Latin America and the Caribbean face a persistent low-growth cycle, but the World Bank’s new Latin America and the Caribbean Economic Review: Transformational Entrepreneurship for Jobs and Growth highlights entrepreneurship as a key driver to create jobs, boost productivity, and accelerate innovation. The region’s growth is forecast at 2.3 percent in 2025 and 2.5 percent in 2026, making it the slowest-growing global region, constrained by inflation, rising debt, weak investment, and global uncertainties.
Susana Cordeiro Guerra, World Bank Vice President for Latin America and the Caribbean, emphasized that governments have maintained economic stability amid repeated shocks, and now reforms are needed to improve the business climate, invest in infrastructure, and mobilize private capital to sustain growth. The external environment remains challenging, with falling global demand and commodity prices projected to decline further, alongside trade policy uncertainties affecting market access and nearshoring. Domestically, persistent inflation and high public debt—rising to 63.8 percent of GDP in 2024—keep borrowing costs high, dampening investment, productivity, and job creation.
The report identifies “transformational” entrepreneurship as a critical path forward. High-growth firms that diffuse technology, generate employment, and raise productivity are central to fostering dynamic, competitive economies. While support for entrepreneurship exists, most regional firms remain micro or small businesses with limited potential to scale. Transformational firms face persistent obstacles such as limited financing, heavy regulation, skills gaps, and inadequate infrastructure.
To unlock entrepreneurship’s potential, the report proposes a three-point agenda. First, investing in human capital is vital: strengthening education, expanding managerial support, scaling up short-cycle training programs, aligning workforce initiatives with private sector needs, and updating labor regulations to protect workers and support business growth. Second, policy and regulatory reforms are necessary to create a business-friendly environment by removing distortionary subsidies, reforming taxes to boost investment, and improving logistics, energy, and digital infrastructure to reduce entry barriers. Third, expanding access to finance is critical, as over a quarter of firms face credit constraints—about twice the OECD rate. Measures include strengthening risk-sharing mechanisms, streamlining dispute resolution, and modernizing bankruptcy laws to improve capital allocation and protect both entrepreneurs and creditors.
With targeted reforms and strategic investment in human capital, infrastructure, and finance, Latin America and the Caribbean can harness entrepreneurship to drive innovation, create jobs, and build more dynamic and competitive economies.
