- For the second consecutive year, Brazil continues to be the least globalized country in Latin America, according to the eighth annual Latin Globalization Index from Latin Business Chronicle.
The index of 18 countries looks at six factors that measure a country's link with the outside world:
Exports of goods and services as a percent of GDP.
Imports of goods and services as a percent of GDP.
Foreign direct investment as a percent of GDP.
Tourism receipts as a percent of GDP.
Remittances as a percent of GDP.
The index uses data from the most recent full year, which in this case is 2011.
LOWEST TRADE LEVELS
Latin Globalization Index 2012 offers a fresh look at Latin reliance on international economics. Despite its size Brazil, the sixth largest economy in the world, has the lowest percent of foreign trade as a percent of GDP in the region.
Its exports of goods and services in 2011 were the equivalent of 11.9 percent of its GDP. Meanwhile, imports accounted for only 12.6 percent. Both figures are increased from 2010. This disconnect from world trade flow shows that Brazilian growth has been fueled by domestic consumption and investment. It also shows the gains in which increased foreign trade might bring to this South American country, were it to increase its international commercial activity.
All in all, Brazil's globalization score was 7.25 points, which reflects the still-high protectionist restrictions which are widely criticized by foreign investors. "Brazil's poor infrastructure and complex tax system are two of the main reasons for the closed economy", said Walter Molano, head of Economic Research at BCP Securities.
In the same group of relatively closed economies are Venezuela with a 7.82 score and Colombia with 8.17.
Colombia, like Brazil, based its 2011 growth on domestic consumption and investment. The country posted low import and export to GDP ratios, which were compensated to a degree by a larger proportion of FDI. Foreign investments were 4.04 of GDP, and were concentrated in mines and oil & gas. Tourism was also low in the country â 0.67 of GDP, the third lowest in the region.
As a whole, Latin America became more globalized in 2011. Two countries which improved their score the most were Nicaragua and Chile.
Nicaragua is second to Panama as most globalized country in Latin America. In 2011 it maintained a high volume of exports and imports as a percentage of GDP - 45.9 and 78.1 percent respectively. It also reported the largest FDI to GDP ratio in the region â 13.3 percent of GDP.
Chile climbed two positions to number four in this ranking thanks to its strong international trade position in exports and imports relative to the size of the economy, but also thanks to an important increase in FDI and internet penetration.
Mexico, the second-largest economy in the region ranks 12 in the LBC Latin Globalization Index. In 2011 it gained 0.74 points to score a final 10.40, just above Peru and Argentina with 9.51 and 9.21 respectively. Mexico has this intermediate position due primarily to lower levels of FDI, remittances and internet penetration than its peers when the size of the economy is taken into account.