From uncertainty to assurance: A retrospective analysisof Colombia’s path to emerging market status

Abstract

Objective: The objective of this article is to present an in-depth exploration of a transition into an emerging market, a phenomenon that is increasingly relevant in international business scholarship. We scrutinised the transformation of Colombia’s status in the global economic landscape, particularly focusing on the pivotal role of foreign direct investment (FDI) and the interplay of various economic, political, and social factors that have influenced this journey. The study uniquely positions Colombia within the broader context of emerging markets, comparing similar transitions in other countries and analysing how global economic trends, such as commodity price fluctuations and financial crises, have shaped its trajectory.

Research Design & Methods: Utilising a qualitative research approach, we delved into a comprehensive literature review, expert interviews, and analysis of historical and mass media data to provide a nuanced understanding of the evolution of FDI in Colombia.

Findings: The findings revealed a complex and multifaceted narrative, highlighting Colombia’s initial challenges and subsequent strides towards becoming an attractive destination for international investors. We discussed the correlation between FDI, exports, and GDP growth, offering insights into the country’s economic development and positioning within the global economy. Thus, the study contributes to the field of emerging markets by analysing a nation’s transformation towards becoming an attractive destination for investment considering different internal and external factors.

Implications & Recommendations: This article contributes to the international entrepreneurship literature by providing a detailed case study of Colombia’s transformation, underscoring the importance of a holistic approach to understanding the process of becoming an emerging market.

Contribution & Value Added: It offers valuable perspectives for policymakers, investors, and scholars interested in the dynamics of emerging economies and their integration into the global economic system.

Keywords

multilatinas, M&As, emerging markets, VUCA, Colombia

Author Biography

Maria Alejandra Gonzalez-Perez

PhD in Commerce, National University of Ireland, Galway; Full Professor of Management at Universidad EAFIT (Colombia). Her research interests include internationalization of emerging market firms, multilatinas, corporate social responsibility (CSR) and sustainability.

Juan Velez-Ocampo

PhD in Management, Universidad EAFIT, Colombia. Associate Professor and Doctoral Program Director - Universidad de Antioquia (Colombia). His research interests include reputation, sustainability, digital transformation, and internationalization of emerging markets firms.

Ana-Maria Gomez-Trujillo

PhD in Management, Universidad EAFIT, Colombia. Full Professor of international business at CEIPA powered by Arizona State University. Her research interests include internationalization of emerging markets firms, sustainability, and corporate social responsibility (CSR).

