Guatemala

Guatemala ranks 85th and 71st in Economic Competitiveness and Comparative Liveability respectively, with its lower Economic Competitiveness rank explained by poor mass education and correspondingly low levels of commercialisation of innovation. An overall rank of 82nd places Guatemala low in the table.

Guatemala is one of the poorest and most populous countries in Central America. The economy is comparatively liberalised, and the private sector generates more than 80% of GDP. The Central American Free-Trade Agreement, which came into force for Guatemala in 2006, has contributed to increased investment in the export sector and promoted openness through freedom to trade.

Guatemala’s poor government effectiveness restricts the amount of capital investment that the country is able to attract. Consequently, remittances now constitute the largest single source of Guatemalan foreign income, and total remittances are larger than the combined value of exports and tourism.

Entrepreneurship is also seriously constrained by Guatemala’s poorly-functioning government apparatus. Mass education levels are the worst in the Latin American region, with the average Guatemalan worker possessing less than one year of secondary education. Poor elite education levels also affect the level of commercialisation of innovation in Guatemala.

As in many Central American countries, poverty is the major challenge. The only mitigating factors for Comparative Liveability are the warm climate and the relatively low unemployment rate of 3.1%. Income per capita is half of the Latin American average, and GDP per capita is roughly half that of Argentina, Brazil, and Chile. Almost two thirds of the population live in poverty, and half in extreme poverty.

The civil war, which ended in 1996, forced many Guatemalans to leave the country. The Guatemalan diaspora, which is located mainly in the United States, is estimated to be between half a million and one million. This net migration is likely caused in part by a dissatisfaction with life in Guatemala and a search for opportunity elsewhere. The freedom of choice indicator shows that only 66%^g of Guatemalans report themselves happy with their freedom to choose the course of their lives, according to the Gallup World Poll.

Two ameliorating factors do have a strong effect upon the life satisfaction score. The warm climate significantly increases life satisfaction for those at low income levels. Also, Guatemalans’ substantial charitable giving, despite low income levels and migration levels, points to a high level of community involvement.