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. TheĀ poor rankingĀ showsĀ 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’sĀ study.
Overall, only Chile and Mexico did better than Colombia among Latin American economies. And while Chile is the best-ranked Latin American country atĀ 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.Ā Only Argentina, which elected a new reformist president last year, improved its year-on-year position, risingĀ from 59th to 55th.
More than the individual movement, however, the biggest takeaway is how poorly Latin American nations rankĀ against their global competitors. The plummet of commodities prices has been the biggest factor in the region’s strugglesĀ over the past two yearsĀ andĀ highlights the need of all South American nations to diversify their economies.
When it comes to economic performance, one key factor measuredĀ by the Switzerland-basedĀ IMD,Ā Colombia fared poorly. As recently as 2012, the country ranked 33rd, but it has slipped back steadily since and now sits at 46th.
“Colombiaās 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 economyĀ and international investment,” said JosĆ© Caballero,Ā senior economist at theĀ 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: theĀ number of days to start a business,Ā regulatory support for the ease of doing business, and legislativeĀ support for the creation of firms.
The school notes several other challenges ahead for Colombia in 2016. One is toĀ 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; guidingĀ 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.