On a March afternoon, with the sun painting the jacarandas purple and the palo blanco trees gold, Guatemala looks like paradise. The song of blackbirds and the flight of hummingbirds remind us that we live in a privileged land. But the danger of paradise is conformism. We have clung to stability, to the idea that “we are fine as we are,” to the fear of change. But like the frog boiling without noticing, we remain in the water, comfortable, without realizing that we are slowly fading away.
Less than a century ago, Guatemala was one of the 24 richest economies in the world in terms of GDP per capita. During the government of Jorge Ubico, although we depended on coffee, rigorous fiscal management allowed the country to reduce foreign debt to zero, invest in infrastructure, and expand education. In 1942, our GDP per capita was almost at the level of Italy, France, and the Japanese Empire. We stood alongside the great powers.
Surprisingly, we had a higher GDP per capita than Hungary, Venezuela, and Spain. Our economy per person was 70% larger than Costa Rica’s, more than double that of Korea and Turkey, and more than triple that of Honduras and Brazil. Today, most of the countries we once surpassed have overtaken us. Brazil, Mexico, and Costa Rica now double our wealth; Turkey and Hungary triple it; South Korea multiplies it fivefold, and Singapore no longer sees us in the rearview mirror: it surpasses us by ten times. While they innovated, we preferred to cling to the comfort of keeping everything unchanged.
Falling from 24th place to 108th in GDP per capita is not just a statistic; it is the reflection of a country that lost its place in the world. Competitiveness depends on many factors, but without an agile business environment and an innovative economy, growth is impossible. According to the Doing Business Index (2020), Guatemala ranks 96th in ease of doing business. While Singapore (2), Korea (5), Spain (31), and Turkey (34) have advanced, Guatemala has fallen behind. Even emerging economies such as Georgia (7), Malaysia (12), and Rwanda (38) have surpassed our country with more investment-friendly regulations. The region does not favor us either: Chile (59), Mexico (60), Colombia (67), and Costa Rica (74) offer more attractive environments. If you were an investor and saw a gap of 89 countries between Guatemala and Georgia, where would you put your money?
The problem is not only bureaucracy. Corporate income tax in Guatemala is 25%, while in Georgia it is 15% and in Ireland 12.5%. In total, 103 countries have lower taxes and 95 more favorable regulations. While the world competes to attract capital, we continue tripping ourselves.
It is easy to blame the government: bureaucracy, regulatory obstacles, and the serious problem of corruption. But Guatemala’s backwardness is also the responsibility of the private sector. A clear example is access to credit. In Guatemala, credit to the private sector represents barely 35.9% of GDP, while in Panama it reaches 106% and in Chile 125%. In those countries, entrepreneurs and businesspeople access financing easily, driving growth and innovation. Chile lends 25% more money than its economy produces. In Guatemala, credit is a bottleneck, not a development engine. Without access to financing, macroeconomic stability is not enough: we need a system that drives growth instead of limiting it.
If we continue settling for too little, in a decade we will pay the price with stagnant growth and more lost opportunities. Guatemala has the talent to conquer the world, but it will not do so with fear or conformism.
The Peace Accords aspired to annual growth of 6%; today we settle for 3.5%. And the problem is not only the government: many companies are still afraid to take risks, innovate, and adopt technology. The world advances with automation and artificial intelligence, where productivity no longer depends on minimum wage, but on the ability to innovate. Guatemala invests only 41 dollars per person in ICT Capital, an indicator of investment in technology-related assets, while Costa Rica invests 418, Estonia 1,744, and Singapore 5,797. Notice this: Singapore invests 141 times more per person than Guatemala in technology.
The gap is brutal. While the world becomes more efficient and competitive, many successful businesspeople in Guatemala continue trusting the formulas that have worked for them so far. If you are a business owner and your team still manages critical processes in Excel, there is your first sign that your company —and the country— are losing the race against the world. For small businesses, the situation is even harder: with tight margins, they cannot afford innovative or radical bets that could give them a competitive advantage abroad.
The consequences are evident: between 2022 and 2024, exports of high value-added products in the processed foods, chemicals, textiles, and metalworking sectors fell from USD 7.1 billion to USD 5.9 billion. Likewise, ICT exports dropped from USD 744 million in 2019 to USD 604 million in 2023.
There is no doubt: the productivity train departed decades ago, and Guatemala stayed behind on the platform. In 1974, our Total Factor Productivity (TFP) was 0.93 relative to the United States, only 7% lower than the world’s largest economy. Today it has fallen to 0.66, below Namibia, Sudan, and Iraq. While Costa Rica (0.77) and Panama (0.79) outperform us, others that were once behind, such as Armenia (0.83) and Turkey (0.89), have already surpassed us. Some, such as Mauritius (1.27) and Macau (1.25), have even exceeded the United States. TFP measures the impact of innovation, competitiveness, and efficiency on economic growth. Thus, the world advances with more efficient and technological economies, while Guatemala remains trapped in a mentality accustomed to low growth and limited profits.
Next week we will explore the topic of productivity in greater depth, but for now one thing is clear: the current model is condemning us to backwardness. The lack of investment in technology, the reluctance toward automation, and the resistance to change are not only government problems; they are also symptoms of a country that has lost the ambition to compete.
If we continue settling for too little, in a decade we will pay the price with stagnant growth and more lost opportunities. Guatemala has the talent to conquer the world, but it will not do so with fear or conformism. First we must imagine it. Then we must dare to build it. The moment to do so is not tomorrow. It is now.
