Chile remains the most competitive Latin American country in the World Economic Forum’s Global Competitiveness Report for 2014, while recession-hit Brazil has overtaken Mexico.
The most improved country is Costa Rica, which has climbed three positions in the past year thanks to a very stable profile and strong institutions. Colombia also climbed three positions, largely due to an increase in its level of technological adoption and the development of its infrastructure. However, the WEF has repeatedly warned Colombia against depending on mineral resources to boost its economy.
Corruption is the biggest negative for Brazil, but its score still score increased slightly – from 4.33 to 4.34 points – while Mexico’s score fell from 4.34 to 4.27 points.
Chile was praised for its strong institutional set-up and low levels of corruption, although the WEF suggested that it should diversify its economy and move towards more knowledge-based activities, due to decreasing demand for minerals in global market.
“Flaws in the country’s education system, especially in mathematics and science, mean the workforce generally lacks the skills required for innovation and this, together with low levels of investment in innovation, could jeopardize Chile’s transition towards a knowledge-based economy,” the report warns.
Panama follows closely behind Chile, but the WEF has expressed concern over Panama’s ability to fight corruption. There are also concerns about a shortage of skills, which threatens to undermine Panama’s transition towards more knowledge-intensive activities.
Costa Rica, the report says, has one of the best education systems in the region, a fairly high ICT uptake and a reasonably well-developed capacity to innovate, making it well-placed to move towards knowledge-based activities. “However, some persistent weaknesses are holding back its overall competitiveness. These include poor transport infrastructure, difficulties accessing finance, concerns about its macroeconomic performance and high budget deficit,” the report noted.
The Caribbean country of Barbados has slipped eight places down the global rankings, as it continues to suffer the consequences of the global financial crisis. The credit crunch is severely hindering the capacity of local businesses to finance their activities or develop innovative projects.
Barbados has one of the highest public deficits in the world, one of the lowest savings rates and high public debt. But the report notes that the country has a fairly skilled labor force thanks to a high-quality education system and high enrolement rates in secondary and tertiary education.
When it comes to Mexico, the WEF says, recent economic reforms will have a positive impact in the years to come. The biggest concern is Mexico’s education system, which the report warns “does not seem to deliver the skills that its changing economy requires.”
Although Peru has recently benefited from strong growth thanks to the rise in the price of minerals, the country should build its resilience by addressing its most long-lasting challenges, says the report. Poor quality education and a lack of interest in adopting technology are holding up Peru’s growth.
Finally, the report has praised Uruguay’s interest in embracing technology, but cited “restrictive labour regulations’’ as the biggest obstacle to doing business.