In 1998, Stanford University published a very famous study about productivity. Its central claim was that social infrastructure is the primary driver of countries’ labor productivity.

Favorable social infrastructure would be one that encourages capital accumulation, skill acquisition, invention, and technology transfer. It relies on solid institutions that protect individuals from theft and corruption and preserve a free market.

The International Labour Organization estimates productivity by how many dollars the average worker of each country contributes to the economy. With recent advances in AI, this metric will be fascinating to keep track of in the next few years.

But looking at the last 10 years, Costa Rica has led Latin America in consistently growing its productivity.

Horizontal bar chart comparing average annual productivity growth rates across Latin American countries, highlighting Costa Rica's leading growth | Sources: International Labour Organization, Latinometrics
Costa Rica leads the region in productivity growth

The land of Ticos has long since moved past its agricultural roots to masterfully position itself as a highly competent technology manufacturer. Medical instruments are its specialty, a market worth $6B and making up 25% of total exports in 2023.

If we travel back in time to 1995, bananas were by far Costa Rica's top product, accounting for 28% of the country’s exports. Since then, the value of medical instruments has grown by 160x, leading to quite a prospering industry.

Beyond growth, what are the most productive countries?

Horizontal bar chart comparing output per hour worked across Latin American economies, showing Puerto Rico as the most productive | Sources: ILO, Latinometrics
Latin America's most productive economies

Puerto Ricans, in large part due to US-linked economic policies and infrastructure, are the productivity champs by a fairly wide margin. An hour of their time produces roughly $64 (adjusting for local purchasing power). Most of the region, including Costa Rica, still sees less than half of that output.

Another characteristic of a productive country's economy that you'll notice is that it focuses on providing services and not just physical products. Panama, which trails Puerto Rico in productivity, properly built a thriving ecosystem around its namesake canal to provide services like banking, logistics, and tourism.

Which countries will adapt and lead over the next 10 years? Hard to say for sure, but they’ll likely include those fostering environments where talent and capital thrive.