Chile is Latin America’s most ethical and sustainable country for business according to a new study by ethics rating firm Management & Excellence (M&E), Madrid. Latam’s largest country Brazil comes in a weak 5th while Mexico makes 2nd and Argentina comes in 3rd.
Sixteen years after the exit of Augusto Pinochet and return of democracy, Chile transitioned to a modern, open economy and leads in anticorruption efforts. It was first to initiate corporate governance reforms in 2000, broadening shareholder rights and increasing the powers of independent directors.
The M&E study is the first ethics and sustainability ranking of Latam’s eight largest countries using 60 points of quantitative data in areas such as corporate governance, fiscal and economic performance, security and social performance, educational performance and performance against corruption to determine “ethics” (good policies) and sustainability.
Second-ranked Mexico is aided by its economic proximity to the U.S., which fuelled its GDP per capita growth. Mexico’s trade with the U.S. increased by 175% since the North American Free Trade Agreement took effect in 1994. Its GDP per capita is higher than Chile’s.
Argentina is only 1% below Mexico but has a different profile. Since the 2001 financial crisis, Argentina is struggling with a public debt that is 65% of its GDP and the third-highest inflation rate in the sample. Yet Argentina leads in areas which were good before the crisis and are still strong, such as education.
Brazil is strong at corporate governance where Lula’s government has spearheaded reforms, but it ties with Colombia for last place in crime and unemployment. It loses points for corruption and poor education.
Sharing the fifth spot with Brazil is Venezuela, but with a very different profile. Venezuela is the worst in corporate governance, together with Ecuador. Economically, Venezuela is among the weakest performers with the highest inflation rate (31.1%) and lowest in economic freedom.
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Rank of Countries
1. Chile 74%
2. Mexico 60%
3. Argentina 59%
4. Peru 51%
5. Brazil 47%
6. Venezuela 47%
7. Ecuador 37%
8. Colombia 31%