Latin America needs to improve competitiveness

Latin America has had a poor performance in competitiveness, according to a Swiss institution. Colombia has been an exceptional case.

Latin America has maintained a performance below expectations, according to the annual ranking of the World Center for Competitiveness, belonging to the IMD business school.

Chile fell several positions in the ranking that makes the Swiss institution, while the analysts point out problems in Argentina, Brazil, and Mexico.

The capacity to carry out reforms to improve competitiveness has been one of the problems of the region, according to the economist Arturo Bris in his analysis of the global ranking, who declared for Efe:

“The problem in Latin America, in general, is that they are very reformist on paper, but then it is complicated to carry out the reforms.”

Arturo Bris, about last year results.

Chile, the best Latin American country in terms of competitiveness

In recent years, Chile has been the Latin American country that has obtained the best results in terms of competitiveness. However, in the global ranking, Chile dropped seven positions and is now in 42nd place. Bris explains this fall by the expectations that the state had created with the change of government:

“In the perspective of competitiveness, there is the new government factor that always benefits the countries. Chile and Argentina experienced an improvement due to the effect (Chilean President Sebastián) Piñera or (Argentine President Mauricio) Macri, and in the case of Chile that effect is no longer there. “

Argentina is almost to the bottom of the ranking, in place 61 of 63. This year the country lost five positions because of the disappointment of the Macri government, according to Bris.

“Now that the elections are over, we see that President Macri has not done much or not as much as expected.”

Bris considers Brazil “a lost cause”, for not making the necessary reforms to improve competitiveness.

“Now, Brazil is merely trying to stay afloat. It needs a massive reform of education, of infrastructures, as well as improvements of the public sector that reduce corruption and for all this, a new government is not enough, much more is needed, “Bris continued.

Mexico climbed one place in the ranking, and now it is in the 50th position. For Bris, the problem facing the country is the short-term policies.

Colombia, an exceptional case

Unlike the rest of the region, Colombia showed a notable improvement in the ranking, going from place 58 to 52. Among the factors that have helped this progress are the improvement of the macroeconomic situation, the increase in investments, and better regulation.

“The improvements are visible in many indicators, such as tax evasion, government transparency, the stability of the exchange rate, government’s adaptability to economic conditions, legislation against unemployment.”

Colombia expects to grow above the Latin American average this year. The government predicts a growth of 3.6%, while the Center for Economic and Social Research (Fedesarrollo) places the figure at 3.3%, both numbers above the 1.4% growth estimated for the region by the International Monetary Fund in 2019.

Luis Fernando Mejía, director of Fedesarrollo, comments that Colombia “continues to be seen as a solid economy, with a stable fiscal macroeconomic framework that allows it to be attractive, facing problems in the neighborhood that are quite serious.”

Colombia has also become an attractive place as a destination for outsourcing and investment. The Illuminates Awards recognized Medellin as the best destination for Nearshoring in 2019; the country grows in technology sector, and Colombian companies such as Rappi have received massive investments.

Singapore, a leader in competitiveness

Singapore overtook the United States in competitiveness this year, thanks to its technological infrastructure, the preparation of its workforce and laws that favor migration, while the United States has fallen to third place as a result of the discouragement of Donald’s policies Trump, according to IMD.

The case of Singapore should serve as an example for Latin America to increase its investment not only in technological infrastructure but also in education. Currently, there are projects in the region with this in mind, such as the creation of a tech hub in Jalisco or reforms in Argentina to promote innovation. However, it is clear that Latin America needs to redouble efforts.