The El Salvador Municipal Competitiveness Index 2009 Measuring Local Economic Governance to Create A Better Business Environment

Gulf of Mexico

Pacific Ocean

August 2009

This publication was produced for review by the United States Agency for International Development. It was prepared by RTI International.

The El Salvador Municipal Competitiveness Index 2009 Measuring Local Economic Governance to Create a Better Business Environment

Contract EPP-I-07-04-00037-00

PREPARED FOR USAID/El Salvador

PREPARED BY RTI International 3040 Cornwallis Road Post Offi ce Box 12194 Research Triangle Park, NC 27709-2194 USA

Th is study is made possible by the generous support of the American people through the U.S. Agency for International Development (USAID). Th e contents are the responsibility of RTI and ESEN and do not necessarily refl ect the views of USAID or the United States Government. ACKNOWLEDGMENTS

Th e Municipal Competitiveness Index (MCI) 2009 from both the public and private sectors who is the result of a collaborative eff ort between the U.S. informed the survey design, and the thousands Agency for International Development (USAID) and of respondents—business owners, mayors, and project implementer RTI International (RTI) with municipal offi cials—who took the time to be Salvadoran partner Escuela Superior de Economía y interviewed about their local business environment Negocios (ESEN). and municipal regulations. Furthermore, this study would not have been possible without RTI’s Chief of Party Dr. Carlos Carcach led the the support of the Ministry of the Economy; development of the Municipal Competitiveness Index Corporation of Municipalities of the Republic research methodology and the presentation of its of El Salvador (COMURES); Foundation for analytical fi ndings. Ms. Jennifer Bartlett managed the Sustainable Development (FUNDES); National overall eff ort, with Mr. Aldo Miranda serving as the Association of Private Businesses (ANEP) and its key advisor on municipal government and Ms. Ashley member associations; Salvadoran Foundation for Whittredge assisting with project coordination. Economic and Social Development (FUSADES); Also supporting Dr. Carcach in the research eff ort National Foundation for Development (FUNDE); was ESEN’s Economic Research Group faculty. American Chamber of Commerce; local chapters of Dr. Edmund Malesky of the University of California, the Chambers of Commerce in San Miguel, Santa San Diego, the architect of the methodology, which Ana, and San Vicente; La Libertad Tourism Board; has been employed throughout Asia, oversaw the ESEN General Director Rafael Barraza; and USAID/ development of the MCI study and served as a key El Salvador Economic Growth Offi ce staff —Project reviewer. Manager Ms. Sandra Lorena Duarte, Bilateral Team We would like to thank all members of the project Leader Mr. Carlos Arce, and Director Dr. Lawrence team for their hard work, the numerous stakeholders Rubey. CONTENTS

EXECUTIVE SUMMARY v FIGURES Uses for the Index Results v Figure 1. Municipal Competitiveness Index Methodology v for 100 El Salvador Municipalities 3 Signifi cant Findings vi Figure 2. Municipal Resource Endowments 4 Dissemination and Sustainability vi Figure 3. Distribution of Municipalities by Weighted MCI and Resource Endowments 5 THE MUNICIPAL COMPETITIVENESS Figure 4. Regional Distribution of MCI Scores 5 INDEX (MCI) 1 Figure 5. Components of the Municipal El Salvador’s Business Environment 1 Competitiveness Index 6 What is the Municipal Competitiveness Figure 6. Municipal Performance, by Nine Index (MCI)? 1 Sub-Indices 8 Methodology 2 Figure 7. Transparency Sub-Index 14 MCI Overall Ranking 3 Figure 8. Municipal Services Sub-Index 14 MCI versus Resource Endowments 4 Figure 9. Proactivity Sub-Index 15 Regional Distribution of MCI Scores 5 Figure 10. Informal Payments Sub-Index 15 Sub-Index Results 6 Figure 11. Public Safety Sub-Index 16 Transparency 10 Figure 12. Time to Compliance Sub-Index 16 Municipal Services 10 Figure 13. Rates and Taxes Sub-Index 17 Proactivity 11 Figure 14. Entry Costs Sub-Index 17 Informal Payments 11 Figure 15. Municipal Regulations Sub-Index 18 Public Safety 11 Figure 16. Unweighted MCI Performance and Time to Compliance 12 Economic Welfare 19 Rates and Taxes 12 Entry Costs 13 TABLES Municipal Regulations 13 Table 1. Indicators Used in Sub-Indices 7 Conclusions and Policy Implications 18 Table 2. Performance of Top Municipalities, The Governance Premium 18 by Performance Group 20 Prioritizing Areas for Improvement 19 Learning from Neighbors 20 Moving from MCI Scores to Reality 20

ABBREVIATED APPENDIX: SUMMARY OF MUNICIPAL COMPETITIVENESS INDEX (MCI) METHODOLOGY 22

III

EXECUTIVE SUMMARY

Th e U.S. Agency for International Development (USAID), through its Promoting Economic The MCI study serves several purposes and benefi ciaries: Opportunities Program, supports a research eff ort called the Municipal Competitiveness Index (MCI) Identify policy and regulatory constraints. Knowing the constraints, municipal, business, and project. Its primary task is to gather baseline data on the community stakeholders can more easily discuss possible business environment at the local level in El Salvador, reforms and then take action to carry them out. and conduct an analysis of the results with the goal of identifying administrative and regulatory constraints Introduce friendly competition. Municipalities with low scores on certain sub-indices can learn from their to private sector development. Additionally, by ranking stronger neighbors; municipalities with high scores can municipalities against each other, the project aims draw attention to their successes by helping to replicate to create a benefi cial spirit of competition to remove them. the identifi ed impediments. A supportive business Encourage advocacy. The business community can use environment will enable local governments to attract the MCI report to identify and advocate for improved and retain local and foreign investment, promote policies and procedures. trade, take advantage of opportunities from free-trade agreements, and increase economic growth and local Inform national and international interests. Central government leaders and the donor community employment. Th e core methodology used to develop the will be able to use the tool to develop action plans for rankings has been employed previously in Asia, where reform and to identify best practices among Salvadoran it has proven to be a valuable way to promote dialogue municipalities for potential replication across the country and healthy competition regarding subnational private and the region. sector development. RTI International (RTI) leads the Stimulate further research. Students and scholars of MCI project together with Salvadoran research partner economic development are encouraged to use the MCI Escuela Superior de Economía y Negocios (ESEN). Th e analysis and data set for additional research on the topic. project began in January 2009; was carried out during the municipal, legislative, and presidential elections; and will conclude in August 2009 following the transition of Methodology government. Data for the eff ort were collected through two face-to- face surveys: one targeted at 4,000 business owners of Uses for the Index Results all sizes and sectors, and the other focused on mayors and municipal offi cials in the 100 project municipalities. RTI, together with ESEN, assessed and ranked the Literature and published data on economic development country’s 100 most populous municipalities on nine in El Salvador were also reviewed. Nine sub-indices aspects of economic governance. Th e outcome of their for which data were gathered were selected based on assessment is this report, which is a ranking tool that their importance to businesses in El Salvador, level can be used by municipal and central government of municipal control over an issue, and variance in leaders, as well as the donor community, to develop local performance across the municipalities. Th e sub-indices action plans for reform and to identify best practices selected were: Transparency, Municipal Services, in Salvadoran municipalities for potential replication Proactivity, Informal Payments, Public Safety, Time in other areas of the country. Th e business community to Compliance, Rates and Taxes, Entry Costs, and can also use the MCI results to advocate for improved Municipal Regulations. Data on these topics were local and national policies and procedures relating to the analyzed and combined to create an overall ranking private sector. of municipal competitiveness of the local business environment.

V Signifi cant Findings Dissemination and Sustainability Th e MCI results revealed a number of interesting Th e MCI provides an opening for constructive dialogues fi ndings. Transparency, Municipal Services, Proactivity, between the public and private sectors at the local level. and Informal Payments were the main factors underlying Th e last stage of the project is a major dissemination municipal competitiveness, as they were the most event in San Salvador and a series of three municipal- closely correlated with business success. Th e results level workshops at which the results will be presented in also demonstrated signifi cant variance in the business- a regional context and next steps for generating a better enabling environment among municipalities across the business environment will be discussed with both the country, including within regions and departments. public and private sectors. Th e dialogues are a fi rst step However, in all municipalities, including the top scorers, toward establishing a peer-to-peer reformers network, there is signifi cant room for improvement. In looking consisting of leaders from municipal government, the at the rankings for each of the nine sub-indices, it is private sector, and related associations, with the MCI clear that many municipalities that were strong in one being used as a tool to improve the business environment area were weak in another. For instance, Conchagua in their jurisdictions and advance the decentralization was an Excellent performer in Transparency (7.97) and agenda in El Salvador. Ideally, the MCI should be Proactivity (7.81) but was a Very Low performer in implemented every two years to measure the progress of Rates and Taxes (3.23). Finally, the study results indicate municipalities toward achieving more business-friendly that although resource endowments are undeniably an policies and procedures and to inform and maintain important aspect of competitiveness, they do not directly the momentum for reform initiatives. Information correlate with a strong business-enabling environment. about the 2009 MCI and future MCI initiatives can be However, the data show that business-friendly policies found at www.municipalindexelsalvador.com or www. and procedures do have positive impacts on local indicemunicipalelsalvador.com. economic development through improvements to the well-being of residents.

Out of all 100 municipalities, Antiguo Cuscatlán emerged as the top-ranking municipality with a score of 7.94 out of 10. La Libertad and Texistepeque rounded out the top three overall scorers.

VI THE MUNICIPAL COMPETITIVENESS INDEX (MCI)

El Salvador’s Business Environment What is the Municipal Over the past 20 years, El Salvador has gone through a Competitiveness Index (MCI)? process of deep economic restructuring that has brought A supportive business environment leads to improved macroeconomic stability and signifi cant improvements living standards, better private sector performance, in the social and economic well-being of its citizens. In increased local investment, and more employment the past several years, the government has catalyzed a opportunities.4 Th e MCI is a tool to measure the number of great improvements to El Salvador’s business business-enabling environment at the subnational environment. According to the World Bank’s Doing level within a country. It is an assessment of municipal Business 2009 report, El Salvador ranks 72nd out of governments’ capacity to create and enforce commercial 181 economies and is fi rst among the Central American regulatory policies that stimulate private sector countries. Four years ago it took 115 days and 12 distinct development. steps to launch a business in El Salvador. Today the process has been reduced to just 17 days and eight steps, Importantly, it does not measure the total investment with many more businesses registering annually as a result. environment, typically thought necessary in measures of development potential. Excluding measures of total Th e country has also been very successful at reducing the investment environment, such as initial structural national poverty rate, which decreased by 31% between conditions, or resource endowments—such as 1991 and 2007.1 However, economic growth across the population size, location, natural resources, and access country has not been even, with more than 44.8% of to markets and skilled labor—allows us to compare the population in the northern region living below the municipalities on a level playing fi eld despite very poverty line.2 To attract businesses and private investment diff erent endowments and stages of development. to municipalities across the country and achieve more It focuses on the aspects of the local economy and even, broad-based economic growth, local governments governance over which municipal governments have must modernize their administration of commercial equal control, thereby providing information that is regulations. actionable by all local governments and can lead to more effi cient, productive, and transparent practices across the El Salvador is organized into 14 departments and 262 country. Th e approach adopted for developing the MCI municipalities. Th e latest economic census, conducted in makes it possible for smaller municipalities to score as 2005, found a total of 179,817 business operations across well as the country’s largest and most economically active the country. Economic activity is heavily concentrated in ones, such as the municipalities in the departments of a few departments, with 73% of all businesses (131,266 San Salvador and La Libertad. In fact, this has been fi rms) located in fi ve departments (San Salvador, La the case with Texistepeque, which received the third Libertad, Santa Ana, San Miguel, and Sonsonate), and highest MCI score this year. Texistepeque is a rural 64% of formal business in San Salvador and La Libertad. municipality that is located 17 kilometers to the north of Th e businesses located in these two departments generate the municipality of Santa Ana, with economic activities 69% of total employment (747,226 jobs) and 76% of primarily focused on farming and cattle, and as such was paid employment (535,839 jobs).3 Most businesses are not expected to receive such a high MCI score. Th e MCI informal—only 17% of businesses (30,206 fi rms) counted provides information for both the public and private by the census keep formal accounting records. sectors to better understand why some municipalities perform better than others in stimulation of private sector growth, job creation, and economic development. 1 Evolución del Bienestar en El Salvador, 1991-2007. An analysis based on the National Multipurpose Survey of Households. Report prepared for the It also helps to identify constraints that need to be Ministry of the Economy. Author: Carlos Carcach, December 2008, San Salvador. 3 Many businesses employ family members without pay. 2 Millennium Challenge Corporation (MCC). MCC and El Salvador: Partnering to Reduce Poverty Th rough Growth. (MCC, May 29, 2009). 4 Djankov, Simeon, Rafael La Porta, Florencio Lopez-de-Silanes, and Available at: http://www.mcc.gov/documents/ Andrei Shleifer, 2002, “Th e Regulation of Entry,” Quarterly Journal of factsheet-052909-elsalvador.pdf. Economics, 117, 1-37. 2 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