References

1. Appiah, M., Li, F., Frowne, D.I., & Donkor, D.T. (2019). Foreign investment and growth: A case of selected African economies. International Entrepreneurship Review, 5(3), 7. https://doi.org/10.15678/IER.2019.0503.01
2. Banco de la República (2023). Inversión extranjera directa en Colombia. Retrieved from https://www.banrep.gov.co/es/estadisticas/inversion-directa on April 10, 2024.
3. Brenes, E.R., Camacho, A.R., Ciravegna, L., & Pichardo, C.A. (2016). Strategy and innovation in emerging economies after the end of the commodity boom—Insights from Latin America. Journal of Business Research, 69(10), 4363-4367. https://doi.org/10.1016/j.jbusres.2016.03.059
4. Buckley, P.J. (2011). The theory of international business pre-Hymer. Journal of World Business, 46(1), 61-73. https://doi.org/10.1016/j.jwb.2010.05.018
5. Cavusgil, S. T. (2021). Advancing knowledge on emerging markets: Past and future research in perspective. International Business Review, 30(2), 101796. https://doi.org/10.1016/j.ibusrev.2021.101796
6. Cieślik, A., & Tran, G. (2019). Determinants of outward FDI from emerging economies. Equilibrium. Quarterly Journal of Economics and Economic Policy, 2, 209-231. https://doi.org/10.24136/eq.2019.010
7. Eisenhardt, K.M. (1989). Building Theories from Case Study Research Published by: Academy of Management Stable. Academy of Management Review, 14(4), 532-550. https://doi.org/10.2307/258557
8. Forbes (2023). La inversión extranjera en Colombia creció 81,7% en 2022. Retrieved from https://forbes.co/2023/03/01/economia-y-finanzas/la-inversion-extranjera-en-colombia-crecio-817-en-2022 on April 10, 2024.
9. Gammeltoft, P., Pradhan, J.P., & Goldstein, A. (2010). Emerging multinationals: home and host country determinants and outcomes. International Journal of Emerging Markets, 5(3/4), 254-265. https://doi.org/10.1108/17468801011058370
10. Gonzalez-Perez, M.A. (2019). Colombia como mercado emergente acelerado, la nueva propuesta de clasificación de economías emergentes en el mundo. Dinero. Retrieved from https://www.semana.com/opinion/columnistas/articulo/colombia-como-mercado-emergente-acelerado-la-nueva-propuesta-de-clasificacion-de-economias-emergentes-en-el-mundo-por-maria-alejandra-gonzalez-perez/277689/ on April 10, 2024.
11. Groh, A., & Wich, M. (2012). Emerging economies’ attraction of foreign direct investment. Emerging Markets Review, 13(2), 210-229. https://doi.org/10.1016/j.ememar.2012.03.005
12. Grosse, R. (2016). How emerging markets firms will become global leaders. International Journal of Emerging Markets, 11(3), 274-287. https://doi.org/10.1108/09564230910978511
13. Hoskisson, R., Eden, L., Lau, C.M., & Wright, M. (2000). Strategy in Emerging Economies. Academy of Management Journal, 43, 249-267. https://doi.org/10.5465/1556394
14. Hernandez, E., & Guillén, M.F. (2018). What’s theoretically novel about emerging-market multinationals?. Journal of International Business Studies, 49(1), 24-33. https://doi.org/10.1057/s41267-017-0131-7
15. International Monetary Fund (2021). Emerging markets must balance overcoming the pandemic, returning to more normal policies, and rebuilding their economies. Retrieved from https://www.imf.org/external/pubs/ft/fandd/2021/06/the-future-of-emerging-markets-duttagupta-and-pazarbasioglu.htm#:~:text=This%20approach%20identifies%20the%20following,and%20the%20United%20Arab%20Emirates on April 10, 2024.
16. Kearney, C. (2012). Emerging markets research: Trends, issues and future directions. Emerging Markets Review, 13(2), 159-183. https://doi.org/10.1016/j.ememar.2012.01.003
17. Lebedev, S., Peng, M., Xie, E., & Stevens, C. (2015). Mergers and acquisitions in and out of emerging economies. Journal of World Business, 50(4), 651-662. https://doi.org/10.1016/j.jwb.2014.09.003
18. Luo, Y., & Zhang, H. (2016). Emerging Market MNEs: Qualitative Review and Theoretical Directions. Journal of International Management, 22(4), 333-350. https://doi.org/10.1016/j.intman.2016.05.001
19. MásColombia (2021). Nueve empresas que ya no son colombianas. Retrieved from https://mascolombia.com/nueve-empresas-que-ya-no-son-colombianas/ on April 10, 2024.
20. Meyer, K. (2004). Perspectives on multinational enterprises in emerging economies. Journal of International Business Studies, 35, 259-276. https://doi.org/10.1057/palgrave.jibs.8400084
21. Meyer, K., & Estrin, S. (2001). Brownfield Entry in Emerging Markets. Journal of International Business Studies, 32, 575-584. https://doi.org/10.1057/palgrave.jibs.8490985
22. Mody, A. (2004). What is an emerging market? Working Paper No. WP/04/177, IMF.
23. Morris, S., Aguilera, R.V., Fisher, G., & Thatcher, S. (2023). Theorising from Emerging Markets: Challenges, Opportunities, and Publishing Advice. Academy of Management Review, 48, 1-10. https://doi.org/10.5465/amr.2022.0527
24. MSCI Investor Insight. 2012. Emerging vs. developed markets classification: Why it matters to investors. MSCI Index Research. Retrieved from https://www.msci.com/documents/10199/7424d920-cdcb-462c-9e16-4c450ed70e2a on April 10, 2024.
25. Sinkovics, R.R., Penz, E., & Ghauri, P.N. (2008). Enhancing the trustworthiness of qualitative research in international business. Management International Review, 48(6), 689-714. https://doi.org/10.1007/s11575-008-0103-z
26. Thomas, D.E., & Grosse, R. (2001). Country-of-origin determinants of foreign direct investment in an emerging market: The case of Mexico. Journal of International Management, 7(1), 59-79. https://doi.org/10.1016/S1075-4253(00)00040-5
27. UNCTAD (2023a). Classifications. Retrieved from https://unctadstat.unctad.org/EN/Classifications.html#:~:text=The%20developing%20economies%20broadly%20comprise,%2C%20Australia%2C%20and%20New%20Zealand on April 10, 2024.
28. UNCTAD (2023b). World Investment Report. Retrieved from https://unctad.org/system/files/official-document/wir2023_en.pdf on April 10, 2024.
29. Wang, C., Hong, J., Kafouros, M., & Wright, M. (2012). Exploring the role of government involvement in outward FDI from emerging economies. Journal of International Business Studies, 43, 655-676. https://doi.org/10.1057/jibs.2012.18
30. Welch, K., & Piekkari, R. (2017). How should we (not) judge the ‘quality’ of qualitative research? A re-assessment of current evaluative criteria in International Business. Journal of World Business, 52(5), 714-725. https://doi.org/10.1016/j.jwb.2017.05.007
31. Witek-Hajduk, M.K., & Grudecka, A. (2021). Brand types applied by emerging markets' firms: Country of brand origin and brand use motives. Entrepreneurial Business and Economics Review, 9(1), 155-168. https://doi.org/10.15678/EBER.2021.090110
32. World Bank (2023). World Bank country and Lending Groups. Retrieved from https://datahelpdesk.worldbank.org/knowledgebase/articles/906519 on April 10, 2024.
33. World Trade Organization (2023). Who are the developing countries in the WTO? Retrieved from: https://www.wto.org/english/tratop_e/devel_e/d1who_e.htm on April 10, 2024.
34. Xie, E., Reddy, K.S., & Liang, J. (2017). Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions. Journal of World Business, 52(2), 127-183. https://doi.org/10.1016/j.jwb.2016.12.005