Panama has replaced Chile as the Latin American country with the best business climate, according to the fifth annual Latin Business Index from Latin Business Chronicle. The index of 19 countries is the broadest measure of business climate in Latin America. Rather than looking at the size of a country’s GDP or GDP per capita, it looks at five key categories and 27 subcategories to measure the recent, current and future business environment in a country. They are:

• Macro Environment (GDP growth 2008 and 2009, estimated growth this year and forecasted growth next year, inflation 2008 and 2009, estimated inflation this year and forecasted inflation next year). 
   
• Corporate Environment (corporate tax rates, access to capital for entrepreneurs, ease of doing business (including starting and closing a business) and economic freedom). 
   
• Globalization & Competitiveness (globalization, competitiveness, tariffs, education/ health and security for companies and business executives). 
   
• Technology Level (PC, Internet, broadband, wireless and fixed telephony penetration). Political Environment (political freedom, political stability, political outlook, business policies of government and corruption).

  Brazil, Latin America’s largest economy, ends up in seventh place, an improvement from ninth-place in 2009 thanks to increasing its score by 0.49 points to 14.301. While Brazil is still among the top stars in macro environment, it now ranks as the fourth-best in Latin America versus third-best a year ago. Pulling downBrazil from the top countries in the overall ranking is its low score in the category globalization and competitiveness. Brazil is among the five worst inLatin America, although it did improve somewhat – from being the second-worst to third-worst. Mexico, the region’s second-largest economy, fell one spot to 9th place despite an increase in its score by 0.14 points to 14.043. Mexico is still among the leaders in the category for corporate environment, but is now ranked as the third-best versus second-best a year earlier.

  PANAMA: TOP STAR - Panama improved its score by 0.60 points to 17.628. It joined the group of top five countries in corporate environment (replacing El Salvador as the fifth-best nation) and technology level (replacing Peru as fourth-best). In the category globalization and competitiveness, Panama replaced Costa Rica as the top country (from being second-best a year ago). Meanwhile, it kept its ranking as the second-best country in macro environment and as the fourth-best country in political environment. Panama is now the only country that is among the top five in all our five main categories. By comparison, Chile is in four, Uruguay in three, while Peru,Costa Rica and the Dominican Republic are in two each. Panama’s score improved thanks to an improvement in corporate environment (thanks to an improved doing business ranking and more economic freedom), globalization and competitiveness (thanks to an improvement in HDI and globalization) and technology level. Those advances helped offset a small decline in macro environment (its GDP score fell compared to last year).

  Panama moved up six spots on The World Bank’s Doing business survey to 77th place. It made progress in the category registering property and dealing with construction permits. A smart move, since much of Panama’s recent growth and expected future growth will come from real estate and construction. Meanwhile, Panama continues being the most globalized country in Latin America, according to the Latin Globalization Index from Latin Business Chronicle. The $5.2 billion expansion of the Panama Canal, along with a fast-growing shipping sector, is already earning it the title of the Singapore of theAmericas. Multinationals like Procter & Gamble, Dell and DHL all have regional hubs or headquarters in Panama. Panama can also boast being host of the world’s top shipping registry, the world’s second-largest free zone (after Hong Kong), and the largest international banking center in Latin America. Still, Panama wants more people to know about its attractiveness. “Panamais a jewel waiting to be discovered,” President Ricardo Martinelli recently told a conference in Panama organized by Citigroup and Panama’s Commerce Ministry. To be sure, Panama is not perfect. Corruption is still a problem (with Panama ranking as the10th most transparent country in Latin America on Transparency International’s latest Corruption Perceptions Index). However, slowly, but surely Panama has become Latin America’s business star, as this year’s top spot shows.