Regional overview: Latin America and the Caribbean

Chile emerges as the clear champion within the Latin America and the Caribbean region, leading in all pillars except Availability and quality of transport infrastructure (where Panama is the regional leader, at 30th globally) and ICT adoption (Uruguay, 36th). Mexico (up 11, to 51st) and Argentina (up nine, to 94th) are the most improved countries in the region, while, at the other end of the spectrum, Trinidad and Tobago, Brazil and Bolivia (all down 13, to 106th, 110th and 112th respectively) are the ones that have slipped down the most in the ranking. Latin America is the only area, together with Europe and North America, to perform better than the global average in terms of both domestic and foreign market access, but the capacity to tap into the opportunities offered by free trade is hindered by the inefficiency of border administration and the low quality of infrastructure and transport services—three areas where the region lies far from world standards, with little or no sign of improvement in the former two and a deterioration in the latter. Finally, in spite of improvements in recent years, physical security in the region (especially in Central America) remains the worst globally, contributing to worsen the local operating environment.

Focus on Latin American economies (in rank order)

Mexico is one of the 2016 edition’s most improved economies, moving eleven places to 51st. Its domestic market has become one of the world’s most open and ranks 10th globally on this pillar, with significant decreases in tariffs on both agricultural and industrial goods. Ninety-three percent of goods enter Mexico duty-free. The regulatory environment for foreign investment is also favourable, as is the ease of hiring foreign skills. On trade facilitation, Mexico performs only moderately, with the cost of compliance with border procedures on the export side remaining high. Its infrastructure is rated relatively high, especially in terms of the connectivity of its sea and air ports. The share of active mobile broadband users has shot from less than 10 percent to just over 50 percent, and the government ranks well in terms of the availability of online services. Security is a lingering issue, along with the efficiency and accountability of its institutions.

Colombia drops slightly in the 2016 edition to 85th, approaching the average for the Latin American region. It performs well in terms of market access, with a fairly simple tariff structure, and its exports enjoy friendly terms abroad. Colombia’s borders, however, remain key bottlenecks, with compliance on both the import and export side being time intensive and costly. Colombia scores well on its ICT infrastructure, but transport, especially rails and road, lags behind. The overall operating environment, especially in terms of its public institutions, stands as another barrier to enabling trade over the medium term. On this pillar, Colombia ranks near the bottom globally overall, though with openness to foreign investment serving as a positive note.

Argentina moves up in the 2016 rankings from 104th to 94th, led by a significant improvement in the efficiency of its border administration, as well as a strong overall infrastructure network. Argentina has simplified its import licensing system with the implementation of the Comprehensive Import Monitoring System (Sistema Integral de Monitoreo de Importaciones [SIMI]), resulting in a decrease in the border compliance time from 12 to 2.5 days. Despite these impressive improvements, however, the predictability of the import process remains a major issue according to businesses surveyed, and the financial cost of border compliance remains among the world’s highest. Similarly, the overall operating environment still requires significant reform to enable trade growth, with weak results on the protecting property, the efficiency and accountability of public institutions and access to finance indicators.

Brazil drops 13 places in this year’s ranking to 110th, driven by deterioration on the market access and operating environment pillars. Brazil’s market remains fairly closed, with high tariffs for both agricultural and industrial products, and a fairly low share of imports enjoying duty-free access (31 percent). Its exports also continue to face relatively high tariffs, with only limited preferential access. At the same time, its borders remain thick, with border and documentary compliance alone costing over $1,000 per container on average and requiring six days for clearance. Moreover, the time predictability of import procedures ranks 135th, only slightly above Venezuela, which occupies the bottom position. Brazil has improved on the infrastructure side slightly, yet the quality of port infrastructure and efficiency of the intra-modal system remaining as key bottlenecks for enabling trade.