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Chile Has Most Competitive IT Industry in Latin America

Chile Has Most Competitive IT Industry in Latin America

 

In regional ranking, Mexico and Peru receive mixed reviews

By Dan Berthiaume

Chile is the overall top performer among Latin American countries on the Business Software Alliance (BSA) 2011 IT Industry Competitiveness Index, even though it fell back from 27th place in 2009 to 32nd place among 66 countries ranked this year. Despite this middling rating, Chile actually ranks number one worldwide in terms of government technology neutrality, thanks to its avoidance of what BSA terms “picking winners” among industry players or technologies.

Other areas where Chile receives strong rankings include business environment relating to IT sector, where it places sixth due to factors such as openness to foreign investment and private property protection; and support for IT industry development, where it rises three spots to 13th in this year’s ranking.

However, Chile ranks near the bottom (52nd) in R&D environment, falling 21 spots from 2009 due to a significant falloff in IT patent filing activity, and has middling ranks in legal environment (28th), and human capital and IT infrastructure (35th in each).

Mexico Shows Growth

Although Mexico was only ranked 44th this year, placing it on the cusp of the bottom third of countries tracked for their IT competitiveness, it rose four spots from its 2009 score, thanks to improvements in all but one category of indicators. Most significantly, Mexico’s R&D environment rose 15 spots to 41st place this year as a result of a significant boost in IT patent filings. According to the World Intellectual Property Organization, IT-related patent applications were 7% of total applications from country sources in the most recent data available.

In addition, Mexico’s legal environment rose five spots to 36th place, aided by the passage of a 2010 data protection law and general efforts to fight cybercrime. Although it only improved by two places in the rankings, Mexico received its highest score in support for IT industry development (31st). IT firms established in Mexico are able to get cash grants of up to 50% of the total cost of their project and tax credits of up to 30% of the R&D expense, although tighter controls on government IT spending have led to a drop in public procurement of IT.

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Mexico ranked most poorly in IT infrastructure (48th, down one place from 2009) and human capital (47th). Single-digit broadband penetration and low rates of mobile and PC adoption damage Mexico’s infrastructure rating, while relatively low levels of science and engineering majors are somewhat offset by Mexico’s 300,000-person IT workforce, which is the largest in Latin America and earns it a top five global ranking for Nearshore/offshore services by Gartner.

Low enrollment in higher education earned Peru a 62nd place ranking in human capital, last in Latin America and among the worst globally

Peruvian Business Environment Improves

Although Peru’s overall ranking remained a disappointing 55th in 2011, the same as in 2009, one bright spot identified by BSA is business environment, which climbed three spots to 49th place this year. Peru is given credit for improving institutional protections of private property and decreasing the regulations surrounding starting a new business, with the World Bank saying the time needed to start a business shrank from 41 days in 2009 to 27 days in 2010.

With low levels of broadband adoption and PC ownership, Peru ranked 54th in IT infrastructure, although mobile penetration has reached 80%. Low enrollment in higher education earned Peru a 62nd place ranking in human capital, last in Latin America and among the worst globally. Peru also fared poorly in R&D environment (60th), legal environment (51st) and support for IT industry development (53rd).

 

About Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.
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