Costa Rica Slips in Economic Forum Ranking

October 7, 2005

COSTA Rica has slipped behind El Salvador in a World Economic Forum ranking of the most competitive countries in the world, released Sept. 30. Costa Rica placed 64th in the Forum’s Growth Competitiveness Index (GCI) representing a drop from its position last year at 50th.According to the Central American Institute of Business Administration (INCAE), which helped compile data for the study, the drop was caused, in part, by low macroeconomic competitiveness. A statement from INCAE points out that the business environment is much better in Costa Rica’s business parks than throughout the rest of the country.Macroeconomic factors such as high inflation, high interest on credit and a rise in the fiscal deficit all contributed to the country’s drop in competitiveness. Corruption of public officials – particularly in international commerce procedures, tax collection and the awarding of government contracts – was also a factor, according to INCAE.In Latin America, Costa Rica placed seventh of 20 countries listed in the GCI, and in Central America came in second to El Salvador, which placed 56th globally. Chile placed first out of Latin America, coming in at 23rd on the GCI, while Finland placed first globally, followed by the United States in second place.The GCI is one of three indices included in the Forum’s 2005-2006 Global Competitiveness Report. In the Business Competitiveness Index, Costa Rica placed 50th, bested only by Chile and Brazil. INCAE explained that while business efficiency and strategy indicators are higher here, Costa Rica is held back by a lower ranking for the business climate, due primarily to a deteriorating infrastructure and lagging technology.

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