apparel item that to begin with is totally unnecessary in the majority of cases. Not exactly an inspiring addition to the economy.

I don't know if this tangible, productive nature of the economy, which I detect in Bogota and not in the US, is due to Colombia's being a developing country that still has a lot of unmet basic needs. I think that's part of it, but I also think that what gives me a good impression of Colombia's economy is that it's not as dominated by big corporations. Most of my wife's and my shopping is in small, owner-operated stores, and in the rare occasions we have to deal with big corporations, we notice the difference. When you have a problem in a corporate chain store, there's no one to talk to about it except an unqualified teenage kid that can't change anything anyway. In a small store, if you need something special done or changed, you can go straight to the owner. This aspect of Colombia's economy may be due in part to its being a developing country, but I also noted the same prevalence of smaller, owner-operated businesses when I lived in Europe.

This brings me to another point. In a recent speech, the CEO of HSBC bank coined a new term, the CIVETS. These are the countries that he thinks will drive the world economy in the new decade--Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa. This is in contrast to the drivers of last decade's growth, the BRICs--Brazil, Russia, India, and China. The BRICs are the biggest developing countries, with huge potential for growth based on production and processing of raw materials. According to the CEO of HSBC, the CIVETS are more like middle-sized countries, with the common features of a young populations, a growing middle class, political stability, and a diversified economy. I'd also venture that the CIVETS countries produce in large part for local and national markets, as opposed to export markets. I'm not sure I'd describe any of those countries as politically stable except for Vietnam, but that's what this CEO says.

While I'm honored that Colombia was classified as a CIVETS country, I wonder what that forebodes for us. Granted, I think that much of the business world's coining of new terms and inventing new trends (think Asian Tigers) is perhaps more hype than anything else. And this article from our daily business newspaper lists Colombia as the 45th most competitive country out of 58 graded by the IMD business school in Switzerland. Not exactly high on the list. But investment hype is often self-fulfilling, so I am a little bit worried that multinational corporations will try to implant themselves more and more in Colombia, as this editorial suggests they should.

The problem is that much of Colombia's economic dynamism is thanks to its diversified, production-heavy economy of small businesses. This would be altered if more multinationals came here. In the past Colombia has been dependent on export markets, and there are still many voices in the country that want to promote that model of growth. But I believe that much of our recent growth and the best potential for future growth lies in local businesses' supplying our own local markets. We are a country with a large middle class that has a growing appetite for consumer goods. Bogota is a market of 8 million consumers, while Medellin, Cali, Barranquilla, and Cartagena add another 8 million or so. I believe that the most sensible economic model is for Colombian businesses to provide goods for those consumers, as opposed to exporting to far-flung countries or importing to sell foreign stuff to Colombians.

If multinational corporations come to dominate more of our economy, we will lose our dynamism, and increasingly resemble the uglier aspects of the US economy--domination by large companies, loss of production and manufacturing, increasing dependence on global markets to absorb our production and provide for our consumption, endless subcontracting, and business models based on superfluous products and services of doubtful utility.

So let's hope that our designation as a CIVETS country doesn't lead to the destruction of the very bases of our economic success.