LOS ANGELES--(BUSINESS WIRE)--Chile ranks no. 1 in Latin America as the country with the most potential to attract foreign investors, according to the 2021 Milken Institute Global Opportunity Index. The annual assessment uses 96 variables including macroeconomic outlook, potential for future innovation and development, access to financial services, and conformance to international standards to offer a forward-looking analysis of the potential for foreign investment in 145 countries.
New this year, the accompanying report focuses on Latin America, a region ripe for investment where an influx in capital could supplement domestic savings, help job creation, and foster innovation.
Latin America performs well compared to other emerging and developing economies in two key areas: 1) having a highly qualified and diverse workforce and 2) the breadth and depth of the region's financial systems.
“The Global Opportunity Index measures a country’s attractiveness to foreign investors based on five broad categories that give investors the tools to determine their own appetite for risk,” said Claude Lopez, PhD, report author and head of the Research Department at the Milken Institute. “These factors include, for example, understanding whether existing institutions promote business activity, the strength of their macroeconomic frameworks, the reliability of their courts, and the degree of transparency in their institutions.”
Key findings from the 2021 Global Opportunity Index include:
- Sweden ranks no. 1 overall as the country with the most potential to attract foreign investment, followed by the UK at No. 2 and US at No. 3 (up one spot from last year). High-income countries have historically performed well in the Global Opportunity Index, underlining their overall resilience, strength in their economic institutions, and rule of law.
- Chile takes the top spot in Latin America. Chile received the highest ranking in the region due to its strong performance across all categories measured, particularly regarding how friendly its institutions are to foreign investors. Uruguay, Costa Rica, Mexico, and Panama rounded out the top five countries in Latin America, in that order.
- New this year, the Global Opportunity Index added seven variables that capture movement toward the digital economy, including the percentage of households with internet access. These new variables offer insight into which countries are most ready to benefit from the world economy's digitization, a positive for future investors.
- The Global Opportunity Index evaluates each country's strengths and challenges based upon how supportive its institutions and policies are to foreign investment. While a region may perform well on average in a specific category, there can be drastic differences in performance within a region. In Latin America, this is especially apparent when comparing how countries conform to international standards and how they integrate within the international community.
“By placing at the top of the index, these countries signal the resilience of their institutions,” added Lopez. “This indicates a level of confidence in their ability to recover post-pandemic, making them a potentially safer bet for investors in a time of global uncertainty.”
How We Evaluate Countries:
To create the index, the Milken Institute evaluated overall investment opportunity through 96 variables organized into five categories and 14 sub-categories. The five major categories included: Business Perception, Financial Services, International Standards & Policy, Economic Fundamentals, and Institutional Framework. The variables within these categories measured all angles of a countries' investment potential, including economic openness and performance, transparency, and workforce talent and diversity. Data sources include the World Bank, the International Monetary Fund, and the Global Health Data Exchange.
The "Global Opportunity Index 2021: Focus on Latin America" is co-authored by Oscar Contreras, Joseph Bendix, Benjamin Smith, and Claude Lopez. The full report can be downloaded here.
2. United Kingdom
3. United States
3. Costa Rica
About the Milken Institute
The Milken Institute is a nonprofit, nonpartisan think tank that helps people build meaningful lives in which they can experience health and well-being, pursue effective education and gainful employment, and access the resources required to create ever-expanding opportunities for themselves and their broader communities. For more information, visit https://milkeninstitute.org/.