Central America’s performance spanned the index rankings of the 2017-2018 World Economic Forum’s (WEF) Global Competitiveness Report, published on September 24. The region did not fare well in the annual study that uses statistics and expert surveys to determine and compare a country’s economic competitiveness and received an average ranking of 80 out of 137 countries.
The WEF takes into account 12 pillars consisting of 114 economic indicators in order to score a nation’s overall competitiveness. These include statistics on institutions, infrastructure, labor market efficiency, macroeconomic environment, education, and health. It also considers opinion surveys of business executives regarding the most problematic factors facing businesses in each country. The responses ranged from inflation to poor public health and tax regulations.
Costa Rica led the way at forty-seventh with the highest-ranking economy in Central America and the second-highest ranking economy in Latin America as a whole. In Latin America, Chile’s growing economy landed it in the thirty-third position for the second consecutive year. The report highlighted Costa Rica’s performance in the areas of health and primary education, business sophistication, and innovation. It’s the first time that Costa Rica was included among the top 50 competitive economies.
Panama, despite maintaining a relatively high position at 50, dropped eight places in comparison to last year’s report. The survey responses indicate that the country’s main business challenges include inefficient government bureaucracy, corruption, and inadequate preparation of its labor force.
El Salvador did poorly in comparison with a ranking of 109 out 137 that was largely attributed to its high crime, theft, corruption, and bureaucracy. Additionally, the report stated that Salvadoran institutions and innovation initiatives rank among the worst globally.
The region as a whole faces important challenges in improving their global competitiveness. In particular, the report emphasized inefficient government bureaucracies as an impediment to business that every single Central American country in the study currently faces. Ultimately, although future trends remain unclear, the report provides a basis that policymakers can utilize to start addressing these pressing issues.