Though more and more executives in the United States embrace nearshoring, Latin America still, by some measures, lacks ideal locations to provide services. The recently released 2016 IMD World Competitiveness Center rankings, for example, show that the biggest economies from the region just don’t match up with others across the world.
Only Chile made the Switzerland-based research organization’s top 40 in its ranking of the world’s most economically competitive countries. Of 61 nations analyzed, Chile finished 36th, while Mexico (45th), Colombia (51st) Brazil (56th), Argentina (55th), and Venezuela (61st) all finished in the bottom third. This mirrors the results from last year, further highlighting how these nations are struggling to get out of their current ruts.
“The public sector continues to be a drag on these economies,” said Arturo Bris, director of the IMD World Competitiveness Center. “It’s notable that Chile is the only Latin American economy not in the bottom 20, and that Argentina is alone among the region’s nations in improving its position since last year.”
Bris added that he believes that onerous regulations, poor infrastructure, and ineffective institutions are what hold back the large economies in Latin America. By contrast, those that fared well in the rankings share some similar qualities.
“The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure, and inclusive institutions,” said Bris. “At the present time no Latin American economy comes close to possessing these qualities to anything like the extent required to make significant progress up the ranking.”
As the large economies in the region continue to show meager progress, others in the Caribbean are starting to stand out.
Despite its small size, Trinidad and Tobago outranked larger locations in the Americas in many key areas of the World Economic Forum’s most recent Global Competitiveness Index. It placed 42nd in terms of electricity and telephone infrastructure, above Costa Rica (46th), Chile (50th), Panama (60th), Brazil (69th), Colombia (72nd), Guatemala (73), Ecuador (79th), Argentina (83rd), and Mexico (86th).
Out of 144 countries, it also ranked 24th in the WEF’s legal rights index, 34th in terms of soundness of banks, and 42nd for trustworthiness and confidence in the financial sector.
When analyzing all the giant economies across the world, it is hard for a Caribbean island nation to land on top of the rankings. But there is a lot of evidence that Trinidad and Tobago is a great alternative to some of the bigger countries in the Americas that are struggling to diversify their economies away from commodities.