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The
Index of Economic Freedom, just released by the Heritage Foundation, gives bad
grades to half of the countries in Latin America and the Caribbean and
notes that “it is the only region in the world that did not experience a net
gain in economic freedom this year.” The
findings of the study are described as “straightforward.” Countries with the
most economic freedom also have higher rates of long-term economic growth.
“Economically free countries exhibit greater tolerance and civility than
economically repressed ones, where hopelessness and isolation foment fanaticism
and terrorism,” it observes. For
the purposes of the survey Heritage analyzed the following areas of each
country’s economy: trade, fiscal burden, government intervention, monetary
policy, foreign investment, banking/finance, wages/prices and property rights.
Information is obtained from various sources including the World Bank, the
International Monetary Fund and the Inter-American Development Bank. Of
the countries in the world included in the study (155), 14 are grade “free,”
while the next 57 are classified “mostly free.” The balance includes 72 in
the “mostly unfree” category and the remaining 13 are described as
“repressed.” Describing
Latin America and the Caribbean as “suffering from stalled reforms,” the
study finds that of the 26 countries (out of a total of 36) in the region graded
this year, 11 “have improved in overall economic freedom and 11 are worse.” Chile
(9) is for the first time
classified as a “:free” country. El Salvador (18), which was ranked as the
freest country in the region last year, has been downgraded to “mostly free”
because of its “expanded fiscal burden and black market.” At
the top of the list in the region, after Chile, is Canada (15) and then the
Bahamas (17), in the “mostly free” category. Regional countries in the same
class are Barbados (26), Trinidad & Tobago (37), Costa Rica (43), Belize
(46), Panama (51), Guatemala (56), Colombia (58), Jamaica (62) and Mexico 64). Economic
situation in D.R. deteriorating
The
“mostly unfree” category also includes Honduras (90), Nicaragua (92), Guyana
(94), Venezuela (130), Haiti (136) and Suriname (143). The only region country
in the “repressed” category is Cuba (153). Among
some other countries in the Caribbean the grades for both Barbados and Trinidad
& Tobago improved (from 35 and 39, respectively, the year before); while
Jamaica dropped (from 60 the year before). Ranked first in the world in the survey, interestingly enough, is Hong Kong even though it has reverted to the Peoples Republic of China which still ranks low at 121. Of the next ten countries in descending order, besides Singapore (2) and the U.S. (4), five are in Europe: Estonia, Ireland, Luxembourg, the Netherlands (all also 4); two in the Pacific: New Zealand (3) and Australia (9); and Chile (also tied for 9). December
31, 2001
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Topping
the list in the “mostly unfree” category is the Dominican Republic (72). A
Heritage spokesperson indicated that the D.R. dropped from 59 in the “mostly
free” category the previous year. Cited were several reasons for the
adjustments in the D.R.’s grade. While the spokesperson indicated the black
market situation in the country actually improved slightly, he said there was an
increase in both wages and prices which contributed to a rise in the inflation
rate to 7.1% in 2001 from 5.8% in 1995. The country’s monetary policy was
given as another reason for the contraction.
