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Latin America losing its competitive edge as demand for commodities slows down

Tuesday, June 3rd 2014 - 05:26 UTC
Full article 17 comments
Brazil is in big trouble: prosperity has not trickled down to the average citizen, says IMD director Arturo Bris Brazil is in big trouble: prosperity has not trickled down to the average citizen, says IMD director Arturo Bris

The United States ranks as the most competitive country in the world in a survey of 60 countries by IMD, a leading global business school in Switzerland. The survey finds Europe is recovering some of its competitive edge, while emerging economies, particularly in Latin America are struggling to hold their own.

 According to the report the United States owes its top position to its resilient economy, better employment numbers, and dominance in technology and infrastructure. It is followed in the competitiveness ranking by three small economies - Switzerland, Singapore, and Hong Kong - all of which prosper from exports, business efficiency and innovation.

The report finds Europe is doing better than last year, thanks to its gradual economic recovery, but most of the big emerging markets are sliding in the rankings. It says the so-called BRIC countries - Brazil, Russia, India and China - are losing out in the competitiveness race as economic growth and foreign investment slow and infrastructure remains inadequate.

Director of the IMD World Competitiveness Center, Arturo Bris, says China does not perform well in terms of competitiveness because of its lack of good institutional development.

“What we see in China and in BRIC countries in general - Brazil, Russia, India - is that economic growth has happened too fast and has not happened in parallel with the necessary reform in the institutional environment. The business regulation, economic institutions and financial markets, business principles and values, corruption, sustainability - in that regard, at some point, economic growth becomes unsustainable,” said Bris.

Bris says Brazil is in big trouble. He says last year's huge economic growth has translated into social unrest because the country's prosperity has not trickled down to the average citizen. Brazil this year has fallen three places to number 54 pot of 60 in the rankings.

The IMD competitiveness rankings are based on four factors: economic performance, government efficiency, business efficiency and infrastructure. The report says there is no relationship between democracy and competitiveness, though the likelihood of a good government is higher in a democracy.

In Latam compared to 2013, this year Chile dropped from position 30 to 31; Mexico, 32 to 41; Peru, 43 to 50 and Colombia, 48 to 51. The only exception was Argentina which climbed from 59 to 58, while Venezuela remained at the bottom of the ranking, 60.

Top Comments

Disclaimer & comment rules

    With respect to what Mr. Bris yes and no.

    Yes Brasil economic growth was very fast. Infrastructure remains a problem.

    But no regarding the protests stemming from the lack of trickle down. That is not the reality.

    The reason for the protests is that exclusively public funds, rather than private funds were used in massive amounts to finance the World Cup stadia. Had this financing been from private funds, or a percentage less than the 97 % quoted in O Globo, it would have been easier to accept.

    Seeing others at the top further enrich themselves in this, it has become a subject of “ Well, what's in it for me then ? ” Ergo the resentment. Crowds are more angry at the World Cup, then they are at the escândalo do mensalão corruption verdicts.

    The fact is conditions are good here, but very expensive since 2010-2011. Better value to buy ones average groceries in Zürich today than it is in Rio.

    Jun 03rd, 2014 - 08:25 am 0
  • Brasileiro

    The sensationalist media and idiot and poor public who reads it gives too much credit to who speaks nonsense in Europe.

    I believe that the end of this century, Europe will be fighting with Africa to see who is more competitive.

    Jun 03rd, 2014 - 11:05 am 0
  • ChrisR

    @ 2 BRASSO

    What do you know about anything other than crap militaristic videos that show Brazil in a poor light?

    The real problem about being competitive is that some people (countries) respond to the challenge and rise to the top (US, UK and Germany) whist all the rest flounder.

    And there we have it. The work ethic in SA is abysmal compared to the Western World. That is why agriculture is king in Brazil: you can mechanise it and you don’t need millions of idle bastards on the payroll as you had before.

    However, your automotive manufacturing is riddled with union problems and lacks the efficiency of other manufacturers throughout the world.

    Perhaps if you tackled that and kicked the unions in the balls things would be better.

    Oh NO! I can see what would happen: the government would grab the new money for themselves!

    So don’t bother. With your system you are screwed.

    Jun 03rd, 2014 - 12:18 pm 0
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