Productive capacity and international competitiveness: evidence from Latin America and Caribbean countries

We analyse the incidence of the productive capacity of twenty Latin America and Caribbean countries on their international competitiveness (IC) for the period 2000–2018. We propose two indicators of IC and measure productive capacity through seven of the eight indicators embodied in the productive capacity index of the UNCTAD. The evidence gathered reveals three areas that have played an important role in the competitiveness of the region; these are natural resources, energy, business regulations, and information and communications technology. It follows structural change and the quality of institutions. The availability of infrastructure has had a positive impact on regional competitiveness, especially in relation to energy. However, information and communication technologies as well as transport capabilities have had a minor effect. The outstanding performance verified by the variables identifying the quality of institutions and business regulations highlights the role that politicians and policymakers can play considering they hold the tools of a major transformation in their hands. Finally, our findings indicate that regional competitiveness is highly dependent on natural and energy resources and quite influenced by institutions and regulatory frameworks.