Unlike many of its neighboring countries, Colombia has not suffered any dramatic economic collapses. The Uribe administration seeks to maintain prudent fiscal policies, and has pursued tough economic reforms including tax, pension and budget reforms. A recent U.S. Agency for International Development (USAID) study shows that Colombian tax rates (both personal and corporate) are among the highest in Latin America. The unemployment rate for November 2005 was 10.2%, down from nearly twice that in 2002.

The sustained growth of the Colombian economy can be attributed to an increase in domestic security, the policies of keeping inflation low and maintaining a stable currency (the Colombian peso), petroleum price increases, and an increase in exports to neighboring countries and the United States as a result of trade liberalization. The Andean Trade Preference and Drug Eradication Act (ATPDEA), which will expire in December 31, 2006, also plays a pivotal role in Colombiaís economic growth. The closure in February 2006 of a Free Trade Agreement portends further opportunity for growth, once it is ratified and implemented.

Colombia's diverse climate and topography permit the cultivation of a wide variety of crops. In addition, all regions yield forest products, ranging from tropical hardwoods in the lowlands to pine and eucalyptus in the colder areas. Cacao, sugarcane, coconuts, bananas, plantains, rice, cotton, tobacco, cassava, and most of the nation's beef cattle are produced in the hot regions from sea level to 1,000 meters elevation. The temperate regions--between 1,000 and 2,000 meters--are better suited for coffee, flowers, corn and other vegetables, and fruits such as citrus, pears, pineapples, and tomatoes. The cooler elevations--between 2,000 and 3,000 meters--produce wheat, barley, potatoes, cold-climate vegetables, flowers, dairy cattle, and poultry.

Mining, manufacturing industries and oil continue to attract the greatest U.S. investment. U.S. investment accounted for 16% of the total $2.6 billion in foreign direct investment in Colombia at the end of 2004. Colombia has improved protection of intellectual property rights through the adoption of three Andean Pact decisions in 1993 and 1994 as well as an internal decree allowing fro data protection, but the United States remains concerned over deficiencies in licensing and copyright protection.

The Pastrana and the Uribe administrations have significantly liberalized Colombiaís petroleum sector, leading to an increase in exploration and production contracts from both large and small hydrocarbon industries. In 2002, royalties were linked to the size of the discovery as opposed to a flat rate. In 2003, a new oil policy created the National Agency for Hydrocarbons (ANH), which as of 2004 administers all exploration and production contracts, replacing Ecopetrol, the state owned hydrocarbon company. Ecopetrol must now compete alongside other hydrocarbon companies for exploration and production contracts, separating state roles as investor and resource administrator. State association contracts have dropped from 30% to 0%, allowing private companies 100% ownership upon exploration success.

The country's oil industry has continuously been a target of extortion and bombing campaigns by the ELN and the FARC; however, strong security policies and an offensive military posture have reduced attacks on pipelines. According to the National Agency for Hydrocarbons attacks on infrastructure in general decreased by 52% between January and August 2005, signaling a significant improvement in security and attack-prevention methods. According to Ecopetrol, as of August 2005 total oil reserves amounted to 1.4 billion barrels. Oil production amounted to 525 million barrels per day, and petroleum exports were 218 million barrels per day. The countryís efforts in exploration during 2004 produced 32 million barrels of new reserves. Twenty-one new exploratory wells, 6,767 kilometers of seismic exploration, and a lower drop in production--from 528 million barrels per day in 2004 to 525 million barrels per day as of August 2005--have improved output. According to this new outlook, Colombia will become a net oil importer one or two years later that originally thought (by 2010/11). Between January and September 2005, a total 21 new exploration and production agreements have been signed and 16 technical evaluation contracts between private investors and the Colombian ANH. Thirty-one exploration and production agreements were signed in 2004, representing $350 million in oil investments.

Colombia is the largest producer of coal in Latin America, and also mines gold, silver, and ferronickel. Coal production increased 7% from 2003 to 2004, from 50 million to 53.5 million tons. Gold production was 20.7 tons in 2002, then up to 46.5 tons in 2003, and down to 37.6 tons in 2004. Gold exports increased from $94.4 million in 2002 to $585.2 million in 2003, falling to $556 million in 2004. Silver production increased 36% from 6,986 kg in 2002 to 9,511 kg in 2003, dropping to 8,189 kg in 2004. Exports of silver increased from approximately $377,700 in 2002 to $678,400 in 2003, dropping to $550,300 in 2004. Colombiaís total ferronickel exports increased from $414.7 million in 2003 to $626.1 million in 2004. Its ferronickel production grew from, 47,868 tons in 2003, to 48,818 tons in 2004, because of increased capacity and strong nickel demand.

Emerald production climbed from 8.96 million carats in 2003 to 9.82 million carats in 2004. The value of emerald exports decreased from $77.9 million in 2003 to $72.7 million in 2004 because of declining world prices.