Increasing Competition Could Boost GDP by 11% and Reduce Inequality by 6% in Latin America and the Caribbean, IDB Report Says

WASHINGTON, Dec. 11, 2025 /PRNewswire/ -- Latin America and the Caribbean could raise GDP per capita by 11% and reduce inequality by 6% by making markets more competitive, according to a new report by the Inter-American Development Bank (IDB).

The flagship report, "Markets for Development: Improving Lives through Competition," shows that limited competition and high market concentration across the region's economies weakens growth, suppresses wages, and keeps firms small and informal. Drawing on a new cross-country dataset of competition indicators, the study finds that stronger, fairer markets are critical to unlocking productivity and opportunity.

"The report demonstrates that markets are not merely a contextual element in development; they play an active role in driving it," said IDB Group President Ilan Goldfajn. "When competition works, the private sector can do what it does best — create jobs, boost innovation, and deliver better outcomes for workers and consumers. Stronger, fairer markets are key to unlocking Latin America and the Caribbean's full potential."

The report was launched today at the IDB's headquarters in Washington, as part of its "Development in the Americas" (DIA) report series. Drawing on new evidence — including a new IDB database of comparable competition indicators across countries and sectors — it shows how bold, well-designed policies can deliver real gains for consumers, workers, and businesses in sectors such as telecommunications, banking, and health.

The key findings include:

• Market concentration in Latin America and the Caribbean is four times higher than in advanced economies.
• Firms in the region charge markups averaging 35% above cost, compared to 20% in more competitive markets.
• Workers take home just 50% of the value they generate — versus 65% in the United States and 81% in other advanced economies.
• Ninety-five percent of firms have fewer than five workers and account for 57% of employment. The most productive firms — those with more than 50 employees — make up just 1% of firms and account for 20% of jobs.
• If labor markets were as competitive as in advanced economies, GDP per capita could increase by as much as 25% — driven by higher investment and production, more efficient resource allocation, and workers moving to better jobs with fairer wages.

To scale these gains, the report outlines three priorities for governments: reduce market fragmentation, design smarter regulations and strengthen competition.

SOURCE IDB Group