Costa Rica, Panama Rank Top for Competitiveness in Central America

An annual study by ADEN International Business School ranks Chile as the most competitive country in Latin America, while Venezuela is ranked bottom

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July 08, 2022 | 12:55 PM
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Panama City — Panama and Costa Rica are the two most competitive economies in Central America, and are only surpassed by Chile in Latin America, according to the annual Competitiveness Ranking published by ADEN International Business School.

In the Latin America ranking, which analyzes the competitiveness of 18 countries that represent 99% of the regional gross domestic product., Bolivia and Venezuela are positioned bottom.

Irvin A. Halman, president of the National Competitiveness Center of Panama, said that improving competitiveness is fundamental, and public policies should focus on overcoming the effects of the pandemic on the labor market while creating a strategy for structural change based on economic and social sustainability and the recovery of formal and decent employment.

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In addition, he added that dynamic strategies must be established that can adapt quickly to changes and new global trends in order to be innovative, competitive and productive.

Halman also emphasized the importance of the development of education, although he pointed out that although Panama scored well when compared to the rest of the nations in the region, “it is clear that we still have a long way to go”.

Panama ranks slightly below the Latin American average, but has some wider gaps, falling below the score of 10 among the 18 countries analyzed in terms of education, for example.

“These results are not very far from what the World Bank’s Human Capital Index’s most recent measurement [in 2020] indicates, which states that taking into account what children actually learn, the expected years of schooling in Panama are only 6.5 years and not the more than 10 years reported in the measurement,” he said.

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The ranking divides countries into three categories: Acceptable, average and less acceptable:

  • Within the ‘acceptable’ ranking are Chile, with 77.8 points, Costa Rica (74.6), Panama (74.5), Uruguay (70.9) and Mexico (68.9).
  • Ranked as ‘average’ are Brazil, with 66.8 points, Colombia (66.3), Peru (65.4), Paraguay (63.3), Ecuador (61.8), and Argentina 61.1.
  • Ranked as ‘less unacceptable’ are El Salvador (59.8), Dominican Republic (59.7), Honduras (57.4), Guatemala (56.5), Nicaragua (55.8), Bolivia (55.8) and Venezuela (47.9).

For Rubén Castillo Gil, president of Panama’s National Council of Private Enterprise (CoNEP), it is positive that Panama fares well in a study of competitiveness, but he said he believes that there is still much room for improvement in terms of education and institutionalism in the country.

“We have to strengthen our democratic institutions, so that citizens are at the center of all things, and participate in public life with more determination,” he said.

According to the ranking, in the Central American region, Honduras, Guatemala and Nicaragua lag behind in competitiveness, due to comparative insecurity, macroeconomic instability, as well as institutional aspects and infrastructure.

El Salvador, on the other hand, shows a marked stagnation, according to the report.

The ranking clarifies that the countries that were more affected by the Covid-19 pandemic have lost positions, and those on which the pandemic had a lesser impact show an advance.

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As for the rest of Latin America, the study places Mexico in fifth place, preceded by Uruguay, where an improvement in its scoring over previous three years allowed it to distance itself from the group that follows it in the ranking.

However, the study shows that, during the last two versions, the gap has narrowed and Mexico’s score (68.9 out of 100) brings it closer to Brazil and Colombia (with 66.8 and 66.3, respectively), and which head the group ranked as ‘average’, while remaining in the ‘acceptable’ category.

With respect to El Salvador and the Dominican Republic, the study points out that those countries’ ‘less acceptable’ level of competitiveness is due to significant shortcomings in some aspects.

As for Venezuela, the competitiveness ranking indicates that the country has serious problems regarding macroeconomic and institutional instability.

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Venezuela’s score setback distances it from the rest of the countries and maintains it in a position of significantly lacking competitiveness, and with scarce possibilities of recovery in the short term, according to the analysis.

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To evaluate each nation, the study analyzes the coverage of basic needs, institutional aspects, infrastructure, macroeconomic stability, health, education, expectations of the population, market competition, efficiency in labor relations, and access to technology.

Founded in 1992, ADEN International Business School is a training and development center for executives and business managers in both classroom and e-Learning modalities.

Translated from the Spanish by Adam Critchley