reduced locally and nationally, as well as best practices Nine sub-indices were developed to capture diff erent in high-performing municipalities that can be replicated aspects of the municipal-level business environment. Th e across the country. By ranking municipalities against criteria for selecting the sub-indices included importance each other on a variety of indicators, the MCI creates a to businesses in El Salvador, level of municipal infl u- benefi cial sense of competition among municipalities to ence over the selected issues, and variance on the improve local policies that spur development. measures associated with topic among municipalities in El Salvador. Methodology Th e methodology used to create the MCI has been previ- The MCI sub-indices* ously applied in a half-dozen Asian countries, including in 1. Transparency measures the degree of openness to provide access to information and the predictability Indonesia and Vietnam, where it was also funded by the of changes to regulations affecting businesses in the U.S. Agency for International Development. municipality. In El Salvador, RTI computed the MCI score for each of 2 Municipal Services measures the quality of services the most populous 100 municipalities, which accounts that the municipality provides to the private sector. for 81% of the population, or approximately 4.6 million 3. Proactivity measures the level of dynamism of people; and 92% of businesses (165,431 fi rms: micro, municipal government in developing and promoting 157,977; small, 5969; medium, 695; large, 678). We initiatives aimed at attracting investment and improving collected the data used to construct the MCI and local business conditions. component sub-indices through two surveys that were 4. Informal Payments measures the magnitude, specifi cally created to fi t the El Salvador context. Our incidence, and costs of informal payments required to team developed both surveys with input from a series start and operate a business. of stakeholder meetings, involving business owners, 5. Public Safety measures the impact of crime to organizations, and municipal offi cials. Th e fi rst was a business owners and municipalities’ ability to prevent sample survey of 4000 business establishments with a and control crime. fi xed address5 in each of the 100 most populous munici- 6. Time to Compliance measures the frequency of palities. Th e second was a survey of mayors and municipal inspections in each municipality, and the degree to offi cials in the same 100 municipalities. We also tested which they are carried out in an appropriate manner. both questionnaires with focus groups and with a pilot 7. Rates and Taxes measures the amount of local taxes test group of business owners and municipal offi cials. and other charges required to operate a business. 8. Entry Costs measures the time costs and ease of During the collection of municipal data, in eight registering and beginning operations of a business. municipalities, the mayor and/or town offi cials refused to participate in the study and did not provide municipality 9. Municipal Regulations measures the number of regulations imposed on businesses operations. survey data. As a result, an alternative data collection measure was developed, whereby an interviewer from the * The sub-indices are described in greater detail in Table 1 on page 7. research team posed as a person interested in registering a business and acquired the information necessary directly from those municipalities. Some data for the reluctant Originally, a Labor Training Sub-Index was intended for municipalities were also collected through offi cial inclusion in the calculation of the MCI; however, data published data sources. Th e data collection and the MCI collected through the municipal survey were incomplete methodology are explained in summary form in the and the business survey data were inconclusive, so 7 abbreviated appendix at the end of this report.6 it was dropped. For more information on the MCI methodology, see the abbreviated appendix.

5 Mobile businesses were excluded from the sample because their availability to be surveyed could not be guaranteed ex-ante. 7 Th e business survey data showed that labor training is typically conducted 6 A more detailed description is found in the full appendix. Th is and funded by the private sector or is supported by the central government. document can be downloaded from the project Web site at www. Not enough municipal involvement was found to show variance between municipalindexelsalvador.com or www.indicemunicipalelsalvador.com. the municipalities to make it strong enough for inclusion in the MCI. Figure 1. Municipal Competitiveness Index for 100 El Salvador Municipalities 3

0246810 Antiguo Cuscatlán 7.94 La Libertad 7.32 Texistepeque 7.19 San Pedro Masahuat 6.92 MCI Overall Ranking Conchagua 6.90 Tepecoyo 6.63 Scores are tallied for each MCI sub-index to determine Santa Tecla 6.62 El Carmen 6.60 how municipalities diff er along each aspect of the business El Rosario 6.58 San Pablo Tacachico 6.56 environment being measured. For each sub-index created, San Francisco Gotera 6.53 Cuscatancingo 6.53 municipalities are ranked on a scale of 1 to 10, where 10 Chalchuapa 6.43 Pasaquina 6.40 represents the best relative performance and 1 the worst. Moncagua 6.38 Nahuizalco 6.33 To create an overall MCI score, the scores from each sub- Quezaltepeque 6.32 Tejutla 6.31 index are combined and weighted. As a result, the nine El Tránsito 6.30 8 Santiago Texacuangos 6.27 sub-indices do not contribute equally to the MCI. Chalatenango 6.25 Mejicanos 6.16 Guazapa 6.15 In order to help classify the results, fi ve performance Ilopango 6.15 El Paisnal 6.15 categories were created: Excellent, High, Average, Low, San Salvador 6.14 San Antonio del Monte 6.13 and Very Low. Th e category ranges, or break points for the San Rafael Cedros 6.10 Soyapango 6.08 categories, were determined by one-point gaps, with the Puerto El Triunfo 6.07 Ilobasco 6.07 rationale being that in the short term, it is very diffi cult Jujutla 6.06 San Juan Opico 6.05 for a municipality to improve its ranking by one point or Suchitoto 6.04 9 Huizúcar 6.02 more. Each sub-index had its own category ranges. Santa Rosa de Lima 6.02 Santiago de María 6.01 Santa Ana 6.01 Th e overall MCI scores for all 100 municipalities can Metapán 6.00 Apopa 5.98 be seen below in Figure 1. Antiguo Cuscatlán achieved Apastepeque 5.97 Juayúa 5.93 the highest overall MCI score in the country, with Cojutepeque 5.92 10 Corinto 5.91 7.94 out of 10 points. Th e average score across the San Julián 5.89 Candelaria de la Frontera 5.87 100 municipalities was 5.79. Th e top fi ve municipalities, Tamanique 5.80 Ayutuxtepeque 5.77 in the Excellent Performing category, are San Marcos 5.75 Tecoluca 5.74 Antiguo Cuscatlán 7.94 San Pedro Masahuat 6.92 Chirilagua 5.74 Atiquizaya 5.73 La Libertad 7.32 Conchagua 6.90 Jiquilisco 5.73 Lolotique 5.71 Texistepeque 7.19 Sensuntepeque 5.68 Aguilares 5.68 Lislique 5.61 A total of 50 municipalities were in the High Performing Guaymango 5.59 Colón 5.57 category, 43 in the Average Performing category, Anamorós 5.56 Santa Elena 5.55 and only 2 were in the Low Performing range. No San Miguel 5.54 Delgado 5.53 municipalities were in the Very Low Performing range Olocuilta 5.53 Santiago Nonualco 5.52 for the overall MCI ranking. San Juan Nonualco 5.50 San Pedro Perulapán 5.50 Izalco 5.46 San Alejo 5.46 8 Sub-index weights were as follows: Transparency (15%), Municipal Services Zaragoza 5.45 (15%), Proactivity (15%), Informal Payments (15%), Public Safety (10%), Nejapa 5.42 Nueva Concepción 5.42 Time to Compliance (10%), Rates and Taxes (10%), Entry Costs (5%), Ciudad Barrios 5.40 and Municipal Regulations (5%). Th ese weights were derived from the Jucuarán 5.39 relative contribution that each sub-index made to the variations in two San Sebastián 5.38 measures of economic success of local businesses during 2008: the average Sonzacate 5.36 Sonsonate 5.36 sales increase and the number of businesses registered in the municipal Jucuapa 5.34 cadastre. San José Villanueva 5.31 Armenia 5.30 9 For instance, Figure 1 shows that Antiguo Cuscatlán recorded the highest San Luis Talpa 5.28 score on the MCI (7.94). Municipalities with an MCI score greater than Tonacatepeque 5.22 or equal to 6.70 were assigned to the Excellent Performing MCI group. San Luis La Herradura 5.22 San Martín 5.21 Municipalities with an MCI value between 5.70 and 6.70 were assigned San Sebastián Salitrillo 5.20 to the High Performing category. Municipalities with scores between Berlín 5.18 Excellent 4.70 and 5.70 were assigned to the Average Performing category. Finally, Tacuba 5.18 San Vicente 5.15 municipalities with an MCI score less than 4.70 were assigned to the Low Acajutla 5.07 High Performing category. Th e category ranges, or break points, are diff erent for Ahuachapán 5.04 each of the sub-indices and classify municipalities into fi ve performance La Unión 5.03 groups: Excellent, High, Average, Low, and Very Low. Th ese ranges are Coatepeque 4.99 Average San Francisco Menéndez 4.98 specifi ed when the fi ndings for each sub-index are discussed. Panchimalco 4.97 Chinameca Low 10 4.93 Mean scores are used across this study because the MCI and sub-index El Congo 4.91 distributions are fairly symmetric. In this case the mean and the median Santo Tomás 4.84 Very Low have similar values. Ciudad Arce 4.82 Usulután 4.58 Zacatecoluca 4.48 4 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

Table A1 in the abbreviated appendix ranks each Figure 2. Municipal Resource Endowments municipality by MCI score and shows actual fi gures for Standardized Resource Endowments (30 Points Possible) 0102030 each sub-index. Antiguo Cuscatlán Santa Tecla San Salvador Mejicanos Soyapango MCI versus Resource Endowments Ayutuxtepeque Ilopango Figure 2 shows the resource endowments for each of Cuscatancingo San Marcos the 100 municipalities, which include measures of Sonzacate Delgado human development, infrastructure, and proximity to Apopa Colón Santo Tomás major markets. Th e MCI is measuring a municipality’s Tonacatepeque San Martín competitiveness independent of its endowments. Th e Santa Ana Aguilares MCI’s purpose is to construct an index that focuses on Cojutepeque Zaragoza actionable items that local governments can undertake to Quezaltepeque Olocuilta improve the business environment. Santiago Texacuangos San Juan Opico San José Villanueva Sonsonate Th ree variables representing resource endowment were Ciudad Arce Guazapa used to create Figure 2, and are controlled for in the Chalatenango El Congo MCI calculations. Th ey are: La Libertad San Sebastián Salitrillo Nejapa 1. Local development as measured by the Human San Rafael Cedros Chalchuapa Development Index (HDI) (United Nations Zacatecoluca San Antonio del Monte San Vicente Development Programme, 2006); Armenia San Sebastián El Rosario 2. Initial infrastructure endowment as measured by the El Paisnal Usulután number of phones per 100 households according to Juayúa San Pablo Tacachico the 2007 Census of Population and Housing (Censos Suchitoto San Juan Nonualco de El Salvador, 2008); and Santiago Nonualco Texistepeque Panchimalco San Miguel 3. Proximity to markets as measured by the distance in San Luis Talpa Metapán kilometers from the municipality seat to the city of Tepecoyo Nueva Concepción San Salvador. San Pedro Masahuat San Pedro Perulapán Tejutla Th e resource endowment data confi rm that the Coatepeque Sensuntepeque Santiago de María municipalities located in the San Salvador Metropolitan Candelaria de la Frontera Atiquizaya Area dominate the measures. In particular, Antiguo Izalco Ilobasco Cuscatlán ranks the highest because of a higher HDI, Tamanique Huizúcar followed by Santa Tecla and San Salvador. Th ese Acajutla Jucuapa three municipalities, together with the rest of the Puerto El Triunfo San Luis La Herradura municipalities of the San Salvador Metropolitan Area, San Julián Apastepeque Ahuachapán Santa Ana, and San Miguel, account for more than Jiquilisco Berlín 50% of the total number of businesses in the country. Santa Elena El Carmen It is obvious that resource endowments are important San Fransisco Gotera Chinameca for investment decisions. However, for the purposes of El Transíto Santa Rosa de Lima this study, the key question is: How can good economic La Unión Tecoluca policy, regulations, and administration spur private Nahuizalco San Francisco Menéndez sector growth beyond the structural conditions of Lolotique Moncagua Ciudad Barrios municipalities? Pasaquina Chirilagua Human Development Index Jucuarán Jujutla San Alejo Phones per 100 households Conchagua Tacuba Guaymango Distance from San Salvador Anamorós Corinto Lislique THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 5

Figure 3 further illustrates the Figure 3. Distribution of Municipalities by Weighted MCI and diff erence between resource Resource Endowments endowments and an enabling business environment, and 100 shows that the former does not 80 necessarily lead to the latter. Twenty-fi ve municipalities 60 Average = 57.9 with above-average MCI scores 40 recorded below-average values 20 Average = 54.2 on the resource endowments index. Th is result suggests that MCR (Rank) Weighted 0 local governments’ eff orts to 0 102030405060708090100 Resource Endowments (Rank) foster conditions leading to a favorable business climate go far beyond the resource endowments that may have an score between 5.70 and 6.70 were classifi ed in the infl uence, either positive or negative, on the capacity of High Performing category and are shown in medium local governments to promote development. Figure 3 blue. Light blue municipalities are in the Average shows the distribution of municipalities according to the Performing category, scoring between 4.70 and 5.70. MCI and the index of resource endowments. Finally, municipalities highlighted in dark gray are in the Low Performing category, with MCI scores below Regional Distribution of MCI Scores 4.70. Th ere is also a category for Very Low Performing Figure 4 shows the geographical distribution of the municipalities. No municipality fell into this category MCI scores. Th e municipalities with an MCI score of for the overall MCI scores; however, many did in the 6.70 and greater were classifi ed as Excellent Performers individual sub-index rankings. and are highlighted in dark blue. Th ose with an MCI

