BY JOACHIM BAMRUD
The latest Global Competitiveness Index from the Swiss-based World Economic Forum includes some welcome news from
Nearly all -- 15 of 18 -- nations in the region improved their score. The average score increased by 0.05 to 4.03 points, according to a Latin Business Chronicle analysis.
However, experts warn against complacency. “The recent advances in competitiveness rankings are a thankful reversal of what has been a decade long slide across Latin America,” says John Price, Managing Director of Americas Market Intelligence and co-editor of Can Latin America Compete? "Every country in the region is lower in the global competitiveness rankings today than they were in 2000."
The economic models of many Latin American countries have shifted from one driven by value-added exports and underpriced currencies to one driven by high commodity prices, cheap credit and booming domestic demand, he points out.
“Such a model does little to inspire politicians to take on the next round of tough reforms (political, judicial, educational, and legal) needed to permanently boost competitiveness,” Price warns. “Until that happens, this year’s improving competitiveness rankings will prove to be an aberration, not a trend.”
The Global Competitiveness Index looks at twelve pillars of competitiveness: 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.
GOOD AND BAD
While Latin America in general does well in terms of macroeconomic environment and some countries have well-developed financial markets, the region clearly lags when it comes to having strong institutions, labor efficiency and adequate infrastructure, health and education systems.
Inefficient government bureaucracy is among the top five problematic factors for business in countries like Brazil, Chile, Colombia, Mexico, Peru and Venezuela, according to a survey from the World Economic Forum published in the Global Competitiveness Report 2011-12..
Another key problem is labor regulations. Restrictive labor regulations is among the top five problematic factors in
Then there’s infrastructure. In countries like
That situation has consequences. Latin American exports today pay an unnecessary high cost due to inefficiencies in infrastructure. A study by the Inter-American Development Bank, shows that the region’s exports to the
Meanwhile, the roads linking the ports with cities or airports is still also inadequate in most countries.
Tax regulations were also among the top five problematic factors in countries like
Despite the progress in the latest Global Competitiveness Index,
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