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Mexico Gets a Big Thumbs Up for Its Business Environment

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I am happy to see that Mexico gets a big thumbs up for its business environment in the newly released Legatum Prosperity Index 2018, ranking 27th out of 149 countries on entrepreneurial environment, business infrastructure, barriers to innovation and labor market flexibility. Mexico has jumped 10 places in the Business Environment category in three years.

The Legatum Prosperity Index, which has been published annually since 2007, measures prosperity in countries by applying a combination of material wealth and life satisfaction factors it calls Pillars, which include: Economic Quality, Business Environment, Governance, Education, Health, Safety and Security and Personal Freedom.

Overall, Mexico ranks 59th, which places it in the top 40 percent of the nearly 150 countries studied. Results for all seven Pillars, or categories, were mixed, with a low 127th ranking for Safety and Security and 122nd for Social Capital. Here is how Mexico fared in all nine Pillars:

Mexico Legatum Prosperity Index Infographic
Credit: Hyewon Byeon

In Latin America, Mexico ranks best for Business Environment and 6th on all seven measures, falling behind Uruguay (30th), Costa Rica (31st), Panama (43rd), Argentina (53rd) and Columbia (57th).

Mexico ranked 52nd overall in the first Legatum Prosperity Index done and reached a low of 67th in 2012. That same year, the country’s Business Environment reached a low of 42nd.

Globally, Norway was the top ranked country followed closely by New Zealand and Finland. Switzerland, Denmark, Sweden, the United Kingdom, Canada, the Netherlands and Ireland round out the top 10.

The U.S. ranks just 17th overall, but 1st for Business Environment. The United States was ranked 17th in 2007 and has remained 17th for the past 11 years.

Each of the nine Pillars, or categories, used to create the Legatum Prosperity Index are further broken down into sub-categories:

Economic Quality: Measures countries on the openness of their economy, macro-economic indicators, foundations for growth, economic opportunity and financial sector efficiency.

Business Environment: Measures a country’s entrepreneurial environment, business infrastructure, barriers to innovation and labor market flexibility.

Governance: Measures a country’s performance in rule of law, effective governance and democracy and political participation.

Education: Measures access to education, quality of education and human capital.

Health: Measures country performance in basic physical and mental health, health infrastructure and preventative care.

Safety and Security: Measures national security and personal security.

Personal Freedom: Measures national progress towards basic legal rights, individual liberties and social tolerance.

Social Capital: Measures strength of personal relationships, social network support, social norms and civic participation.

Natural Environment: Measures quality of the natural environment, environmental pressures and preservation efforts.

We use data from the Legatum Prosperity Index in several of our Mexico profile sub-categories because it captures both wealth and wellbeing, not just macro-economic measurement of a country’s prosperity. It also synthesizes data from a number of well-known sources, such as Gallup, the World Bank and the International Monetary Fund (IMF) to produce its rankings.

The Legatum Institute is an independent educational charity based in London with the goal of advancing the education of the public in national and international political, social and economic policy.

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