Guatemala : Investment Climate Assessment, Volume 2. Background Notes on Productivity
Guatemala has achieved substantial progress in improving its investment climate since 2004. Despite these achievements, Guatemala continues to face significant challenges. Guatemala's overall ease of doing business ranking is still relatively...
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| Format: | Investment Climate Assessment (ICA) |
| Language: | English en_US |
| Published: |
Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/06/10286945/guatemala-investment-climate-assessment-vol-2-2-volume-two-background-notes-productivity http://hdl.handle.net/10986/7821 |
| Summary: | Guatemala has achieved substantial
progress in improving its investment climate since 2004.
Despite these achievements, Guatemala continues to face
significant challenges. Guatemala's overall ease of
doing business ranking is still relatively low-114th out of
178 countries, and it falls well behind the rankings of
comparator countries such as El Salvador (69), Nicaragua
(93), and Panama (65). Economic growth in Guatemala over the
past 25 years has been very modest, even by Latin American
standards. Productivity and export growth has been
disappointing. The Central America Free Trade Agreement
(CAFTA) brings new opportunities as well as competitive
pressures. To be competitive, Guatemala needs to
aggressively tackle reforms in three main areas:
infrastructure, governance, and access to finance. Reforms
in these areas, as well as other targeted initiatives, will
better position Guatemala to take advantage of CAFTA. The
Government should also build on what has been working in
trade promotion. Road, port, and airport quality could all
be improved, with private sector participation playing a key
role. Electricity subsidies should be targeted in a more
efficient manner and the social tariff system should be
reconsidered. More effective mechanisms to promote
investments in renewable energy should be adopted. Guatemala
should continue reforming its regulation of private business
activity-especially in firm registration, construction
permits, and tax and customs administration. The government
should attack corruption directly. Concerted, long-term
effort is needed to strengthen contract enforcement and the
judiciary. To lower crime, the strategy should be to
emphasize preventive measures and support greater police
enforcement. The growth of commercially oriented
microfinance institutions (MFIs) should be promoted through
an adequate regulatory and supervisory framework. Accounting
and auditing practices, financial information
infrastructure, and regulatory norms for movable collateral
should be strengthened. |
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