Colombia was one of the three countries that emerged after the dissolution of Gran Colombia in 1830 (the others are Ecuador and Venezuela). A decades-long conflict between government forces and antigovernment insurgent groups, principally the Revolutionary Armed Forces of Colombia (FARC) heavily funded by the drug trade, escalated during the 1990s. More than 31,000 former paramilitaries demobilized by the end of 2006 and the United Self Defense Forces of Colombia as a formal organization ceased to operate. In the wake of the paramilitary demobilization, organized criminal groups arose, whose members include some former paramilitaries. After four years of formal peace negotiations, the Colombian Government signed a revised final peace accord with the FARC in November 2016, which was subsequently ratified by the Colombian Congress. The accord calls for members of the FARC to demobilize, disarm, and reincorporate into society and politics, and it creates an alternative system for transitional justice that includes a “Special Jurisdiction for Peace” to address accountability for conflict-related crimes and established truth-telling mechanisms. The Colombian Government has stepped up efforts to reassert government control throughout the country, and now has a presence in every one of its administrative departments. Despite decades of internal conflict and drug related security challenges, Colombia maintains relatively strong democratic institutions characterized by peaceful, transparent elections and the protection of civil liberties.
Colombia’s economy benefits from free trade and sound fiscal policies but it has slowed in 2016 because of falling global oil prices, a strong dollar, and moderate inflation. Colombia heavily depends on energy and mining exports, making it vulnerable to a drop in commodity prices. Colombia is the world's fourth largest coal exporter, the world’s second largest coffee and cut flowers exporter, and Latin America’s fourth largest oil producer. Economic development is hampered by inadequate infrastructure, poverty, narcotrafficking, and an uncertain security situation.Although real GDP growth averaged 4.7% for the past decade, growth fell to 2.0% in 2016. The El Nino weather pattern in early 2016 and a 40-day truckers strike caused food and energy prices to rise, with inflation spiking to a high of nearly 9% in July 2016. Declining oil prices have reduced government revenues. Colombia received about $1 billion in oil revenue in 2016, compared with $6 billion in 2014; oil accounts for 20% of government revenues. President Juan Manuel SANTOS signed into law a tax reform bill in December 2016 aimed at offsetting lost revenue from the drop in oil prices by decreasing corporate taxes to incentivize investment and by increasing the value added tax. The enactment of the tax reform bill was key to maintaining Colombia’s BBB investment-grade credit rating. Foreign investment has been hampered by Colombia’s struggle to address its fiscal problems. As of September 2016, FDI in Colombia had risen to $10.2 billion, up from $9.3 billion over the same period in 2015.Colombia has signed or is negotiating Free Trade Agreements (FTA) with more than a dozen countries; the US-Colombia FTA went into force in May 2012. The US and Colombia have benefitted from the FTA, but Colombia’s ability to take full advantage of its enhanced access to American markets continues to be constrained by lack of export diversification. Non-tariff measures remain a point of contention for bilateral trade relations. The Colombian government acted in 2016 to address several bilateral trade irritants with the US, including truck scrappage, distilled spirits, pharmaceuticals, ethanol imports, and labor rights. US and industry stakeholders are still evaluating the implementation of recent reforms. Colombia is a founding member of the Pacific Alliance - a regional trade block formed in 2012 by Chile, Colombia, Mexico, and Peru to promote regional trade and economic integration. In 2013, Colombia began its accession process to the Organization for Economic Cooperation and Development.