Puerto Rico climbed one more notch in this year’s edition of the World Economic Forum’s “Global Competitiveness Report,” landing in 30th place among 148 countries around the globe.
This is the third consecutive year that the island shows improvement in the prestigious index, jumping from 31st place last year and 35th place in 2011, according to the report released this morning.
Puerto Rico fared well in certain key areas that the index measures, such as financial market development (18 out of 148), labor market efficiency (38), innovation (24) and business sophistication (19), placing among the world’s 37 “innovation-driven technologies” according to the report.
Information to support Puerto Rico’s rankings was provided by Puerto Rico 2000 Inc. and the International Competitiveness Institute at the Inter American University, which coordinated participation in the online survey tool that was available this year in 20 languages. Puerto Rico’s GDP numbers were sourced from national statistics.
Puerto Rico’s capacity to provide businesses with legal and regulatory efficiency was reflected in its 16th place ranking, while the strength of its auditing and reporting standards earned the island the 10th place position in the index.
The island also stood out positively in the area of protection of property rights, ranking 11th, trailing behind some of the world’s strongest economies, namely Finland, Singapore, Switzerland and the United Kingdom, among others. In terms of intellectual property protection, Puerto Rico landed in 7th place out of 148.
The island also fared well in terms of its infrastructure — quality of roads (31), port infrastructure (28), and air transport (32). In terms of electricity supply, Puerto Rico remained in the top half of the index, taking 64th place.
Challenges still ahead
But despite lining itself up among the globe’s top-third most prosperous jurisdictions, Puerto Rico is still battling significant demons that it must overcome to become a true economy to be reckoned with.
According to the WEF index, Puerto Rico’s economy presents a number of “problematic factors” for doing business, such as inefficient government bureaucracy, restrictive labor regulations, access to financing and insufficient capacity to innovate.
The island also faltered in terms of inspiring public trust in politicians, taking 72nd place in the ranking. This index measures how people rate the ethical standards of politicians. Meanwhile, Puerto Rico ranked 78th related to the opinions given on how those surveyed feel that government officials show favoritism to well-connected firms and individuals when deciding upon policies and contracts.
Wastefulness of government spending was another category in which Puerto Rico slipped, taking 82nd place in terms of how people perceive the government spends public revenue. Furthermore, those surveyed placed Puerto Rico in 118th place regarding how burdensome is it for businesses to comply with governmental administrative requirements (e.g., permits, regulations, reporting.)
Crime and violence were also factors that the index considered, in which Puerto Rico took 116th place, reflecting how the incidence of crime and violence impose costs on businesses.
Latin American, Caribbean performance
The WEF index noted that last year, the region grew by 3 percent, a slower pace than in previous years.
“Despite this moderate deceleration, the region has exhibited resilience with a projected growth rate of 3 percent for 2013 and 3.4 percent for 2014, outperforming other regions in the world, especially advanced economies. A recovery in several export markets and robust internal demand based on fairly good access to financing are driving this growth,” the WEF report indicated.
Notwithstanding this positive economic outlook, the WEF report showed that the region continues “to suffer from low levels of productivity and slow productivity growth rates.”
“Overall, after a few years of general improvement, the results of this edition of The Global Competitiveness Report show that most countries are stagnating in their competitiveness performance,” the document said.
Panama consolidated its position as the most competitive economy in Central America, and second in Latin America behind Chile, which dropped down a notch to 34 this year. Mexico (55) reflected a stable competitiveness profile, while Barbados slipped three notches to 47th place, buckling to an ongoing credit crunch that is hindering the capacity of local businesses to finance their activities, the report showed.
While Bolivia improved its standing by six notches to 98th place, Uruguay dropped 11 places to 85th place, as did Argentina, which fell 10 positions to 104th place.