This week’s snapshot looks at Latin America’s rankings in the recently released Global Competitiveness Index, produced by the World Economic Forum (WEF). The rankings are a combination of scores on multiple factors, including institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.
For this snapshot we focus on the Latin American countries’ standings and changes from last year. A positive move in the rankings indicates an increase in the country’s international competitiveness and attractiveness to foreign investors, while a negative move indicates a decrease. We have separated the region into two graphs, South America and Central America & the Caribbean, for ease of seeing changes in each country’s rankings.
There are two major observations. The first regards Central America. The graph shows a divide in the business climate between the Northern Triangle countries of Honduras, Guatemala El ,Salvador, and Nicaragua, and the southern countries of Costa Rica and Panama. This is not surprising. The northern countries make headlines for their gruesome murder rates, gang wars, migrants fleeing the region as well as protests over the corruption of the political and economic elite. Costa Rica and Panama make news for tourism and business news, such as the expansion of the Canal or ecotourism, both countries have gone out of their way to provide a hospitable climate for investment.
The second major observation is the comparative placement of the countries from across the political spectrum of Latin America. Those countries of the ALBA alliance and its sympathizers all do worse in the rankings than more centrist, pro-market countries, whether of the left or the right. ALBA countries are all ranked comparatively lower than the rest of the region. For example, on the WEF global ranking of 140 countries, Venezuela ranks 132nd , Ecuador 76th (though it’s not included because of lack of data for 2014-2015–itself a problem), Bolivia at 117th, Nicaragua 108th, and Argentina at a still lowly 106th. Compare those with the performance of Colombia at 61st (rising 5 places from last year) Mexico at 57th, Peru at 69th, Costa Rica at 52nd and Chile, the highest regional performer, at 35th.
Brazil’s fall in the rankings is the most dramatic change in the graphs, from 57th to 75th place. The country has been convulsed by protests, corruption scandals, a possible attempt to impeach President Rousseff, a plunging currency and negative economic growth. It remains to be seen if the government’s about-face in economic and fiscal policies can save the economy (and her presidency), or if it will continue to tumble. In the meantime, if the WEF numbers are to be believed, the country faces severe problems in re-attracting the investment and confidence that could pull it out of its hole.
WEF Competitiveness Rankings: 2014-2016
Central America rankings
South America rankings