Costa Rica was among the top three most “competitive” economies in Latin America last year, according to the World Economic Forum’s Global Competitiveness Report 2014-2015, released on Wednesday. Costa Rica, ranked 51st worldwide, came in behind Panama (48) and Chile (33).
Costa Rica has enjoyed a steady rise on the index during the last several years, jumping three spots this year, up from 54. The country scored especially well on metrics for health and education, technology readiness, and innovation potential.
The Dominican Republic (101), El Salvador (84), Guatemala (78), Honduras (100), and Nicaragua (99) all trailed Costa Rica. Venezuela (131) and Haiti (137) scored at the bottom of the annual survey for Latin America and the Caribbean.
The report observed that poor transport infrastructure, difficulties accessing finance, concerns about its macroeconomic performance and high budget deficit continue to hold back the country’s economic potential. Transportation infrastructure was one of Costa Rica’s greatest weaknesses with the quality of its ports and roads ranked at 115th and 119th, respectively, out of the 144 countries surveyed. The country also scored poorly in female participation in the workforce, coming in at 117.
President Luis Guillermo Solís has named many of these weaknesses as priorities for his administration. Vice President and Finance Minister Helio Fallas listed increases in infrastructure and education spending in the president’s budget proposal at the Legislative Assembly on Monday. Solís also made specific mention about improving access to finance for small businesses and working mothers as part of his employment strategy that aims to create 217,000 jobs in the next four years. One area that the government has yet to seriously address is the country’s gaping deficit, which Fallas projected would rise to 6.7 percent of gross domestic product in 2015.
Globally, the report said that countries need to shift their recovery strategies for the financial crisis away from monetary policy and focus more on improving productivity through structural reforms. The WEF report also highlighted investment in skills and innovation, as well as public-private partnerships as keys to long-term economic growth. The report opined that Latin American and Caribbean nations need to implement structural reforms and increase investment in infrastructure, skills development and innovation if it wanted to see the boom of the last decade continue.
The most competitive countries were Switzerland, Singapore and the United States.
The Global Competitiveness Report ranks national economies based on institutions, infrastructure, health and education, labor market efficiency, technological readiness, innovation and business sophistication, among other metrics. The report defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country.”
View the full report here.