Figure 4. Regional Distribution of MCI Scores

WEIGHTED MCI Excellent High Average Low Water bodies Municipalities not included in the construction of the MCI 6 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

Sub-Index Results success.13 Th ese sub-indices were followed by Public Figure 5 illustrates that not all of the sub-indices have Safety, Time to Compliance, and Rates and Taxes with the same impact on local competitiveness and not all regard to their infl uence in the MCI scores. Entry Costs municipalities perform equally across all sub-indices, as and Municipal Regulations explained the remaining part can be seen in the varying top, average, and low scores of municipal competitiveness.14 across each sub-index. Th e top-ranking municipality is With the exception of the sub-indices of Informal also named at the top of each sub-index. As with the Payments, Entry Costs, and Municipal Regulations, overall MCI scores, the sub-indices are calculated on a the remaining measures of competitiveness recorded 1-to-10 scale, where 10 represents the best score and 1 relatively low average values. Th is result suggests that is the worst. A score of 10 does not necessarily indicate opportunities for improvement exist across all areas of a perfect performance by a municipality on a particular municipal competitiveness, and across all municipalities. sub-index. Th e transformed scale assigns a value of 10 to Municipal Services recorded the poorest overall the municipality with the best average value for the set of performance with an average of just 3.23. Rates and indicators included in the calculation of a sub-index.11 Taxes and Time to Compliance also had low average Th e Transparency, Municipal Services, Proactivity, and scores of 4.30 and 4.96, respectively. Informal Payments sub-indices appeared as the main A number of indicators were used to compute the sub- factors underlying municipal competitiveness,12 as they indices. Th ese are described in Table 1. were the most closely correlated with local business

Figure 5. Antiguo Cuscatlan, Tejutla, San Juan Opico, Sensuntepeque, El Carmen (Cuscatlán) El Rosario (La Paz), Jucuaran Components of 10.00 10.00 the Municipal 10

Competitiveness 9.54 Index 9 8.44 8.10 San Sebastián (San Vicente) 8.23

8 Conchagua 8.87 La Libertad 8.31 Conchaque 7.97

7 Antiguo Cuscatlán 9.50 Santa Ana 7.53 6.48

6 6.94 Ilopango 6.00 5.67 5.54 5 4.96 4.66 4.30 4 3.69 3.66 3.70 3.23 3.04 3 2.99

2 2.07 1.44 1 Transparency Municipal Proactivity Informal Public Time to Rates and Entry Municipal Services Payments Safety Compliance Taxes Costs Regulations

Highest Score Average Score Lowest Score

11 For example, Figure 5 shows San Juan Opico, Sensuntepeque, El Rosario Informal Payments contributed 48% to the total competitiveness of a (La Paz), and Jucuarán with a score of 10 for the Municipal Regulations municipality. Public Safety, Time to Compliance, and Rates and Taxes Sub-Index. Th ese municipalities recorded the lowest values for each of explained 27%, and Entry Costs, together with Municipal Regulations, the two indicators for the sub-index: 0.0% for the percent of businesses explained the remaining 25% of local competitiveness. that perceived that the number of municipal regulations had increased 13 Business success was calculated with 2008 fi gures for average sales increase during 2008, and 0.0% for the percent of businesses that perceived that and number of businesses registered with municipalities. the number of regulations was above normal compared to neighboring municipalities. 14 View the full appendix for the regression analysis. 12 Th e results of a factor analysis shown in the full appendix (available at: www.municipalindexelsalvador.com or www.indicemunicipalelsalvador. com) indicate that Transparency, Municipal Services, Proactivity, and THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 7

Table 1. Indicators Used in Sub-Indices

TRANSPARENCY INFORMAL PAYMENTS % Businesses not affected by municipal support to informal sector % Businesses feeling informal payments are a common occurrence % Businesses think municipality does not favor businesses owned by % Businesses think informal payments do help in gaining access to people belonging to the mayor's party municipal documents or in obtaining permits/licenses % Businesses think municipality does not favor large businesses and does % Businesses feeling tenders are fair not discriminate against small businesses % Businesses perceiving extra tax payments are a common occurrence % Businesses knowing about the existence of processes for fi ling in the municipality complaints or making recommendations % Businesses have made extra payments to fi x municipal tax problems % Businesses knowing about the existence of processes for informing PUBLIC SAFETY citizens about local issues % Businesses saying that crime was higher in 2008 compared to 2007 % Businesses perceiving that municipal policies are applied in a % Businesses perceiving that crime has increased due to bad municipality consistent manner work % Businesses perceiving that relationships are important for gaining % Businesses perceiving that crime has decreased due to good access to documents and/or obtaining permits/licenses municipality work % Businesses gaining easy access to local documents Municipal spending on public safety per capita (US$) % Businesses perceiving that changes to rates/taxes and regulations are % Businesses victimized during 2008—robbery or theft predictable % Businesses perceiving that local crime is higher than in neighboring % Businesses perceiving municipal tenders as transparent municipalities MUNICIPAL SERVICES Cost of crime to businesses per US$1,000 sale increase in 2008 % Businesses qualifying municipality as good at controlling informal % Businesses victimized during 2008—extortion or kidnapping commerce TIME TO COMPLIANCE % Businesses qualifying municipality as good at doing public works during 2007–2008 % Businesses inspected in 2008 % Businesses qualifying municipality as good at providing facilities for Number of inspections per 100 businesses administrative procedures % Businesses feeling the number of inspections is above normal % Businesses qualifying municipality as good at providing facilities for tax % Businesses feeling municipal inspectors act fairly payments % Businesses feeling the municipality adequately ensures compliance % Businesses qualifying municipality as good at crime prevention and RATES AND TAXES control % Businesses feeling that local taxes are higher than in neighboring % Businesses qualifying municipality as good at developing labor and municipalities entrepreneurship programs Number of incentives per 100 businesses % Businesses qualifying municipality as good at promoting tourism Municipality offers tax advantages % Businesses qualifying municipality as good at promoting business opportunities Tax revenue standardized by municipal services % Businesses qualifying municipality as good at promoting and ENTRY COSTS supporting local business associations Effective wait for business premises (days) % Businesses qualifying municipality as good at providing services to Length of wait for other business-related permits (days) attract investors and clients % Businesses waiting over ONE month to obtain permits to start % Businesses qualifying municipality as good at providing services to operations facilitate access to credit by local business % Businesses waiting over THREE months to obtain permits to start % Businesses qualifying municipality as good at export promotion operations PROACTIVITY % Businesses having problems with obtaining permits/licenses to start % Businesses perceiving that municipality works actively to solve operations business problems % Businesses fi nding it diffi cult to obtain information on necessary % Businesses perceiving that municipality has good initiatives, but these procedures/documents are blocked by central government Total number of documents required to obtain permit for operations % Businesses perceiving that not all private-sector related policies come Time to issue permits to operate (days) from the central government MUNICIPAL REGULATIONS % Businesses that feel the number of municipal regulations increased during 2008 % Businesses that feel the number of municipal regulations is above normal, compared to neighboring municipalities 8 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

Figure 6 contains star graphs showing the performance Th e shaded area for each sub-index indicates the score of all 100 municipalities on each of the nine sub-indices. obtained in that area.

Figure 6. Municipal Performance, by Nine Sub-Indices

Antiguo La Libertad Texistepeque San Pedro Conchagua Tepecoyo Santa Tecla Cuscatlán Masahuat

El Carmen El Rosario San Pablo San Francisco Cuscatancingo Chalchuapa Pasaquina Tacachico Gotera

Moncagua Nahuizalco Quezaltepeque Tejutla El Tránsito Santiago Chalatenango Texacuangos

Mejicanos Guazapa Ilopango El Paisnal San Salvador San Antonio San Rafael del Monte Cedros

Soyapango Puerto Ilobasco Jujutla San Juan Suchitoto Huizúcar El Triunfo Opico

Santa Rosa Santiago Santa Ana Metapán Apopa Apastepeque Juayúa de Lima de Mariá

Cojutepeque Corinto Transparency Informal Payments Rates and Taxes

Municipal Services Public Safety Entry Costs

Proactivity Time to Compliance Municipal Regulations THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 9

Figure 6. Municipal Performance, by Nine Sub-Indices (continued)

San Julián Candelaria de Tamanique Ayutuxtepeque San Marcos Tecoluca Chirilagua la Frontera

Atiquizaya Jiquilisco Lolotique Sensuntepeque Aguilares Lislique Guaymango

Colón Anamorós Santa Elena San Miguel Delgado Olocuilta Santiago Nonualco

San Juan San Pedro Izalco San Alejo Zaragoza Nejapa Nueva Nonualco Perulapán Concepción

Ciudad Jucuarán San Sebastián Sonzacate Sonsonate Jucuapa San José Barrios Villanueva

Armenia San Luis Tonacatepeque San Luis San Martín San Sebastián Berlín Talpa La Herradura Salitrillo

Tacuba San Vicente Acajutla Ahuachapán La Unión Coatepeque San Francisco Menéndez

Panchimalco Chinameca El Congo Santo Tomás Ciudad Arce Usulután Zacatecoluca 10 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

Transparency Th e average value of the Transparency Sub-Index Transparency is one of the most crucial factors in was 5.67. Conchagua was the most transparent identifying environments that promote local municipality, with a score of 7.97. Figure 7 on page 14 investment.15 It is closely linked to both corruption shows Transparency Sub-Index scores by municipality, and accountability. Transparency allows businesses to with bars colored according to performance category: plan their strategy and operations by providing access Excellent Performing (dark blue), High Performing to accurate information on administrative processes, (medium blue), Average Performing (light blue), Low procedures, and decisions aff ecting businesses. Th is sub- Performing (dark gray), and Very Low Performing (light index assesses how municipalities diff er in their openness gray). to provide information to the private sector that is relevant to the operation of local businesses and in the Municipal Services predictability of applying or changing those regulations Th e Municipal Code delegates a broad set of authorities and procedures. Th e sub-index was constructed from and responsibilities to the municipalities. Title 3, business survey data. It includes measures for access to Unique Chapter, of the Code describes 30 types of information and documents relevant to local businesses, competencies for municipalities, although in reality few knowledge among businesses of processes to fi le municipalities currently address the majority of them. complaints, predictability of municipal policies, and Services relevant to the business sector, and included discrimination based on party affi liation or business in our measurement of this sub-index, are traditional size. Th e higher the value of the sub-index, the more services, such as administration and public works, as transparent a municipality is perceived by the private well as those that are noted in the Municipal Code but sector. less widely implemented such as attracting investment, promoting tourism, and improving access to credit for Notable Advances in Transparency in San Pedro businesses. Th e Municipal Services Sub-Index measures Masahuat diff erences across municipalities in the quality of the San Pedro Masahuat has a Municipal Information Center services they provide to the private sector. Th e sub-index that is open to the public, where anyone can consult the ordinances, plans, budgets, project status reports, and reports about budget closeouts for the years 2007 and Suchitoto: A Good Model for Municipal Services 2008. Also, the municipality has instituted several other A restaurant owner and tour operator notes: “Religiously, means of delivering information to the citizens. Once a every day, squadrons of street sweepers pass by, year, during the fi rst 60 calendar days, members of the cleaning and sweeping the entire town. You only have Municipal Council organize and convene a public meeting to look around you to see the relative lack of garbage with representatives from all the communities in the accumulated in the streets, gutters, plaza, and parks, which interest of accountability and to inform them about the is such a prominent characteristic of the urban landscape principal management results from the past fi scal year, in the rest of the country. At the same time, residential emphasizing the details of projects and expenditures. trash collection is good and very advanced. They don’t Afterward, a summary of that information is prepared in just collect garbage every day; they also have managed an annual bulletin on accountability to citizens. Moreover, to educate the citizens and institutionalize the practice every quarter the mayor tours the community assemblies of separating organic waste, glass, plastic, and cans. In in villages where they are carrying out or have planned a similar manner, the city has installed and operates a a project. Also, a wall display on municipal activities sanitary landfi ll to manage solid waste; wastewater from and the newspaper New Image, the Citizens’ Voice—a urban households is processed in a treatment plant, publication with national circulation that specializes in thereby avoiding the problem of environmental pollution municipal development—are used monthly as a channel from untreated wastewater dumped into the lake. for disseminating brief notices about activities the local Moreover, the municipality does a good job maintaining government has carried out. and repairing the pavement on city streets. All of the above have contributed to the efforts to make Suchitoto a national and international tourist destination.”

