Doing Business in the Caribbean 2017: Central America Leading By Example

By: Caribbean Journal Staff - August 1, 2017

By Paul Hay
CJ Contributor

Doing Business 2017: Equal Opportunity for All is the 14th in the long-standing series of co-publications by the World Bank and International Financial Corporation (IFC). This annual report on the ease in doing business, now in 190 nations, covers the period from June 2015 to June 2016.

For the past 3 years, I have reviewed such reports and, with the exception of last year, published two articles from each: first examining the global ranking of Caribbean states, followed by an itemized breakdown of their performance. This article reviews “Doing Business 2017”.

Last year Doing Business 2016: Measuring Regulatory Quality and Efficiency used a new methodology for its analysis and also additional data not previously measured. So, comparison with the previous year was difficult, to say the least, and proved too much to allow writing a second article.

Like the last, the current report has also made changes which make an itemized breakdown difficult, if not impossible. So, this article will again be limited to the review of global rankings of Caribbean States; and again, the states referred to will be members of the Association of Caribbean States (ACS).

The two tables below present data for these states. Last year’s data is included as a convenience, but it is stressed that differences may simply indicate the change in the methodology used in preparing the report, which negatively impacted only the ranking of the Caribbean Islands.

Table 1 conveys information on 13 Caribbean Islands, divided into two groups: 11 Small Island Developing States (SIDS) and 2 large island-states: namely the Dominican Republic and Haiti. The SIDS group is further sub-divided into three groups.

Puerto Rico, being the only SIDS that is not politically independent, is a group unto itself. The 6 smallest islands belong to the Organization of Eastern Caribbean States (OECS); and, the remaining 4 states comprise the last group.

Table 2 conveys information on 12 ACS Latin American (LatAm) states. Like the Caribbean Islands, these LatAm states are divided into two groups – Central, and South American States. The former comprises 8 states and the latter 4 states.

It should also be noted that this table includes three CARIFORUM member-states: Belize, in the Central American group, as well as Guyana and Suriname in the South American group. With the exception of Puerto Rico, all Caribbean islands in table 1 are CARIFORUM states.

Doing Business Regional Profile 2017: Latin America and the Caribbean lists 32 LAC states. With the exception of Puerto Rico, 24 of these are ACS members. The 17 remaining LAC states are all located in South America. Average rating for the Caribbean Island ACS members is below the LAC average of 107.

But, 9 of the top 12 LAC performers are ACS member states, just like “Doing Business 2015”, but less than the top 10 in “Doing Business 2016”. Again, this is mostly due to the superior rankings of the Central American sub-group, though this number does include 3 Caribbean Island ACS members.

Currently, the top 12 ranked LAC performers, from highest to lowest, are: Mexico, Colombia, Peru, Puerto Rico, Costa Rica, Jamaica, Panama, Saint Lucia, Guatemala, Uruguay, El Salvador, Trinidad and Tobago. Of these, Peru, Puerto Rico, and Uruguay are the only states that are not ACS members.

Six LatAm ACS member-states are in the top 12: Colombia being the sole South American member, of its group of 4. Mexico, Costa Rica, Panama, Guatemala and El Salvador comprise the remaining 5, of the 8 member Central American group.

No large Caribbean-Island state is present. Jamaica, Trinidad and Tobago are 2 of the 4 larger ACS SIDS that are top performers. Puerto Rico is also among the top performers. But, Saint Lucia is the sole member of the 6 OECS members that is a top performer.

The superior ranking of the LatAm sub-group is specifically due to performance of Mexico, and Colombia: Mexico with rank of 47 being best performer in the Central America group and Colombia, ranked 53, best of the South America group. The former being ranked higher than the latter.

Only 2 of the 8 Central American group members were below the LAC average. One which was below average – Belize – is a CARIFORUM member. Otherwise, only Puerto Rico, and Jamaica ranked above the Central America group average of 85.

Regrettably, ACS still comprises 7 of the 8 lowest ranked economies in LAC. In ascending order from the lowest, these are: Venezuela, Haiti, Suriname, Bolivia, Grenada, Saint Kitts and Nevis, Nicaragua, and Saint Vincent and the Grenadines. Bolivia is the sole non-ACS member.

The South American group has the largest discrepancy in ranks: Colombia is at the top with 53 and Venezuela the last at 187: the remaining 2 – Guyana and Suriname – being CARIFORUM members: Suriname and Venezuela being in the bottom 8.

The Association of Caribbean States not only has the most capable states to effect reform, but it also has the most deserving of states. Therefore, it seems to be the body most suitable to facilitate this reform in the shortest order. Indifference to reform should not be allowed to further deteriorate performance.

Central America is leading by example. Can other ACS members, including CARIFORUM members, follow suit? Can we all collaborate to bring about well-needed reform and a better future? We can, and we must, but we need to actively effect change now and stop procrastinating.

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