CITY OF PLENTY

Colombia 2014 | ECONOMY | FOCUS: MEDELLÍN

When contemplating investment in, or relocation of a business to a city other than the capital, what it comes down to is having the infrastructure of a dynamic economy, and the human talent to operate it. Enter Medellín.

First settled in by the Spanish in the early 16th century, and in 2012 dubbed "The most innovative city in the world" by the Wall Street Journal, Medellín, Colombia's second city is also its industrial capital. It lies in the Antioquia Department, which according to official 2011 data had a population of 6.1 million— Medellín alone is home to 2.4 million.

The business community has a history of active participation in Medellín's development, notably in the early 20th century when the 1913 Plan Futuro set out contemporary infrastructure projects, as well as establishing a public utilities company and fostering industrial investment. Three decades later in a prototypic a public-private-participation (PPP) project, local officials and industrial leaders drew up the Medellín master plan to prepare the city for urban expansion. The subsequent dilemma, widely observed in emerging markets, was that urban success spawned mass migration from the countryside, and the endemic problems of unemployment, stretched infrastructure and crime. Added to that were the devastating consequences of the narcotics industry and half-century conflict that the Santos administration is so keen to relegate to the pages of history. “By the late 1980s and early 1990s, Medellín was a blighted city with a homicide rate of 380 per 100,000 in 1991, perhaps a world record," according to Americas Quarterly. The challenge for the authorities was well and truly on.

Today's Medellín is an exercise in developing one that works in terms of transportation, accommodation, and recreation. Judging by the metrics and sheer number of major companies headquartered there, it has succeeded. “In the past." Mayor Aníbal Gaviria told TBY, “…Medellín was known internationally as the most dangerous city in the world. We have changed that." “Medellín", he added, “…represents a strong example of how to invest in education to create future opportunities for the youth, as well as a sense of urban equality through investment in infrastructure." And while still in double-figures the 11% unemployment rate is notably the lowest of the past 20 years.

BUSINESS

Today, as Invest in Colombia puts it, “Medellín has become an advanced epicenter for commerce, industry, and technology." By 2010 Antioquia's contribution to GDP had reached around $41 billion with a GDP per capita print of $6,740.10. Among resident industries, services, which account for over 50% of Colombia's GDP, are prominent. These include service business process outsourcing (BPO), information technology outsourcing (ITO), and knowledge process outsourcing (KPO), as well as software and IT services.

A vital function of any functioning city, and underpinning fluid commerce is transportation, not just of goods, but also of people. Medellín's urban metro system provides comfortable commuting with social inclusion by linking formerly remote and underdeveloped areas. Its unique MetroCable aerial cable car transport system—a project of erstwhile Mayor Luis Pérez Gutiérrez—connects commercial and industrial Medellín to hillside neighborhoods, the poverty of which was formerly compounded by isolation. The project, far more than providing commanding views, has markedly cut the time and cost of commuting, opening job opportunities to more people and stimulating the local economy in the process.

Meanwhile, Medellín's two airports, the José María Córdova International Airport in neighboring municipality of Rionegro, and Olaya Herrera Airport for regional and domestic flights, keep the wheels of commerce well lubricated.

Municipal measures, too, conducive to attracting investment have been in evidence. With recourse to a neologism that crystalizes the city's enterprising spirit, the Mayor talks of setting up “…the Medellínnovation District, a kind of Silicon Valley that will develop solutions for health, energy, and ICT. Companies establishing operations in this district will enjoy tax incentives and will be able to benefit from an innovative, creative, and knowledge-focused environment." Small wonder then that one fifth of Colombia's key businesses have opted for Medellín over Bogotá.

The city's science and technology district epitomizes the Colombian central government's ambition of transforming Medellín into the 'innovation capital of Latin America' by 2021. To realize this it has underlined six business clusters to showcase within the city—energy, construction, fashion, tourism, health care, and ICT. The epicenter of efforts toward attracting innovative companies and investors to the ICT community is the Ruta N complex, home to Hewlett Packard's global service center. The headquarters of Ruta N itself is a model of green architecture that recycles all water.

URBAN LIVING

Employment aside a city's value to its residents rests on the quality of life it offers in terms of available homes, the built environment, and social spaces. Urban planning combines new construction with the shoring-up and in some cases legalization of existing real estate. The local administration, “…has aimed to provide over 100,400 units through a project that incorporates new housing units, and regularization of existing housing units. In this context, Medellín has capitalized on the National Government investment in the social interest housing project; 10% of the 100,000 housing projects that form part of the National Government's plans were built in Medellín," the Mayor continued.

What's more, inhabitants are being treated to greater green spaces in what until recently were exhausted stretches of the Medellín River. These will see the landscaping of natural parks that, combined, will run for around 18 kilometers, again through PPP projects.

HEALTHY BODY, HEALTHY MIND

City officials have taken on a comprehensive program of education and healthcare provision to ensure the sustainable development of Medellín's population from birth, through to higher education and the world of work. “Our administration," Mayor Gaviria explained, “…created the first public health promoting entity (EPS) in Colombia's health system, and today it has over 1.7 million affiliated people. The related investment entails the construction of five new health centers and four hospitals.

According to Gaviria, in the educational arena, “Our biggest challenge is to build bridges between secondary education and technical and higher education. We have plans to build two new university campuses, each one with a capacity of 10,000 students." Importantly, inclusiveness is a core consideration, with approximately 35,000 students today enjoying scholarships at Medellín's academic institutions.

Medellín's 387 km2 are home to industries that will sustain its economy for the foreseeable future, and crisscrossed by transport infrastructure that makes light work of reaching its remoter areas. Meanwhile, ICT is printed large on the welcome mat city officials present to would-be investors.