15 2009 Index of Economic Freedom, http://www.heritage.org/Index/pdf/ Index09Full.pdf THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 11

was constructed from the business survey on fi rms’ sub-index means that businesses perceive a municipality perceptions of the quality of business-oriented services as having a high level of proactivity. provided by municipalities. A higher value of the sub- Th e Proactivity Sub-Index had an average value of 5.54, index means that businesses perceive a municipality as with the municipality of La Libertad achieving the providing good-quality services to the private sector. highest score of 8.31. Figure 9 on page 15 shows the Antiguo Cuscatlán was the only municipality that value of the Proactivity Sub-Index by municipality, with achieved the Excellent Performing ranking on this sub- bars shaded according to performance classifi cation. index. A total of 84 municipalities were perceived as Low or Very Low Performing based on the quality of services Informal Payments they provide to the private sector. Th ese results reveal Th is sub-index aims to assess how municipalities diff er that providing good-quality services to the private sector in terms of business perceptions on their need to make is an area with signifi cant room for improvement by local informal payments to obtain permits, licenses, or other governments. information relevant to local tenders or local economic Th e average value of the Municipal Services Sub- development. Th e sub-index was constructed from the Index was 3.23. Antiguo Cuscatlán had the highest business survey to measure the prevalence, incidence, value with 9.50. Figure 8 on page 14 shows the scores and associated costs of informal payments when busi- by municipality, with bars colored according to their nesses applied for permits and licenses in the course of performance classifi cation, just as with the Transparency their operation within a municipality. A higher value of Sub-Index. the sub-index means that the business sector perceives a municipality as having lower prevalence and incidence of problems related to informal payments. Proactivity Proactivity is defi ned in this study as the extent to Th e Informal Payments Sub-Index had an average value which the mayor and the municipal council are actively of 8.10, which suggests that in general, the business involved in promoting initiatives to attract investment community perceives that municipalities are performing and improve conditions associated with operating well on this sub-index. Antiguo Cuscatlán, El Carmen, local businesses. Th ese are activities that fall outside of Tejutla, Lolotique, and Juayúa were the municipalities the requirements of the Municipal Code but that are with the top scores. Figure 10 on page 15 shows the undertaken by the local government to spur economic value for the performance classifi cation. development. Th e Proactivity Sub-Index was constructed from the business survey data on the perceptions of Public Safety the number and quality of business-oriented initiatives El Salvador is one of the most violent countries in developed and implemented by the municipality, rather the world. In 2008, there were 3,179 murders,16 and than by the central government. A higher value of the the country had a murder rate of 51.8 per 100,000 inhabitants.17 Such a lack of basic security imposes Proactivity Initiatives in Tepecoyo and enormous costs on the Salvadoran economy and scares La Libertad away investment. According to a study by El Salvador’s Tepecoyo implemented the Micro-Enterprises Support National Public Security Council, the violence cost Program and the Strengthening for Rural Development Program, and instituted a tourism committee with the the country US$2 billion in 2006—nearly 11% of help of various nongovernmental organizations. gross domestic product (GDP).18 Crime and safety

In La Libertad, the municipality actively promoted a 16 Offi cial data released by Fiscalía General de la República, Policía Nacional Tourism Committee, supported by the Ministry of Civil, and Instituto de Medicina Legal. Tourism. The Committee attends tourism fairs and other 17 Rate based on the offi cial projected population for 2008 (Ministerio de events to highlight the attractions in La Libertad. The Economía, Dirección General de Estadística y Censos, July 2009). municipality also coordinates with the Committee to 18 Carlos Acevedo, “Los costos económicos de la violencia en Centroamérica organize regular beach-cleaning campaigns. [Th e economic costs of violence in Central America],” Consejo Nacional de Seguridad Pública de El Salvador, 2008, p. 14, http://www.ocavi.com/ docs_fi les/fi le_538.pdf. 12 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

are factors that must be considered in any assessment Time to Compliance of the competitiveness of municipalities in attracting When business owners and managers attend to and retaining investment. Crimes such as homicide, bureaucratic issues such as inspections and other extortion, kidnapping, forced abduction, theft and regulations, it reduces the amount of time they can robbery on business premises, and theft and robbery devote to more productive activities that relate directly to of goods in transit, have direct and salient eff ects on the actual operation of their businesses. Th e Compliance business activity. Sub-Index assesses how municipalities diff er in the frequency, effi ciencies, and fairness of conducting local Th e Public Safety Sub-Index assesses diff erences across business inspections. Th is includes the ease of working municipalities in the experiences of local businesses with with municipal offi cials, their compliance with laws crime and their perceptions on whether local crime rates and regulations, and the appropriateness and number are higher than in neighboring municipalities, whether of inspections required for compliance. Th e sub-index local crime has increased or decreased, and whether such was constructed from business survey data because no a change is caused by the municipality taking actions to municipal survey data could be collected on this issue. control and prevent crime. Th is sub-index also captured A high sub-index value indicates that local businesses municipal spending levels on crime prevention initiatives require less time to comply with municipal rules. in 2008. A higher value of the sub-index means that a Th e fact that no municipality fell into the Excellent municipality is seen as having a lower level of crime.19 Performing category is noteworthy. Th e average value of the Public Safety Sub-Index was Th is average value for the Time to Compliance Sub- 6.48. Conchagua had the highest value at 8.87, which Index was 4.96. Ilopango was the municipality with the made it the municipality with the lowest crime-related top score of 6.94. Figure 12 on page 16 shows the value costs to businesses. Figure 11 on page 16 shows the of the Compliance Sub-Index by municipality, with bars Public Safety Sub-Index scores by municipality, with bars shaded according to performance classifi cation. shaded according to performance classifi cation.

Rates and Taxes Public Safety in Antiguo Cuscatlán and Santa Rates and taxes are a major source of municipal resources Tecla and determine the capacity of any local government to Antiguo Cuscatlán instituted coordinated patrols between the municipal and national police and has developed a provide quality services to the general population and the public safety plan. The public safety system is composed of business sector. Some municipalities may charge higher joint scooter and bicycle patrols. taxes or have higher rates than other municipalities within their geographic area, but they also may provide Santa Tecla created a public safety commission comprising citizens and central government representatives to jointly tackle public safety issues. It also created a Pawnshop Reports Reasonable Rates and Taxes municipal crime observatory to tally crime statistics in in Cuscatancingo order to make more informed decisions and conduct “We decided to open a branch of our pawn shop here, regular training sessions for the municipal police on for several reasons. According to a poll, people have to specifi c topics, such as the Criminal Conduct Law travel to Mejicanos to pawn something. In addition, we (Ley Contravencional). Santa Tecla has also developed were able to obtain a location in the middle of the main agreements with universities to help students engage in street, where there is a high level of foot traffi c each day. local social service activities. This gives us a lot of exposure and visibility to potential clients. Moreover, the anticipated cost of applicable municipal taxes and fees—estimated at about US$18 per month—will not prevent investment or be detrimental to the business, given the volume of sales that is expected. They are about the same as those charged in San Martín, 19 Th e perceptions of and experiences with crime of local businesses recorded in the business survey do not necessarily match the offi cial crime rates where our headquarters is.” because only a small portion of all thefts, robberies, extortions, and kidnappings are reported to the police. THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 13

more and/or better quality services. High taxes that are Entry Costs No Problem for San Rafael Cedros not matched by good provision of services may place Bakery municipalities at a relative disadvantage when they try “When we opened in November 2007, the municipality to attract investment. In addition, the diff erence in rates was gracious enough to allow us a ‘test month,’ without and taxes infl uences the distribution of investment and charging taxes or fees, to give us the opportunity to general economic activity across municipalities. fi nd out whether we could sell enough to make a bread business feasible. After the end of the test period, we Th e Rates and Taxes Sub-Index assesses diff erences in the went to the cadastre offi ce to register the business. Two experiences of local businesses with tax payments. It also days later, after the appropriate inspections, we received examines businesses’ perceptions on whether local taxes our business classifi cation and were assigned an amount of fees and taxes to pay monthly. There was not a single are higher than in neighboring municipalities, whether problem or delay in starting up our operations.” any advantages are off ered by the local tax structure, and whether measures are taken by the municipalities to collect tax payments on time. Also, the sub-index Th e average value of this sub-index was 8.23, with San captures the effi cacy of local tax revenue in terms of Sebastián (San Vicente) municipality receiving the services provided. In addition to the business survey, data highest score of 9.54, making it the municipality with from the municipality survey were used to create this the lowest cost of entry for a business. Figure 14 on sub-index, in order to capture any advantages off ered page 17 shows the value of the Entry Cost Sub-Index by by the local tax structure, as well as local government municipality, with bars shaded according to performance incentives that inspire businesses to pay their taxes classifi cation. on time; and to measure tax revenue adjusted for the services. A higher sub-index value means a municipality Municipal Regulations is providing a greater fi scal advantage to businesses. Th is sub-index measures how municipalities diff er Th is sub-index had an average value of 4.30 with Santa in terms of business perceptions on the number of Ana recording the highest value of 7.53. Figure 13 on regulations imposed on businesses to operate. Th e page 17 shows the value of the Rates and Taxes Sub- sub-index was constructed from the business survey to Index by municipality, with bars shaded according to measure the number of regulations, whether this number performance classifi cation. had increased or decreased during 2008, and whether the municipality had put in place adequate mechanisms to ensure compliance with regulations on local businesses. Entry Costs A high value of the sub-index indicates the municipality Th e Entry Costs sub-index assesses the diff erences in successfully promotes investment through a business- entry costs to new fi rms across municipalities. A new friendly regulatory framework. fi rm was defi ned as one that had started operations since 2006 within a municipality. Th e sub-index was Th e Municipal Regulations Sub-Index had an average constructed from the business survey, supplemented value of 8.44. San Juan Opico, Sensuntepeque, El with data obtained directly from the municipalities, to Rosario (La Paz), and Jucuarán were the best performing capture the perceived diffi culties specifi c to the business of the 100 municipalities, all with a score of 10.00. registration and licensing procedures that take place Figure 15 on page 18 shows the value of the Municipal within municipalities. Included are the actual wait in Regulations Sub-Index by municipality, with bars shaded days for approval of all required permits as recorded by according to performance classifi cation. the municipalities, the perception of business owners on the length of time required for the process, ease of On the following pages, Figures 7 through 15 display the scores on obtaining both the information on the process and the all nine sub-indices for the 100 assessed municipalities. Municipalities actual permits, and the number of documents required with the highest scores appear at the top of each graph. Color coding indicates the groupings into Excellent, High, Average, Low, and for the process. Very Low scores: Excellent High Average Low Very Low 14 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 Figure 7. Transparency Sub-Index Figure 8. Municipal Services Sub-Index

01 2345 678910 012345678910 Conchagua 7.97 Antiguo Cuscatlán 9.50 San Pedro Masahuat 7.63 Santa Rosa de Lima 7.45 Texistepeque 7.54 La Libertad 6.39 Antiguo Cuscatlán 7.44 Suchitoto 6.02 San Antonio del Monte 7.37 Conchagua 5.73 San Francisco Gotera 7.32 Tepecoyo 5.20 Moncagua 7.12 Moncagua 5.03 Tepecoyo 7.11 Pasaquina 4.99 Santiago Texacuangos 7.07 Santa Tecla 4.95 El Rosario 6.92 Chalchuapa 4.78 Ilopango 6.92 Juayúa 4.74 San Pablo Tacachico 6.83 San Pablo Tacachico 4.56 Chalchuapa 6.81 Cojutepeque 4.32 Cuscatancingo 6.68 Tecoluca 4.30 Chalatenango 6.66 San Miguel 4.29 Guazapa 6.60 Texistepeque 4.28 San Julián 6.59 San Pedro Masahuat 4.21 Tamanique 6.55 Santiago Texacuangos 4.17 El Tránsito 6.50 El Carmen 4.13 Puerto El Triunfo 6.45 Apopa 4.12 San Juan Opico 6.43 Apastepeque 4.05 Santa Tecla 6.40 Chirilagua 3.99 La Libertad 6.36 Puerto El Triunfo 3.99 San Rafael Cedros 6.33 San Salvador 3.95 Corinto 6.32 Guazapa 3.90 San Salvador 6.32 San Antonio del Monte 3.82 Huizúcar 6.30 Nahuizalco 3.77 Pasaquina 6.28 Aguilares 3.63 Ayutuxtepeque 6.27 Candelaria de la Frontera 3.54 El Paisnal 6.25 Metapán 3.53 Sonsonate 6.23 El Rosario 3.51 Candelaria de la Frontera 6.23 Jujutla 3.46 San Miguel 6.22 Sensuntepeque 3.45 Quezaltepeque 6.19 Cuscatancingo 3.42 San Marcos 6.18 Soyapango 3.36 Apopa 6.13 Nejapa 3.28 San Martín 6.05 Chalatenango 3.28 Soyapango 5.97 Atiquizaya 3.26 El Carmen 5.91 Ayutuxtepeque 3.23 Chirilagua 5.86 Ilopango 3.22 Lislique 5.85 Tamanique 3.20 Santiago Nonualco 5.81 Mejicanos 3.17 Apastepeque 5.80 Tejutla 3.16 Mejicanos 5.79 Huizúcar 3.15 Tejutla 5.79 Santiago de María 3.12 Nahuizalco 5.78 San Alejo 3.11 Aguilares 5.75 Ilobasco 3.07 Jujutla 5.71 Quezaltepeque 3.02 Santa Rosa de Lima 5.69 Guaymango 3.02 Delgado 5.63 San Juan Opico 2.95 Jiquilisco 5.58 Lolotique 2.92 Nejapa 5.55 Santiago Nonualco 2.92 San Pedro Perulapán 5.55 Coatepeque 2.88 Suchitoto 5.55 El Tránsito 2.83 Ilobasco 5.53 Acajutla 2.82 Santa Elena 5.51 San Francisco Gotera 2.80 Sensuntepeque 5.41 Anamorós 2.80 Tonacatepeque 5.41 Santo Tomás 2.79 Zaragoza 5.38 Lislique 2.77 San Sebastián Salitrillo 5.36 Zaragoza 2.75 Tecoluca 5.34 Olocuilta 2.75 Olocuilta 5.34 Armenia 2.72 Juayúa 5.32 El Paisnal 2.72 Armenia 5.31 Santa Ana 2.69 San Francisco Menéndez 5.31 El Congo 2.69 San Sebastián 5.28 San Marcos 2.66 San Luis Talpa 5.24 San Sebastián Salitrillo 2.66 Metapán 5.24 Jiquilisco 2.60 San Juan Nonualco 5.21 Corinto 2.57 Anamorós 5.19 Delgado 2.54 Guaymango 5.15 Colón 2.49 Ciudad Barrios 5.10 Nueva Concepción 2.43 Ciudad Arce 5.09 Santa Elena 2.43 San Luis La Herradura 5.03 Sonsonate 2.33 Tacuba 4.98 Usulután 2.33 Cojutepeque 4.96 San Rafael Cedros 2.31 Berlín 4.94 Chinameca 2.30 San José Villanueva 4.94 San Vicente 2.27 Colón 4.92 Jucuarán 2.26 Santo Tomás 4.82 San Juan Nonualco 2.21 San Vicente 4.77 Sonzacate 2.18 Lolotique 4.77 Tacuba 2.18 San Alejo 4.77 La Unión 2.16 Atiquizaya 4.70 San Pedro Perulapán 2.14 Santiago de María 4.68 Ciudad Arce 2.12 Izalco 4.65 Berlín 2.11 Ahuachapán 4.64 San Martín 2.10 La Unión 4.62 Ahuachapán 2.08 Nueva Concepción 4.61 San Francisco Menéndez 2.07 Jucuarán 4.58 Zacatecoluca 2.05 Acajutla 4.48 Ciudad Barrios 1.99 El Congo 4.39 San Sebastián 1.98 Chinameca 4.30 San José Villanueva 1.94 Coatepeque 4.27 San Julián 1.93 Panchimalco 4.17 Tonacatepeque 1.85 Usulután 3.99 Panchimalco 1.77 Jucuapa 3.92 Jucuapa 1.66 Sonzacate 3.90 San Luis La Herradura 1.66 Santa Ana 3.78 Izalco 1.59 Zacatecoluca 3.69 San Luis Talpa 1.44 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 15 Figure 9. Proactivity Sub-Index Figure 10. Informal Payments Sub-Index

