As noted on our Canal blog, a new forty-eight-city ranking for investment friendliness in Latin America is out from the Centro de Pensamiento en Estrategias Competitivas, Colombia, and Inteligencia de Negocios, Chile. Naturally, such a ranking is open to interpretation regarding its methodology, along with questions over how municipal jurisdictions can learn from it to get ahead of the pack.
This week in Across the Americas, Rodrigo Diaz, executive director of IdN, joins me to give a broader explanation of the data and results (shown below the video). Diaz offers three key considerations or important ingredients:
- Economy size, both of the country and the city. Larger cities, in particular, offer a critical mass or economies of scale that attracts international companies. However, smaller cities can still compete, and Diaz points to Medellín (13), Montevideo (24), and Porto Alegre (25) as such examples.
- National stability. The city itself cannot overcome the “deterioration of the platform that is the country” and still achieve competitive standing. He identifies Argentina, Bolivia, and Venezuela as particularly problematic in this manner, given a tendency for property confiscation and nationalization.
- City management. “When a city is doing well, you can find lower unemployment, a higher rate of growth, and a certain [sustainability].” The index took into account a variety of inputs for this, including fiscal stability, living environment, and international reputation, and Diaz says one can see these factors having a direct impact on both whether a company moves to an area and the size of its operation.
[table id=1 /]Over the past four years, the index has remained basically the same. They have only brought in an additional measure of human capital, based on the quality of the higher education in the region.
The greatest challenge he faces is finding sufficient and accurate data at the city level. That means some cities simply cannot be included, but he is pushing ahead and plans to include Arequipa, Perú, and Campinas, Brazil, in future years.