Trade relations between Colombia and Venezuela are on the rise, with projections indicating that trade could reach between $800 million and $1 billion this year. This optimistic forecast was shared by Colombia’s Trade Minister, German Umana, during a business conference in Caracas. The increase in trade between these neighboring nations began to pick up pace since the end of the previous year. This was largely due to the reopening of the border and the efforts of Colombia’s President Gustavo Petro to renew ties with Venezuelan President Nicolas Maduro.
For our young business and economics students, here’s a bit of context. Trade relations between countries can be influenced by various factors, including political relations, economic policies, and global events. In the case of Colombia and Venezuela, trade had previously reached a value of around $6 billion in 2006 and 2007. However, political tensions and Venezuela’s economic crisis led to a decline in trade.
Recent data from the Colombian National Foreign Trade Association reveals that trade between the two countries from January to July 2023 amounted to about $441 million, marking a growth of over 15% compared to the same period in the previous year. Colombian businesses are keen on forming strategic alliances in specific sectors in Venezuela, such as steel, tourism, and construction.
This situation offers a lesson on the dynamics of international trade and how political and economic decisions can influence trade relations. It’s a real-world example of the interplay between diplomacy, economics, and business strategies.
THINK LIKE AN ECONOMIST!
Q1. Explain one benefit of international trade.
Q2. Explain one drawback of international trade.
Q3. Analyse with the use of a diagram how international trade can both boost and reduce economic growth.
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