012345678910 01 2345678910 La Libertad 8.31 Antiguo Cuscatlán 10.00 San Pedro Masahuat 8.26 El Carmen 10.00 Texistepeque 8.18 Tejutla 10.00 Conchagua 7.81 Lolotique 9.89 San Pablo Tacachico 7.17 Juayúa 9.84 Antiguo Cuscatlán 7.10 Santa Elena 9.84 Chalatenango 7.05 San Rafael Cedros 9.82 Apopa 7.03 Izalco 9.82 Mejicanos 6.92 El Paisnal 9.74 Santiago de María 6.86 Puerto El Triunfo 9.71 El Tránsito 6.85 San Pedro Masahuat 9.65 Tepecoyo 6.83 El Rosario 9.60 Santa Tecla 6.81 San Salvador 9.51 San Francisco Gotera 6.71 La Libertad 9.50 Metapán 6.68 San Francisco Gotera 9.48 Tamanique 6.68 Tepecoyo 9.45 Nahuizalco 6.62 Cojutepeque 9.44 El Rosario 6.57 San Luis Talpa 9.43 Cuscatancingo 6.50 Sonzacate 9.40 Soyapango 6.50 Chalchuapa 9.32 Santa Ana 6.44 Jujutla 9.31 El Carmen 6.44 San Sebastián 9.30 Tejutla 6.35 San Juan Opico 9.30 Santiago Nonualco 6.30 Ciudad Barrios 9.30 Quezaltepeque 6.26 Cuscatancingo 9.30 Ayutuxtepeque 6.20 Texistepeque 9.28 San Alejo 6.19 Quezaltepeque 9.25 Chalchuapa 6.16 San Pablo Tacachico 9.25 San Marcos 6.13 San Julián 9.25 San Salvador 6.10 Ilobasco 9.16 Aguilares 6.10 Nahuizalco 8.99 San Martín 6.10 Santiago Texacuangos 8.99 Ilobasco 6.03 Apastepeque 8.97 El Paisnal 5.90 El Tránsito 8.90 San Antonio del Monte 5.86 Santa Ana 8.86 Corinto 5.81 Corinto 8.76 Tecoluca 5.81 Santiago de María 8.70 Ilopango 5.81 Moncagua 8.68 Colón 5.80 Santa Tecla 8.56 Lolotique 5.78 Atiquizaya 8.56 Pasaquina 5.73 Huizúcar 8.56 Olocuilta 5.73 Conchagua 8.46 San Vicente 5.70 Lislique 8.41 Jiquilisco 5.70 Chalatenango 8.29 San Julián 5.64 Pasaquina 8.29 Sensuntepeque 5.64 Metapán 8.26 San Juan Nonualco 5.62 San Juan Nonualco 8.25 Ciudad Barrios 5.59 Colón 8.20 Delgado 5.59 Mejicanos 8.19 Guazapa 5.51 Guazapa 8.17 Armenia 5.51 Ayutuxtepeque 8.15 Nueva Concepción 5.45 Tonacatepeque 8.12 Lislique 5.44 Suchitoto 8.01 Jucuarán 5.43 San Antonio del Monte 7.95 San Francisco Menéndez 5.42 Jucuapa 7.95 Guaymango 5.42 Anamorós 7.92 Moncagua 5.41 Zaragoza 7.87 San Rafael Cedros 5.33 Soyapango 7.82 San Luis La Herradura 5.31 Aguilares 7.80 Anamorós 5.30 Olocuilta 7.78 Nejapa 5.28 Jucuarán 7.67 Zaragoza 5.26 Chirilagua 7.66 Candelaria de la Frontera 5.22 Guaymango 7.65 Sonsonate 5.13 Tecoluca 7.62 San Sebastián Salitrillo 5.11 Jiquilisco 7.61 San José Villanueva 5.08 San Marcos 7.57 Atiquizaya 5.06 Tamanique 7.54 Suchitoto 5.03 Nejapa 7.51 Berlín 5.03 Panchimalco 7.49 Jujutla 4.94 San Pedro Perulapán 7.45 San Miguel 4.90 San José Villanueva 7.45 Jucuapa 4.90 Ahuachapán 7.41 Panchimalco 4.89 San Martín 7.38 Juayúa 4.83 San Miguel 7.36 Coatepeque 4.75 Apopa 7.33 Tacuba 4.71 Sensuntepeque 7.28 La Unión 4.66 La Unión 7.26 Usulután 4.63 Berlín 7.25 Huizúcar 4.62 Santo Tomás 7.15 Santiago Texacuangos 4.55 Candelaria de la Frontera 7.10 San Juan Opico 4.52 Nueva Concepción 7.05 Santa Elena 4.51 San Sebastian Salitrillo 6.89 Ahuachapán 4.51 Tacuba 6.84 Apastepeque 4.49 Delgado 6.75 Ciudad Arce 4.45 El Congo 6.67 Zacatecoluca 4.37 Acajutla 6.61 San Luis Talpa 4.34 San Alejo 6.60 San Pedro Perulapán 4.30 Sonsonate 6.51 El Congo 4.18 Coatepeque 6.50 Chinameca 4.17 Ciudad Arce 6.39 Santa Rosa de Lima 4.17 San Vicente 6.39 San Sebastián 4.16 San Francisco Menéndez 6.25 Acajutla 4.13 Santiago Nonualco 6.24 Puerto El Triunfo 3.97 Santa Rosa de Lima 6.20 Sonzacate 3.95 Zacatecoluca 6.01 Izalco 3.86 Chinameca 5.80 Cojutepeque 3.63 San Luis La Herradura 5.65 Santo Tomás 3.48 Armenia 5.38 Chirilagua 3.45 Ilopango 5.36 Tonacatepeque 3.04 Usulután 4.66 16 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

Figure 11. Public Safety Sub-Index Figure 12. Time to Compliance Sub-Index

012345678910 01 234 56 78 910 Conchagua 8.87 Ilopango 6.94 Texistepeque 8.66 Santa Ana 6.62 Antiguo Cuscatlán 8.07 Santiago de María 6.24 Guaymango 7.92 La Libertad 6.15 San Pablo Tacachico 7.72 San Juan Opico 6.08 El Carmen 7.68 Cuscatancingo 6.00 Tejutla 7.54 Candelaria de la Frontera 5.96 Sonsonate 7.46 Antiguo Cuscatlán 5.95 Jucuarán 7.44 Puerto El Triunfo 5.94 Armenia 7.43 Ilobasco 5.87 San José Villanueva 7.42 Santa Tecla 5.84 Pasaquina 7.39 Chirilagua 5.79 El Tránsito 7.38 Chalchuapa 5.75 Suchitoto 7.35 Nahuizalco 5.72 Atiquizaya 7.32 Conchagua 5.67 Santiago de María 7.30 Cojutepeque 5.62 Chalatenango 7.29 Santo Tomás 5.55 Huizúcar 7.27 San Francisco Gotera 5.52 Apastepeque 7.27 Chalatenango 5.49 San Pedro Masahuat 7.26 San Martín 5.46 San Juan Nonualco 7.17 Texistepeque 5.46 San Francisco Gotera 7.16 San Francisco Menéndez 5.45 Ilopango 7.14 San Antonio del Monte 5.40 Tonacatepeque 7.10 Guazapa 5.39 Mejicanos 7.10 San Pedro Perulapán 5.37 Nahuizalco 7.09 Santiago Texacuangos 5.35 Berlín 7.08 Tonacatepeque 5.34 San Julián 7.06 Jujutla 5.32 Jujutla 7.04 Santiago Nonualco 5.32 San Luis La Herradura 6.98 Chinameca 5.29 Santa Rosa de Lima 6.96 El Tránsito 5.26 Santa Tecla 6.90 Coatepeque 5.26 El Paisnal 6.90 San Salvador 5.25 Jiquilisco 6.87 Apastepeque 5.20 Metapán 6.86 Huizúcar 5.19 San Rafael Cedros 6.84 Guaymango 5.19 San Alejo 6.84 Mejicanos 5.16 Anamorós 6.84 Acajutla 5.13 Soyapango 6.80 Zacatecoluca 5.12 Chinameca 6.78 Moncagua 5.11 Tepecoyo 6.77 San Sebastián 5.11 Tacuba 6.76 San Rafael Cedros 5.07 San Marcos 6.73 Nueva Concepción 5.04 Chirilagua 6.73 Metapán 5.04 Zaragoza 6.72 San Miguel 5.04 Santiago Nonualco 6.64 Jiquilisco 5.02 San Francisco Menéndez 6.64 Sensuntepeque 5.02 Tamanique 6.61 Quezaltepeque 5.00 Guazapa 6.60 Olocuilta 5.00 La Libertad 6.57 El Congo 4.98 Ilobasco 6.56 Sonzacate 4.98 Tecoluca 6.50 Aguilares 4.94 Nueva Concepción 6.43 Anamorós 4.93 Izalco 6.41 El Paisnal 4.86 San Salvador 6.39 El Rosario 4.86 Delgado 6.39 Armenia 4.85 Colón 6.38 Jucuapa 4.80 Sonzacate 6.35 Santa Rosa de Lima 4.79 Jucuapa 6.33 Izalco 4.77 San Antonio del Monte 6.31 Pasaquina 4.77 Usulután 6.21 Delgado 4.74 Lolotique 6.20 Ayutuxtepeque 4.72 Cojutepeque 6.19 Lislique 4.72 Ahuachapán 6.17 Tecoluca 4.70 San Pedro Perulapán 6.16 San Luis La Herradura 4.67 Quezaltepeque 6.11 Soyapango 4.67 Coatepeque 6.10 San José Villanueva 4.66 Lislique 6.10 Colón 4.64 San Juan Opico 6.08 Ahuachapán 4.64 El Rosario 6.06 Atiquizaya 4.63 Cuscatancingo 6.03 Santa Elena 4.61 Ciudad Barrios 6.01 Zaragoza 4.61 Moncagua 6.00 Tejutla 4.59 Corinto 5.99 San Pedro Masahuat 4.56 El Congo 5.93 Corinto 4.54 Chalchuapa 5.92 San Alejo 4.50 Santiago Texacuangos 5.89 San Sebastián Salitrillo 4.49 Candelaria de la Frontera 5.87 Berlín 4.46 Ciudad Arce 5.80 Nejapa 4.41 Sensuntepeque 5.77 Ciudad Barrios 4.39 Olocuilta 5.75 San Pablo Tacachico 4.39 Juayúa 5.75 San Juan Nonualco 4.38 Panchimalco 5.73 Ciudad Arce 4.35 San Luis Talpa 5.73 San Julián 4.34 Aguilares 5.73 Panchimalco 4.28 La Unión 5.68 Juayúa 4.26 Nejapa 5.66 Sonsonate 4.26 Ayutuxtepeque 5.58 Jucuarán 4.24 Santa Elena 5.41 San Marcos 4.20 Acajutla 5.38 El Carmen 4.15 Apopa 5.33 Apopa 4.15 San Sebastián 5.32 San Vicente 4.07 San Vicente 5.29 Lolotique 4.06 Zacatecoluca 5.06 La Unión 4.03 San Sebastián Salitrillo 5.05 San Luis Talpa 3.99 Santa Ana 5.01 Tepecoyo 3.98 Puerto El Triunfo 4.97 Tamanique 3.94 San Miguel 4.84 Usulután 3.90 Santo Tomás 4.50 Tacuba 3.78 San Martín 3.66 Suchitoto 2.99 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 17

