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Colombia’s Economy Remains Uncompetitive Globally but Is Outpacing Most of Its Latin American Peers
For the third year running, Colombia placed 51st out of 61 countries analyzed in IMD business school’s World Competitiveness Ranking. The poor ranking shows that the Andean nation still has a lot of work to do as it tries to ascend into the Organisation for Economic Co-operation and Development (OECD), although it can take some solace in the fact that most of its regional peers took a step back in this year’s study.
Overall, only Chile and Mexico did better than Colombia among Latin American economies. And while Chile is the best-ranked Latin American country at 36th, it did fall back one place from last year. Mexico (45th) and Brazil (57th) tumbled six and one spots, respectively. Peru held steady at 54th as did Venezuela, albeit in last place at 61st. Only Argentina, which elected a new reformist president last year, improved its year-on-year position, rising from 59th to 55th.
More than the individual movement, however, the biggest takeaway is how poorly Latin American nations rank against their global competitors. The plummet of commodities prices has been the biggest factor in the region’s struggles over the past two years and highlights the need of all South American nations to diversify their economies.
When it comes to economic performance, one key factor measured by the Switzerland-based IMD, Colombia fared poorly. As recently as 2012, the country ranked 33rd, but it has slipped back steadily since and now sits at 46th.
“Colombia’s ranking in economic performance may very well be the result of the decline in oil prices as its ranking experience falls in two relevant sub-factors: domestic economy and international investment,” said José Caballero, senior economist at the IMD World Competitiveness Center.
The nation has also fallen back when it comes to having a business-friendly environment. “Indicators related to the ease of doing business have decreased this year,” said Caballero. Among the factors he notes as hurting the nation in this respect are: the number of days to start a business, regulatory support for the ease of doing business, and legislative support for the creation of firms.
The school notes several other challenges ahead for Colombia in 2016. One is to strengthen economic development through the construction of highways, a issue that the nation is trying to tackle head on through its enormous “4G” road and transportation infrastructure project. Upon completion, currently expected around 2023, transport time is supposed to drop by 30 percent across the country while transport costs will fall by 20 percent.
Other challenges noted include improving productivity through the incorporation of information and communication technologies; guiding national production towards tradable goods and increase the spending on domestic goods: and deepening the quality of basic education and ease access to health services.
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