Weaknesses in “managerial dynamics” – an umbrella term encompassing productivity growth, financial depth, business dynamism, and innovation capacity – are holding back the competitiveness of economies in Latin America and the Caribbean (LAC), according to a data-driven report from the IMD World Competitiveness Center (WCC).
The IMD Latin America and Caribbean Prosperity Index evaluates 34 LAC economies across four pillars – Economic Challenges, Governance & Institutions, Managerial Dynamics, and Societal Empowerment – using 78 indicators. Countries are grouped into eight tiers from A1 (highest) to D2 (lowest).
The index finds that poor managerial practices are preventing many economies in the wider region from taking advantage of opportunities arising from shifts in global trade and turning them into sustained improvements in economic prosperity.
“If China ends up shifting production chains to Latin America in a bid to mitigate the effects of US tariffs, the manufacturing opportunities will be real and substantial. But without the right conditions in place, the region risks missing the moment entirely,” said José Caballero, Senior Economist at the WCC and lead author of the report.
“In the Trump 2.0 era, capitalizing on shifts in global trade requires the ability to diversify markets, deepen regional integration, and navigate instability – precisely where Latin American and Caribbean economies are most exposed.”
Prosperity in the region is highly fragmented, with countries spread across all tiers. Economic strength alone does not explain the variation. Panama and Uruguay show high income levels, while Brazil and Argentina have comparable income profiles but do not feature among the top tiers. Meanwhile, countries such as Costa Rica and Panama score high in Governance & Institutions and Societal Empowerment, but still face constraints elsewhere.
Three broader patterns
Across the region, three other patterns emerge as to why prosperity stalls: economic gains without institutional credibility (Brazil, Mexico); strong governance without managerial progress (St. Lucia, Paraguay); and rising income without social inclusion (Panama).
Indicators within the Governance & Institutions pillar clearly distinguish high-performing from low-performing nations, with Uruguay and Costa Rica scoring strongly on the rule of law, while Haiti and Venezuela sit at the bottom. Mid-tier countries like St. Lucia show solid governance despite only moderate overall prosperity.
Managerial Dynamics, however, create the largest bottleneck for economies in the region, limiting upward mobility even for countries with solid institutions or income levels. Costa Rica leads in productivity, while Honduras and El Salvador show very low levels of new business creation.
Social gaps compound the picture. Despite progress, social inequality and disparities in health, education, and digital access persist. Puerto Rico, Chile, and Uruguay show high human development, while Nicaragua and Haiti remain at the bottom. But inequality is not confined to low performers – Panama’s prosperity is undercut by high social disparity.
The Rating breaks with traditional approaches that rely heavily on GDP and a limited set of economic indicators by using a methodology that enables policymakers and researchers to pinpoint structural deficiencies and benchmark performance in a meaningful and multidimensional way.
It is the second report in two years by the WCC focusing on the dynamics of prosperity in developing regions. Last year, the Africa Prosperity Rating evaluated 54 African economies, and next year, Emerging Asia will fall under the WCC spotlight.