Figure 13. Rates and Taxes Sub-Index Figure 14. Entry Costs Sub-Index

01234 5678910 012345678910 Santa Ana 7.53 San Sebastián 9.54 San Pedro Perulapán 7.28 El Rosario 9.48 Ilopango 6.93 Jucuapa 9.45 Quezaltepeque 6.18 Panchimalco 9.39 Candelaria de la Frontera 6.15 Sensuntepeque 9.26 Santiago Texacuangos 6.14 La Unión 9.23 Tepecoyo 6.09 Jiquilisco 9.23 Delgado 6.08 Suchitoto 9.20 Acajutla 5.97 Corinto 9.19 La Libertad 5.79 Chirilagua 9.14 Tacuba 5.75 Soyapango 9.07 Pasaquina 5.73 Santiago de María 9.06 Nueva Concepción 5.69 Armenia 9.05 Apopa 5.58 Antiguo Cuscatlán 9.04 Cuscatancingo 5.50 San Martín 9.03 Huizúcar 5.49 Santa Rosa de Lima 9.02 Texistepeque 5.38 El Tránsito 9.01 Moncagua 5.38 Ilobasco 8.99 Izalco 5.38 Pasaquina 8.97 Jiquilisco 5.35 Metapán 8.97 Antiguo Cuscatlán 5.35 Berlín 8.94 El Carmen 5.26 La Libertad 8.94 El Rosario 5.24 Santiago Nonualco 8.92 Mejicanos 5.22 San Julián 8.90 Cojutepeque 5.18 San Marcos 8.87 Puerto El Triunfo 5.13 Conchagua 8.79 Jucuapa 5.12 Acajutla 8.73 San Luis La Herradura 5.09 San Rafael Cedros 8.71 Santa Tecla 4.96 Huizúcar 8.71 El Tránsito 4.93 Ayutuxtepeque 8.67 Jujutla 4.87 Zacatecoluca 8.67 San Juan Opico 4.82 San Pedro Masahuat 8.64 San Francisco Gotera 4.80 Nejapa 8.62 San Rafael Cedros 4.68 Tecoluca 8.62 Apastepeque 4.59 Ciudad Barrios 8.61 San Vicente 4.58 Nahuizalco 8.61 Chirilagua 4.58 Chalatenango 8.60 San Pedro Masahuat 4.56 Ciudad Arce 8.60 San Sebastián Salitrillo 4.55 Jucuarán 8.60 Guazapa 4.47 Santa Tecla 8.53 Tonacatepeque 4.43 San Luis La Herradura 8.52 Atiquizaya 4.37 El Carmen 8.48 Tejutla 4.37 Aguilares 8.46 Soyapango 4.35 Nueva Concepción 8.44 San Miguel 4.34 Puerto El Triunfo Olocuilta 4.32 8.42 San Luis Talpa 8.41 Chalatenango 4.31 Candelaria de la Frontera Usulután 4.30 8.34 San Vicente San Alejo 4.30 8.33 Guazapa Corinto 4.29 8.32 El Paisnal Suchitoto 4.28 8.31 Ahuachapán Nahuizalco 4.22 8.31 Chinameca Sonzacate 4.08 8.27 San Sebastián 3.99 Lislique 8.25 San Pablo Tacachico 3.97 Mejicanos 8.24 El Paisnal 3.95 Quezaltepeque 8.20 Colón 3.93 Juayúa 8.20 Aguilares 3.93 San Francisco Gotera 8.17 San Antonio del Monte 3.93 Anamorós 8.16 Santa Rosa de Lima 3.89 Cojutepeque 8.13 San José Villanueva 3.88 Moncagua 8.11 Ilobasco 3.87 El Congo 8.10 Santa Elena 3.83 Sonzacate 8.07 San Marcos 3.78 Apopa 8.06 San Luis Talpa 3.75 Santo Tomás 7.97 Sensuntepeque 3.71 Texistepeque 7.97 San Salvador 3.63 Ilopango 7.97 Tamanique 3.61 Olocuilta 7.96 Juayúa 3.55 Cuscatancingo 7.93 Panchimalco 3.54 San Salvador 7.91 Anamorós 3.53 Usulután 7.86 Chinameca 3.52 Zaragoza 7.82 Ahuachapán 3.50 Atiquizaya 7.80 Lislique 3.42 Chalchuapa 7.77 Chalchuapa 3.38 Santa Elena 7.73 Coatepeque 3.35 Lolotique 7.69 Zaragoza 3.33 San Juan Nonualco 7.65 Nejapa 3.32 Tepecoyo 7.64 Armenia 3.32 San Miguel 7.56 Ciudad Arce 3.24 Sonsonate 7.55 San Julián 3.24 Colón 7.52 Lolotique 3.23 San Pedro Perulapán 7.51 Conchagua 3.23 Tejutla 7.50 San Juan Nonualco 3.19 Santiago Texacuangos 7.49 Jucuarán 3.18 Tamanique 7.47 Zacatecoluca 3.16 San Sebastián Salitrillo 7.46 Ayutuxtepeque 3.16 San Juan Opico 7.40 La Unión 3.08 San Alejo 7.36 Metapán 3.07 Tonacatepeque 7.34 San Martín 3.04 Guaymango 7.31 San Francisco Menéndez 3.01 San Pablo Tacachico 7.31 Guaymango 3.00 Izalco 7.27 Santiago de María 2.93 San Antonio del Monte 7.21 Santiago Nonualco 2.82 Coatepeque 7.11 Sonsonate 2.78 Delgado 7.09 Tecoluca 2.67 Apastepeque 7.01 El Congo 2.66 San José Villanueva 6.98 Santo Tomás 2.63 Santa Ana 6.61 Berlín 2.16 Jujutla 6.60 Ciudad Barrios 2.07 San Francisco Menéndez 6.42 Tacuba 6.00 18

Figure 15. Municipal Regulations Sub-Index

012345678910 San Juan Opico 10.00 Sensuntepeque 10.00 Conclusions and Policy Implications El Rosario 10.00 Jucuarán 10.00 Th e MCI is a fi rst eff ort to assess and rank the 100 El Carmen 9.98 Sonzacate 9.92 most-populated municipalities in El Salvador on their Sonsonate 9.90 Santa Ana 9.90 regulatory and business-enabling environment to Soyapango 9.89 Colón 9.85 generate private sector development. As such, it can Cuscatancingo 9.84 Metapán 9.84 be considered as a baseline from which a sustained Jujutla 9.83 Tejutla 9.72 measurement eff ort can be implemented to attract and San Juan Nonualco 9.69 La Unión 9.61 retain local and foreign investment, promote trade, take Chinameca 9.59 San Luis La Herradura 9.57 advantage of opportunities from free-trade agreements, Santa Rosa de Lima 9.55 San Julián 9.52 Jucuapa 9.50 and increase economic growth and local employment. Berlín 9.49 Tecoluca 9.48 Atiquizaya 9.47 Analysis of the MCI results reveals three main fi ndings Lolotique 9.47 San Vicente 9.45 that could have important policy implications. Chalchuapa 9.44 Guazapa 9.40 El Paisnal 9.39 1. A business-enabling environment does not directly Quezaltepeque 9.33 Santiago Texacuangos 9.14 correlate with resource endowments in El Salvador, Texistepeque 9.13 Cojutepeque 9.13 and business-friendly policies and procedures have Izalco 9.13 Juayúa 9.09 El Congo 9.08 positive impacts on local economic development Ilopango 9.07 San Marcos 9.03 through improvements to the well-being of residents. Corinto 9.03 Armenia 8.94 San Antonio del Monte 8.90 2. All municipalities, no matter how high their scores, Santo Tomás 8.90 Anamorós 8.88 have room for improvements that could lead to a large San Luis Talpa 8.85 Antiguo Cuscatlán 8.82 impact on business development and employment. Puerto El Triunfo 8.76 San José Villanueva 8.76 Improvements in a few areas, however, have been Tacuba 8.74 La Libertad 8.74 shown to be particularly benefi cial to private sector Chirilagua 8.73 San Rafael Cedros 8.71 performance. Ciudad Barrios 8.66 Suchitoto 8.65 Guaymango 8.55 San Francisco Gotera 8.54 3. Th e business environment diff ers greatly across the Zaragoza 8.53 Santa Elena 8.50 country, including within departments and regions. San Pablo Tacachico 8.47 San Alejo 8.45 Municipalities can look to their neighbors for Ilobasco 8.42 Santa Tecla 8.37 examples of best practices to adapt and implement to Apastepeque 8.35 Nahuizalco 8.34 increase their own MCI scores. Tamanique 8.34 Santiago de María 8.32 Ayutuxtepeque 8.18 Nejapa 8.17 San Sebastián Salitrillo 8.11 The Governance Premium Lislique 8.10 Santiago Nonualco 8.07 Th e MCI demonstrates that although resource Tonacatepeque 8.02 Panchimalco 7.97 endowments are undeniably an important aspect of San Pedro Masahuat 7.97 Ahuachapán 7.96 competitiveness, they do not directly correlate with a Usulután 7.95 Coatepeque 7.90 Huizúcar 7.85 strong business-enabling environment. An analysis of Mejicanos 7.78 Olocuilta 7.67 the MCI data shows that business-friendly policies and Moncagua 7.64 Delgado 7.57 procedures have positive impacts on local economic Apopa 7.53 Pasaquina 7.47 development through improvements to the well-being of San Sebastián 7.17 Nueva Concepción 6.92 residents. Figure 16 illustrates that municipalities with Ciudad Arce 6.80 Candelaria de la Frontera 6.77 high unweighted MCI scores have a higher standard San Salvador 6.73 El Tránsito 6.62 of living at every level of resource endowments. After San Miguel 6.50 San Pedro Perulapán 6.46 initial endowments have been controlled for—which Jiquilisco 6.42 Chalatenango 6.40 means that wealthy and resource-poor municipalities Aguilares 6.07 San Francisco Menéndez 5.91 are on the same footing—a one-point increase in San Martín 5.89 Zacatecoluca 5.80 Acajutla 5.56 the unweighted MCI generates a diff erential of Tepecoyo 5.49 Conchagua 3.70 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 19

Figure 16. Unweighted MCI Performance and Th e MCI enables local governments to understand how Economic Welfare the private sector perceives its municipality’s relative strengths and weaknesses across several governance 10 “Governance Premium” dimensions. Our fi ndings indicate that local businesses 8 Better governance (high MCI) generates better living assign a high value to practices and initiatives by conditions from the same 6 municipal governments that facilitate access to level of development information, promote integrity and honesty among their 4 offi cers, create opportunities to develop new investments, 2

Per Capita GDP (US$) Capita Per support local businesses in attracting new clients, and

0 facilitate access to fi nancial resources. Each of these 20 30 40 50 60 70 80 90 activities is related to municipalities being transparent Index of Resource Endowments (Rank) and proactive providers of high-quality services to the private sector. 7% in per capita GDP in favor of high-performing Initiatives aimed at improving MCI scores have the municipalities.20 Th e gap between the two curves can potential to generate signifi cant gains in private sector be interpreted as a measure of the net economic gain performance and economic development. A one-point of good governance or a “Governance Premium.” Th is increase in the MCI score is estimated to lead to an means that at every level of initial resource conditions, average annual sales increase of US$1,147 per business, better-managed municipalities are more eff ective at and to a 22% increase in the number of businesses using their natural endowments and realize a higher registered in a municipality.22 level of economic well-being. Better governance leads to increased private sector investment, which in turn Municipalities can begin by looking across the MCI can generate local employment and additional tax sub-indices to identify their lowest scores, giving priority income for municipalities. Increased employment also to those in the higher-weighted categories (Transparency, results in more consumption, which can attract further Municipal Services, Proactivity, and Informal Payments) investment. Th e graph also shows that these gains because these are estimated to have a stronger impact on increase as the municipality becomes more developed. business performance. Th e data in Table 2 show the level of performance across Prioritizing Areas for Improvement sub-indices of the top municipalities within each level of All municipalities, no matter how high their scores, have MCI score. room for improvement, which could lead to increased Among the municipalities with the highest MCI business development and employment. However, scores, Antiguo Cuscatlán ranked Excellent in all advances in a few areas could be particularly benefi cial. sub-indices, except for Proactivity, Rates and Taxes, Of the nine sub-indices assessed, Transparency, and the Municipal Regulations sub-indices. Antiguo Municipal Services, Proactivity, and Informal Payments Cuscatlán could focus on the specifi c indicators of each appeared to be the main factors underlying municipal of these three sub-indices to identify opportunities for competitiveness, as defi ned by the MCI.21 Th ese four improvement so that it can maintain its position as the sub-indices had a weight of 15% in the fi nal MCI. best performing municipality of El Salvador. As another Th e sub-indices of Public Safety, Time to Compliance, example within this group, Texistepeque might decide and Rates and Taxes had a weight of 10% each. Th e to focus on improving its performance in Municipal remaining sub-indices, Entry Costs and Municipal Services, Time to Compliance, Rates and Taxes, and Regulations, had a weight of 5% each. Entry Costs.

