MercoPress. South Atlantic News Agency

Argentina, Uruguay and Venezuela fall dramatically in WEF Competitiveness ranking

Economist Xavier Sala-i-Martín from Columbia University, political cronyism has replaced economic efficiency

The World Economic Forum Competitiveness report published last week shows Latinamerica is loosing ground in the world economy and the three countries which most plunged in the ranking in the last twelve months were: Venezuela, Argentina and Uruguay.

The report basically assesses institutions, infrastructure, business climate, education, technology advance and innovation of each of the 148 economies included. And as last year Switzerland leads followed by Singapore, Finland, Germany, US, Sweden, Hong Kong, Holland, Japan and the UK.

The best ranked Latinamerican country is Chile, 34; followed by Panama, 40; Barbados, 47; Costa Rica, 54; Mexico, 55 and Brazil 56. Further down the list are Peru, 61; Colombia, 69; Ecuador, 71; Uruguay, 85; Guatemala, 86; El Salvador, 97; Bolivia, 98; Nicaragua, 99 and Argentina, 104. In the last leg of the ranking figure Venezuela, 134 and Haiti, 143.

The report points out that after a full decade of economic progress, based on strong commodities prices and solid macroeconomic policies, the latest data reveals that a majority of countries are undergoing a slowdown in their competitiveness performance. Urgent action is needed to improve the institutions, quality education, technology and innovation.

And the report shows that although the region’s major economies, Brazil and Mexico managed to hold on to their global ranking, Argentina, Uruguay and Venezuela plummeted in their performance.

Argentina dropped ten points despite the fact that only last month President Cristina Fernandez said that the Argentine economy was performing much better than Canada’s and Australia’s. Nevertheless Canada is positioned 14 and Australia 21, which means 83 places ahead of Argentina. Even Algeria and Lebanon rank better than Argentina.

Uruguay slid from position 74 to 85, eleven points because of a serious deterioration of macroeconomic conditions; restrictive labour practices and an overall weakening of education quality and innovation capacity. “The weakest point for Uruguay in competitiveness is the efficiency of the labour market with the economy ranked 139 out of 148 in this specific issue”.

Likewise Venezuela was down eight points compared to last year, continuing with the slide of past years. Now the oil rich country stands next Uganda, Zimbabwe, Mozambique, Haiti and Chad, the least competitive of countries in the world.

Economist Xavier Sala-i-Martín from Columbia University and one of the co-authors of the annual report said that in Argentina and Venezuela the problem is not only the excessive seizure by the State of the economy, but the very poor way they were accomplished. The government is not ruled by economic efficiency but rather by political cronyism and punishing those “who don’t belong to us”.

The Spanish economist added that the main difference between Latinamerica and the successful Asian countries such as Singapore, South Korea and China is “the incredible emphasis of these countries in improving education standards”.

Furthermore the so called progressive governments in Latinamerica are so overcome by corruption and lack of transparency that it is hard to see any changes in the short or medium term. Major changes will have to wait.