Case 2: Colombian entrepreneurial ecosystemDespite its deep embroilment for a long time, ina war with guerrilla, paramilitary groups and drug cartels, Colombia has made drastic improvement in its entrepreneurial performance in recent years. According to a BBC World survey, the country was rated among the 24 "most entrepreneur-friendly nations". A high defense spending, family-business dominatedculture, low level of investments in research and development (R & D) have, however, severely constrained the efficiency andproductivity of the Colombian entrepreneurial ecosystem. Moreover, foreigners' perception of the country as “lawless” and “violent” has been difficult to change1. Colombia’s entrepreneurial revolution is a result of a number of diverse, contradictory and conflicting forces. Many paradoxes thus exist in Colombian entrepreneurial ecosystem as well as itsvarious components and processes. Colombian entrepreneurship-related institutions, for instance, are characterized by a recombination of old institutionalelements with the introduction of new elements as it happens inan institutional change2. Indicators related to entrepreneurial performance and impactIndicators related to entrepreneurial performance and impactare mixed.Colombia has become one of the most dynamic economies in Latin America. In 2011, Colombia was represented in Forbes’ Global 2000 list of the world's biggest companies3. The country’s unemployment reduced from 17.3% in 2002 to 12.1% in 20094. During2002-2007, Colombia's average annual economic growth rate exceeded 5% thanks to improved domestic security, greater foreign investment inflows, export growth and sound monetary policy. Colombia is Latin America's No. 4 oil producer as well as fifth biggest coal exporter in the world. It is also a top producer of mild, washed Arabica coffee. It also is a major flower exporter and textile producer5. However, most Colombian companies have not been able to move beyond natural-resource based industries. Commodities make up more than 50% of Colombia's exports, while exports account for about 20% of its GDP6.
A significant informal economy has been a major challenge faced by the Colombian entrepreneurial ecosystem. One estimate suggested that Colombian informal economy employs about 60% of the country’s population7. Moreover, the size of the informal sector is expanding8. Thecountry also performs poorly with respect to poverty reduction. A gini coefficient of 58.5 puts it among economies with the highest income inequalities between the rich and the poor9. Externalities generated by violence, insecurity and the drug entrepreneurship By the early 2000s, about 4% of the country’s population, mostly from rural Areas, was forced to leave homes due to violence10. Likewise, during 2000-2005, about 1 million Colombians migrated to the U.S., Spain, and Costa Rica11.However, institutional framework for entrepreneurship has emerged through the stable coexistence of violence and democracy. Seemingly “normal”