20 Refer to the full appendix for detailed regression results. 21 Th ese weights were derived from the contribution each sub-index made to local business success, measured by the 2008 fi gures for average sales increase and the number of businesses registered with municipalities. Th e 22 Refer to the full appendix. results of a factor analysis are shown in the full report appendix. 20 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

Table 2. Performance of Top Municipalities, by Performance Group Sub-Index

Municipal Informal Public Time to Rates and Entry Municipal MCI Score Municipality Transparency Services Proactivity Payments Safety Compliance Taxes Costs Regulations Excellent Antiguo EEHEEEAEH Cuscatlán La Libertad H H E E A E H E H Texistepeque E A E E E H A H E San Pedro ELEEHAAEA Masahuat Conchagua E H E H E H VL E VL High Tepecoyo E A H E A A H H VL Santa Tecla H A H H H H A E H El Carmen A L H E H A A H E El Rosario H L H E A A A E E San Pablo HAHEHALAH Tacachico Average Sensuntepeque A L A A L H L E E Aguilares A L A A L H L H L Lislique A VL A A A H VL E H Guaymango A VL A A E H VL H H Santa Elena A VL L E L A L E H Low Usulután L VL L VL A L L H A Zacatecoluca VL VL L L L H VL E VL

Note: E = Excellent, H = High, A = Average, L = Low, VL = Very Low

In the High Performing group, Santa Tecla ranked highly the proactivity practices of San Pedro Masahuat would in most sub-indices but could benefi t from targeting elevate Zacatecoluca to the High Performing group. reforms in Municipal Services and Rates and Taxes. Th ese improvements would result in an increase of 1.5 With relatively little eff ort, this municipality could points in the MCI score for Zacatecoluca, which our move up to the Excellent Performing group. Th e data in statistical estimates demonstrate would yield an average Table 2 show that as we move down into the lower MCI annual sale increase of US$1,720 per business. With performance categories, there are increasing numbers of 2,296 registered businesses, additional annual sales opportunities to improve the local business environment. would amount to US$3,949,120. An improvement of 1.5 points in the MCI score would increase the number of registered businesses by 33%, which would generate Learning from Neighbors additional employment and would increase local tax As shown by the map in Figure 4, the business revenue.23 environment diff ers greatly across the country, including within departments and regions. Th is suggests that municipalities could learn from governance practices that Moving from MCI Scores to Reality have proved successful for their neighbors. In this sense, Th e MCI is meant to be a tool for municipal and central the MCI has the potential to enable local governments to government leaders to identify and remedy constraints identify promising opportunities for mutual cooperation. to doing business in their municipalities, as well as to For instance, if Zacatecoluca adopted the transparency recognize best practices among Salvadoran municipalities practices of its neighbor San Pedro Masahuat, this and potentially replicate them throughout the country. would take it from the very bottom level of the MCI to the Average Performing group. In addition, adopting 23 See regression results in the full appendix. THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 21

As the early paragraphs of this document describe, by Th e last stage of the MCI project is a major ranking municipalities against each other on a variety dissemination event in San Salvador and a series of of indicators, the MCI creates a benefi cial sense of three municipal-level workshops at which next steps competition among municipalities to improve local for generating a better business environment will be policies that spur development. discussed with both the public and private sectors.

Suggested Actions Some suggested actions for municipalities which may be • Continuing to streamline regulatory and administrative examined during the MCI workshops are: processes to reduce costs and time to local businesses. • Using the 2009 MCI results as a baseline from which • Identifying innovative ways to assist businesses, such areas of improvement can be identifi ed to set municipal as promoting and engaging with business associations, priorities and develop local action plans for local supporting skills training and entrepreneurship economic development. programs, and developing services and incentives to attract investors. • Generating business-friendly environments by prioritizing those aspects of municipal governance • Taking an active role in tackling crime at the local level, that are valued by local business and are crucial for because public safety directly affects businesses and local development, as noted by the MCI. The private investment decisions. sector is a key actor in the process of generating local employment and well-being. • Strengthening municipal linkages within regions, within departments, and across the country to allow better • Increasing participation of business owners and citizens transfers of information, best practices, and local in municipal decision-making processes. This is an initiatives. important fi rst step to achieve transparency. • Strengthening linkages between the municipal-level • Taking actions to improve access to local documents governments and the central government to better and information to improve transparency. Access to address issues affecting all municipalities and to improve accurate and reliable information on municipal budgets, local implementation of national policies. planning documents, and local rules and regulations is essential to promote and retain private sector development. ABBREVIATED APPENDIX: SUMMARY OF MUNICIPAL COMPETITIVENESS INDEX (MCI) METHODOLOGY

Notes on the Methodology A systematic sample of blocks was selected with probability proportional to the distance from the center. Information Sources Field staff counted the number of establishments with a Th e data used to construct the MCI and component fi xed location within each selected block. Th e sampling sub-indices were collected through two surveys. Th e fi rst frame consisted of the list of selected blocks together was a sample survey of fi xed-location establishments in with the count of establishments within each of them. each of the 100 municipalities included in the study. Th e second was a survey of mayors and offi cers across Municipality Survey Design the 100 municipalities. Other sources of municipal data Th e municipality survey was conducted in the same were the Diario Ofi cial, municipality Web sites, and 100 municipalities through interviews with mayors reports published by government agencies, in particular and other municipal offi cials. Data collection from the the Instituto Salvadoreño para el Desarrollo Municipal municipal government was hampered by the transition (ISDEM), the Fondo de Inversión para el Desarrollo process following the January 2009 municipal elections. Local (FISDL), and the Corporación de Municipalidades Problems occurred with eight municipalities which de El Salvador (COMURES). were reluctant to participate in the survey, or whose mayors and offi cers did not have time to provide the Business Survey Design data because they were in the middle of preparing Th e business survey was designed as a two-stage sample documentation for the transition to a newly elected local within each of the 100 municipalities included in the government. study. Th e fi rst stage consisted of the selection of a To fi ll the remaining holes in the data, the research systematic sample of blocks within a municipality, with team decided to try to collect data on the main survey probability proportional to the block distance from the variables from these municipalities through a “mystery main business district, usually downtown. Th e second shopper” approach. An interviewer from the research stage consisted of the systematic selection of business team posed as a person interested in registering a establishments within selected blocks, with probability business to acquire the information necessary directly proportional to the number of establishments within from those municipalities. To test the validity of the blocks. Th is sample design resulted in a clustered sample method, the “mystery shopper” approach was conducted of establishments within each municipality. for some of the municipalities that had already provided Th e business survey population consisted of all 165,319 complete information. Th e data collected through this establishments with a fi xed location in the 100 project method were nearly identical to those already collected municipalities recorded by the Economic Census through the face-to-face interviews. conducted by the National Statistical Offi ce in 2005.24 Th e sampling frame consisted of a list of area blocks Budget Information specially developed for the study. In most municipalities, Only 70 municipalities provided data on the amount blocks consisted of groups of urban squares well of their budget and on their expenditures on public delimited by streets starting from the geographical services for 2008. For these municipalities, the per center, normally the central park. In San Salvador and capita budget was strongly correlated with the number other large municipalities, the city was divided into of businesses, according to the 2005 Economic known business districts and blocks were formed starting Census.25 Th ese municipalities were classifi ed into from a previously defi ned geographical center. fi ve groups by the number of workers per business.

24 Dirección General de Estadística y Censos (DIGESTYC), Ministerio de 25 Correlation coeffi cient of 0.74. Economía, El Salvador. THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 23

Average values for population size, total budget, and Data Collection municipal expenditures on public works, education Data were collected from March 30 to April 24, 2009, and vocational training, assistance to local businesses, by a team of 36 interviewers organized into six groups, public safety, solid waste management, and urban each under the leadership of one fi eld supervisor. Th e six street maintenance were computed within each of these supervisors reported directly to a Head of Operations. groups. Th is procedure resulted in a 0.99 correlation Field staff were trained over four sessions to ensure between the reported budget and the imputed budget their full understanding of the survey questions and the within the 70 municipalities with data on this variable. structure of the survey form, the cartography, and the Predicted quantities were converted to a per capita basis fi eld procedures for the selection of establishments. and then used for imputation in the 30 municipalities with missing data. In the case of San Salvador, budget Quality Control and public expenditure data were obtained from the Th e fi eld supervisors reviewed the full set of municipality Web site; this information was offi cial at questionnaires completed by their interviewers and the time of data collection. returned those forms that contained errors to the respective interviewers. Th ese interviewers then revisited Survey Questionnaire Development and Testing the establishments and the municipal government offi ces Both survey questionnaires were developed by MCI to obtain the correct data. Th e supervisors then returned project staff . Extensive desk research was conducted the completed survey forms to the Head of Operations, on the municipal business environment in El Salvador, who conducted quality checks on a 20% sample of with additional information gathered through regional business survey forms and on each of the municipality stakeholder meetings with the business community, forms. In case of errors, a team of 6 interviewers beyond mayors, and other key government offi cials. Th e draft the 36 interviewers previously engaged was used to questionnaires were validated using focus groups that recover data from the relevant establishments and the were held with business owners in San Salvador and municipal governments. Santa Tecla, and with municipal offi cers in Santa Tecla, Sonsonate, and Sonzacate. Simultaneously, the fi rst Data Entry, Processing, and Production of training session held with the fi eld staff who would Clean Files conduct the interviews was used to test the tone, level, SPSS Data Entry Builder™ was used to develop a and accuracy of the language in the fi rst versions of customized data entry and editing program to capture the survey questionnaires. Adjustments were made to and manage the data from the survey forms. Clean fi les both survey forms and pilot tests were conducted with were produced in SPSS format. a sample of establishments and with municipal offi cers in Santa Tecla and Zaragoza. Th ese pilot tests provided useful data to develop the fi nal versions of the survey questionnaires and to test the fi eld procedures. 24 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

MCI Construction Overview 4. A simple total of the sub-index scores is not suffi cient The MCI construction process consisted of the following to measure the municipalities’ level of competitiveness. stages: This is because some sub-indices are highly correlated 1. Indicators were selected for the variables included as with business success and therefore contribute more part of the sub-indices. Data for these indicators were to the MCI. The specifi c weights for each sub-index gathered through the business and municipality surveys were obtained via regression analysis of two measures described in the full appendix to this report. of business performance: scores derived from a factor analysis of the sub-indices, and three measures of 2. Indicator values were transformed to a scale ranging from municipal structural conditions.* 1 to 10, where 1 represented the lowest value and 10 the highest value of the characteristic they represented. 5. The fi nal MCI was obtained as the weighted sum of the sub-indices. See Table A1 below for an overview of 2009 3. Unweighted MCI scores were obtained from the sum of MCI scores by sub-index. the sub-index values. The unweighted MCI could take on a maximum value of 90 for a municipality with a perfect * Human Development Index (UNDP, 2006), Number of telephones per 100 households (National Census of Population and Housing, 2007) and Distance from score for all the sub-indices. San Salvador (in kilometers).

