Medellín’s Miraculous Transformation

By June 26, 2017

In the last decade, no country in Latin America, or perhaps the world, has posted a more dramatic recovery than the Andean nation of Colombia. In two short decades, the country has transformed itself from a failed narco state to a beacon of hope in Latin America, with a GDP that outpaced its neighbors and a burgeoning entrepreneurial business community.

Nowhere is the transformation more visible than Colombia’s second largest city, Medellín.

In 1991, Medellín was the murder capital of the world with 381 murders per 100,000 residents. To put that into perspective, the current murder capital of the world, Caracas, Venezuela, had 120 murders per 100,000 residents in 2016. Last year, Medellín’s murder rate was 30 murders per 100,000 residents – less than 10% of the 1991 high.

Ex-president Álvaro Uribe, elected in 2002, launched an aggressive campaign to eliminate violence and crime from the city and took the fight directly to criminal groups. The initiative, called Operation Colombia and supported with funding from the United States, was enormously successful.

Once the city was safe, investment flooded in and the economy began to boom. The city’s GDP per capita has grown more than 4% each year during the first decade of this century, and has exceeded 5% every year since 2011. In 2013, Medellín was named the world’s most innovative city by the Wall Street Journal, and in 2014 it was named the “highest performing Latin American metro area” by the Brookings Institution.

The city’s rise is nothing short of a miracle, and in fact has been dubbed the “Medellín Miracle” by various news outlets. And the story is not over, as the city continues to innovate and demonstrate that it is a model for other city’s in Latin America that have been caught in a cycle of poverty and stagnation, often due to socialist regimes that create policies which levy high taxes on investment and small businesses, or in the case of Venezuela, seize the businesses outright.

Medellín, on the other hand, has instituted programs to encourage entrepreneurship and investment in the city. Ruta-N, a joint venture between the mayor’s office, telecom giant UNE and EPM, has created an ecosystem where entrepreneurs can create innovative businesses and receive a landing space and discounted rent and services in order to bootstrap their businesses. Ruta-N Capital, a division of Ruta-N, provides grants and loans to small businesses and accompanies them through their growth phase.

The city, nicknamed the City of Eternal Spring, has yearlong high temperatures of about 82F (25 C) and a very low cost of living, thus appealing to American and European ex-pats, many of whom arrive in the city with the explicit intention of creating a new business. Their new businesses inject more money into the economy, and create more employment. It is a win for all involved.

Within Colombia, Medellín has outshined its rival, Bogotá, with a more efficient transportation system and the ability to legislate, create and implement projects quickly. Unlike Bogotá, which has leftist roots and recently elected a communist, ex M-19 terrorist as mayor, Medellín is generally more fiscally conservative and more friendly toward investment.

There are, of course, risks. The national government has recently signed a peace treaty with FARC terrorists, a treaty that was overwhelmingly rejected in Antioquia in a referendum. The treaty has an enormous cost, and in granting amnesty to terrorists, runs the risk that they will simply take their trade into the underworld and focus upon criminal activity.

There is also a risk with the upcoming 2018 election, one in which leftist Gustavo Petro, the former M-19 terrorist, is considered one of the favorites to win the presidency. A win by extreme leftists in the election would risk reversing all the progress that Medellín has made over the past two decades.

Overall, though, Medellín’s remains Latin America’s brightest star. Only time will tell if the star brightens further, or falls prey to leftists, including FARC terrorists who are now permitted to participate in the political process. If Gustavo Petro, Piedad Córdoba or a FARC supported candidate win Colombia’s presidency in 2018, all bets are off.

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