According to the latest World Economic Forum Global Competitiveness Report, in order to keep up the positive economic momentum of recent years and boost competitiveness, Latin America and the Caribbean need to implement further structural reforms and strengthen investment in infrastructure, skills development and innovation.

The report, which covers 144 economies and ranks them on 12 key measures that influence competitiveness, finds that productivity in Latin America and the Caribbean remains low. But there are still success stories. Here are the top 10 performers in the region.

1. Chile remains the most competitive economy in Latin America, with a strong institutional set-up, low levels of corruption and an efficient government. It also boasts solid macroeconomic stability with a small public deficit and low public debt. Although there are some rigidities in its labour market due to persistently high redundancy costs, its markets are on the whole efficient. The decline in the price of minerals, however, highlights the need for Chile to diversify its economy and move towards more knowledge-based activities. Flaws in the country’s education system, especially in mathematics and science, mean the workforce generally lacks the skills required for innovation and this, together with low levels of investment in innovation, could jeopardize Chile’s transition towards a knowledge-based economy.

2. Panama again follows Chile in the regional rankings and remains the most competitive economy in Central America, despite a fall in the global rankings driven by a slight dip in perceptions of its institutions, especially regarding its ability to fight corruption. There are also concerns about a skill shortage, which threatens to undermine Panama’s transition towards more knowledge-intensive activities. However, the country has an impressive infrastructure, with some of the best port and airport facilities in the world, and it is proving to be a strong adopter of technology.

3. Costa Rica continues to rise in the rankings, improving three positions in the past year thanks to a very stable profile and strong institutions. It has one of the best education systems in the region, a fairly high ICT uptake and a reasonably well-developed capacity to innovate, making it well-placed to move towards knowledge-based activities. However, some persistent weaknesses are holding back its overall competitiveness. These include poor transport infrastructure, difficulties accessing finance, concerns about its macroeconomic performance and high budget deficit.

4. Barbados has slipped eight places down the global rankings, as it continues to suffer the consequences of the global financial crisis. Within the region it  ranks fourth for overall competitiveness. The credit crunch is severely hindering the capacity of local businesses to finance their activities or develop innovative projects. Concerns about macroeconomic conditions also persist, as Barbados has one of the highest public deficits in the world, one of the lowest savings rates and high public debt. The country does, however, have a fairly skilled labour force thanks to a high-quality education system and high enrolment rates in secondary and tertiary education. It also has solid infrastructure and generally well-functioning institutions.

5. Brazil drops one position in the rankings this year to 57th globally, due to insufficient progress in fixing its poor transport infrastructure, and a perceived deterioration in the functioning of its institutions. It has had a weaker macroeconomic performance this year and a further tightening of access to financing. Its poor education system is still failing to provide workers with the necessary skills for an economy in transition to more knowledge-based activities. The country has also faced headwinds due to a drop in the international price of commodities and potential outflows of capital. That said, Brazil has significant strengths, most notably its large market size and its fairly sophisticated business community, with pockets of innovation excellence in many research-driven, high-value-added activities.

6. Mexico has made important structural reforms in the past year aimed at increasing the level of competition and efficiency of its markets, though the benefits of these have not yet materialized. Competitiveness will improve as these reforms start to have an impact. There has been a fall in the perceived functioning of Mexico’s institutions, and the Mexican education system does not seem to deliver the skills that its changing economy requires. In its favour, however, is a stable macroeconomic environment, large internal market, good transport infrastructure and a number of sophisticated businesses ‒ uncommon for a country at its stage of development.

7. Peru’s competitiveness gains in recent years, driven by a very strong macroeconomic performance and highly efficient financial and labour markets, seem to be losing momentum. There are concerns about the functioning of its institutions, along with insufficient progress in improving the quality of its education and lifting levels of technological adoption. Although Peru has recently benefited from strong growth thanks to the rise in the price of minerals, the country should build its resilience by addressing its most long-lasting challenges: it needs to strengthen its public institutions by increasing government efficiency, fighting corruption and improving infrastructure.

8. Colombia climbs three positions in the global rankings this year due to an increase in its level of technological adoption and the development of its infrastructure. However, more progress needs to be made with infrastructure, as this is still the second most problematic factor for doing business in Colombia, after the high level of corruption. The country has stable macroeconomic conditions, but as is the case across much of the region, it needs to diversify its economy and become less dependent on revenue from mineral resources. To do so it must improve education and foster an environment that fuels innovation.

9. Guatemala climbs eight places to the middle of the global rankings this year, due to improvements in its level of competition in the goods market ‒ thanks to the reduction of red tape for new businesses ‒ and better infrastructure, although more progress here must be made.

10. Uruguay has improved its performance this year. GDP per capita has been growing at a faster rate in Uruguay than the regional average for several years, and the country performs well on measures relating to technological readiness, its institutions and its education system. Restrictive labour regulations are the biggest obstacle to doing business in the country.

Read the Global Competitiveness Report 2014-15.

See how well different countries perform on our latest Global Competitiveness Index:

Author: Beñat Bilbao, Associate Director, Senior Economist, Global Competitiveness and Risk, World Economic Forum

Image: A fisherman waits for a catch in front of the beach of Copacabana in Rio de Janeiro, March 18, 2014. REUTERS/Jorge Silva