Table A1. Municipal Competitiveness Index Overview

Municipality (Department) MCI Transparency Municipal Services Proactivity Informal Payments Safety Public Time to Compliance and Rates Taxes Entry Costs Municipal Regulations Antiguo Cuscatlán (LLB) 7.94 7.44 9.50 7.10 10.00 8.07 5.95 5.35 9.04 8.82 La Libertad (LLB) 7.32 6.36 6.39 8.31 9.50 6.57 6.15 5.79 8.94 8.74 Texistepeque (STA) 7.19 7.54 4.28 8.18 9.28 8.66 5.46 5.38 7.97 9.13 San Pedro Masahuat (LPA) 6.92 7.63 4.21 8.26 9.65 7.26 4.56 4.56 8.64 7.97 Conchagua (LAU) 6.90 7.97 5.73 7.81 8.46 8.87 5.67 3.23 8.79 3.70 Tepecoyo (LLB) 6.63 7.11 5.20 6.83 9.45 6.77 3.98 6.09 7.64 5.49 Santa Tecla (LLB) 6.62 6.40 4.95 6.81 8.56 6.90 5.84 4.96 8.53 8.37 El Carmen (CUS) 6.60 5.91 4.13 6.44 10.00 7.68 4.15 5.26 8.48 9.98 El Rosario (LPA) 6.58 6.92 3.51 6.57 9.60 6.06 4.86 5.24 9.48 10.00 San Pablo Tacachico (LLB) 6.56 6.83 4.56 7.17 9.25 7.72 4.39 3.97 7.31 8.47 San Francisco Gotera (MOR) 6.53 7.32 2.80 6.71 9.48 7.16 5.52 4.80 8.17 8.54 Cuscatancingo (SAN) 6.53 6.68 3.42 6.50 9.30 6.03 6.00 5.50 7.93 9.84 Chalchuapa (STA) 6.43 6.81 4.78 6.16 9.32 5.92 5.75 3.38 7.77 9.44 Pasaquina (LAU) 6.40 6.28 4.99 5.73 8.29 7.39 4.77 5.73 8.97 7.47 Moncagua (SMI) 6.38 7.12 5.03 5.41 8.68 6.00 5.11 5.38 8.11 7.64 Nahuizalco (SON) 6.33 5.78 3.77 6.62 8.99 7.09 5.72 4.22 8.61 8.34 Quezaltepeque (LLB) 6.32 6.19 3.02 6.26 9.25 6.11 5.00 6.18 8.20 9.33 Tejutla (CHA) 6.31 5.79 3.16 6.35 10.00 7.54 4.59 4.37 7.50 9.72 El Tránsito (SMI) 6.30 6.50 2.83 6.85 8.90 7.38 5.26 4.93 9.01 6.62 Santiago Texacuangos (SAN) 6.27 7.07 4.17 4.55 8.99 5.89 5.35 6.14 7.49 9.14 Chalatenango (CHA) 6.25 6.66 3.28 7.05 8.29 7.29 5.49 4.31 8.60 6.40 Mejicanos (SAN) 6.16 5.79 3.17 6.92 8.19 7.10 5.16 5.22 8.24 7.78

Department codes: AHU (Ahuachapán), CAB (Cabañas), CHA (Chalatenango), CUS (Cuscatlán), LAU (La Unión), LLB (La Libertad), LPA (La Paz), MOR (Morazán), SAN (San Salvador), SMI (San Miguel), SON (Sonsonate), STA (Santa Ana), SVI (San Vicente), USU (Usulután) THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009 25

Table A1. Municipal Competitiveness Index Overview (continued)

Municipality (Department) MCI Transparency Municipal Services Proactivity Informal Payments Safety Public Time to Compliance and Rates Taxes Entry Costs Municipal Regulations Guazapa (SAN) 6.15 6.60 3.90 5.51 8.17 6.60 5.39 4.47 8.32 9.40 Ilopango (SAN) 6.15 6.92 3.22 5.81 5.36 7.14 6.94 6.93 7.97 9.07 El Paisnal (SAN) 6.15 6.25 2.72 5.90 9.74 6.90 4.86 3.95 8.31 9.39 San Salvador (SAN) 6.14 6.32 3.95 6.10 9.51 6.39 5.25 3.63 7.91 6.73 San Antonio del Monte (SON) 6.13 7.37 3.82 5.86 7.95 6.31 5.40 3.93 7.21 8.90 San Rafael Cedros (CUS) 6.10 6.33 2.31 5.33 9.82 6.84 5.07 4.68 8.71 8.71 Soyapango (SAN) 6.08 5.97 3.36 6.50 7.82 6.80 4.67 4.35 9.07 9.89 Puerto El Triunfo (USU) 6.07 6.45 3.99 3.97 9.71 4.97 5.94 5.13 8.42 8.76 Ilobasco (CAB) 6.07 5.53 3.07 6.03 9.16 6.56 5.87 3.87 8.99 8.42 Jujutla (AHU) 6.06 5.71 3.46 4.94 9.31 7.04 5.32 4.87 6.60 9.83 San Juan Opico (LLB) 6.05 6.43 2.95 4.52 9.30 6.08 6.08 4.82 7.40 10.00 Suchitoto (CUS) 6.04 5.55 6.02 5.03 8.01 7.35 2.99 4.28 9.20 8.65 Huizúcar (LLB) 6.02 6.30 3.15 4.62 8.56 7.27 5.19 5.49 8.71 7.85 Santa Rosa de Lima (LAU) 6.02 5.69 7.45 4.17 6.20 6.96 4.79 3.89 9.02 9.55 Santiago de María (USU) 6.01 4.68 3.12 6.86 8.70 7.30 6.24 2.93 9.06 8.32 Santa Ana (STA) 6.01 3.78 2.69 6.44 8.86 5.01 6.62 7.53 6.61 9.90 Metapán (STA) 6.00 5.24 3.53 6.68 8.26 6.86 5.04 3.07 8.97 9.84 Apopa (SAN) 5.98 6.13 4.12 7.03 7.33 5.33 4.15 5.58 8.06 7.53 Apastepeque (SVI) 5.97 5.80 4.05 4.49 8.97 7.27 5.20 4.59 7.01 8.35 Juayúa (SON) 5.93 5.32 4.74 4.83 9.84 5.75 4.26 3.55 8.20 9.09 Cojutepeque (CUS) 5.92 4.96 4.32 3.63 9.44 6.19 5.62 5.18 8.13 9.13 Corinto (MOR) 5.91 6.32 2.57 5.81 8.76 5.99 4.54 4.29 9.19 9.03 San Julián (SON) 5.89 6.59 1.93 5.64 9.25 7.06 4.34 3.24 8.90 9.52 Candelaria de la Frontera (STA) 5.87 6.23 3.54 5.22 7.10 5.87 5.96 6.15 8.34 6.77 Tamanique (LLB) 5.80 6.55 3.20 6.68 7.54 6.61 3.94 3.61 7.47 8.34 Ayutuxtepeque (SAN) 5.77 6.27 3.23 6.20 8.15 5.58 4.72 3.16 8.67 8.18 San Marcos (SAN) 5.75 6.18 2.66 6.13 7.57 6.73 4.20 3.78 8.87 9.03 Tecoluca (SVI) 5.74 5.34 4.30 5.81 7.62 6.50 4.70 2.67 8.62 9.48 Chirilagua (SMI) 5.74 5.86 3.99 3.45 7.66 6.73 5.79 4.58 9.14 8.73 Atiquizaya (AHU) 5.73 4.70 3.26 5.06 8.56 7.32 4.63 4.37 7.80 9.47 Jiquilisco (USU) 5.73 5.58 2.60 5.70 7.61 6.87 5.02 5.35 9.23 6.42 Lolotique (SMI) 5.71 4.77 2.92 5.78 9.89 6.20 4.06 3.23 7.69 9.47 Sensuntepeque (CAB) 5.68 5.41 3.45 5.64 7.28 5.77 5.02 3.71 9.26 10.00 Aguilares (SAN) 5.68 5.75 3.63 6.10 7.80 5.73 4.94 3.93 8.46 6.07 Lislique (LAU) 5.61 5.85 2.77 5.44 8.41 6.10 4.72 3.42 8.25 8.10 Guaymango (AHU) 5.59 5.15 3.02 5.42 7.65 7.92 5.19 3.00 7.31 8.55 Colón (LLB) 5.57 4.92 2.49 5.80 8.20 6.38 4.64 3.93 7.52 9.85 Anamorós (LAU) 5.56 5.19 2.80 5.30 7.92 6.84 4.93 3.53 8.16 8.88 Santa Elena (USU) 5.55 5.51 2.43 4.51 9.84 5.41 4.61 3.83 7.73 8.50 San Miguel (SMI) 5.54 6.22 4.29 4.90 7.36 4.84 5.04 4.34 7.56 6.50

Department codes: AHU (Ahuachapán), CAB (Cabañas), CHA (Chalatenango), CUS (Cuscatlán), LAU (La Unión), LLB (La Libertad), LPA (La Paz), MOR (Morazán), SAN (San Salvador), SMI (San Miguel), SON (Sonsonate), STA (Santa Ana), SVI (San Vicente), USU (Usulután) 26 THE EL SALVADOR MUNICIPAL COMPETITIVENESS INDEX 2009

Table A1. Municipal Competitiveness Index Overview (continued)

Municipality (Department) MCI Transparency Municipal Services Proactivity Informal Payments Safety Public Time to Compliance and Rates Taxes Entry Costs Municipal Regulations Delgado (SAN) 5.53 5.63 2.54 5.59 6.75 6.39 4.74 6.08 7.09 7.57 Olocuilta (LPA) 5.53 5.34 2.75 5.73 7.78 5.75 5.00 4.32 7.96 7.67 Santiago Nonualco (LPA) 5.52 5.81 2.92 6.30 6.24 6.64 5.32 2.82 8.92 8.07 San Juan Nonualco (LPA) 5.50 5.21 2.21 5.62 8.25 7.17 4.38 3.19 7.65 9.69 San Pedro Perulapán (CUS) 5.50 5.55 2.14 4.30 7.45 6.16 5.37 7.28 7.51 6.46 Izalco (SON) 5.46 4.65 1.59 3.86 9.82 6.41 4.77 5.38 7.27 9.13 San Alejo (LAU) 5.46 4.77 3.11 6.19 6.60 6.84 4.50 4.30 7.36 8.45 Zaragoza (LLB) 5.45 5.38 2.75 5.26 7.87 6.72 4.61 3.33 7.82 8.53 Nejapa (SAN) 5.42 5.55 3.28 5.28 7.51 5.66 4.41 3.32 8.62 8.17 Nueva Concepción (CHA) 5.42 4.61 2.43 5.45 7.05 6.43 5.04 5.69 8.44 6.92 Ciudad Barrios (SMI) 5.40 5.10 1.99 5.59 9.30 6.01 4.39 2.07 8.61 8.66 Jucuarán (USU) 5.39 4.58 2.26 5.43 7.67 7.44 4.24 3.18 8.60 10.00 San Sebastián (SVI) 5.38 5.28 1.98 4.16 9.30 5.32 5.11 3.99 9.54 7.17 Sonzacate (SON) 5.36 3.90 2.18 3.95 9.40 6.35 4.98 4.08 8.07 9.92 Sonsonate (SON) 5.36 6.23 2.33 5.13 6.51 7.46 4.26 2.78 7.55 9.90 Jucuapa (USU) 5.34 3.92 1.66 4.90 7.95 6.33 4.80 5.12 9.45 9.50 San José Villanueva (LLB) 5.31 4.94 1.94 5.08 7.45 7.42 4.66 3.88 6.98 8.76 Armenia (SON) 5.30 5.31 2.72 5.51 5.38 7.43 4.85 3.32 9.05 8.94 San Luis Talpa (LPA) 5.28 5.24 1.44 4.34 9.43 5.73 3.99 3.75 8.41 8.85 Tonacatepeque (SAN) 5.22 5.41 1.85 3.04 8.12 7.10 5.34 4.43 7.34 8.02 San Luis La Herradura (LPA) 5.22 5.03 1.66 5.31 5.65 6.98 4.67 5.09 8.52 9.57 San Martín (SAN) 5.21 6.05 2.10 6.10 7.38 3.66 5.46 3.04 9.03 5.89 San Sebastían Salitrillo (STA) 5.20 5.36 2.66 5.11 6.89 5.05 4.49 4.55 7.46 8.11 Berlín (USU) 5.18 4.94 2.11 5.03 7.25 7.08 4.46 2.16 8.94 9.49 Tacuba (AHU) 5.18 4.98 2.18 4.71 6.84 6.76 3.78 5.75 6.00 8.74 San Vicente (SVI) 5.15 4.77 2.27 5.70 6.39 5.29 4.07 4.58 8.33 9.45 Acajutla (SON) 5.07 4.48 2.82 4.13 6.61 5.38 5.13 5.97 8.73 5.56 Ahuachapán (AHU) 5.04 4.64 2.08 4.51 7.41 6.17 4.64 3.50 8.31 7.96 La Unión (LAU) 5.03 4.62 2.16 4.66 7.26 5.68 4.03 3.08 9.23 9.61 Coatepeque (STA) 4.99 4.27 2.88 4.75 6.50 6.10 5.26 3.35 7.11 7.90 San Francisco Menéndez (AHU) 4.98 5.31 2.07 5.42 6.25 6.64 5.45 3.01 6.42 5.91 Panchimalco (SAN) 4.97 4.17 1.77 4.89 7.49 5.73 4.28 3.54 9.39 7.97 Chinameca (SMI) 4.93 4.30 2.30 4.17 5.80 6.78 5.29 3.52 8.27 9.59 El Congo (STA) 4.91 4.39 2.69 4.18 6.67 5.93 4.98 2.66 8.10 9.08 Santo Tomás (SAN) 4.84 4.82 2.79 3.48 7.15 4.50 5.55 2.63 7.97 8.90 Ciudad Arce (LLB) 4.82 5.09 2.12 4.45 6.39 5.80 4.35 3.24 8.60 6.80 Usulután (USU) 4.58 3.99 2.33 4.63 4.66 6.21 3.90 4.30 7.86 7.95 Zacatecoluca (LPA) 4.48 3.69 2.05 4.37 6.01 5.06 5.12 3.16 8.67 5.80

Department codes: AHU (Ahuachapán), CAB (Cabañas), CHA (Chalatenango), CUS (Cuscatlán), LAU (La Unión), LLB (La Libertad), LPA (La Paz), MOR (Morazán), SAN (San Salvador), SMI (San Miguel), SON (Sonsonate), STA (Santa Ana), SVI (San Vicente), USU (Usulután)

RTI El Salvador Local B, Torre Anexa Radisson 87 Avenida Norte Entre la 13 y 15 Calle Poniente San Salvador, El Salvador Phone: +503.2264.3258/3260 Fax: +503.2264.3479 Web site: www.rti.org MCI Project Web site: www.municipalindexelsalvador.com