2017 Index of Economic Freedom

The Bahamas

overall score61.1
world rank90
Rule of Law

Property Rights45.3

Government Integrity38.2

Judicial Effectiveness48.7

Government Size

Government Spending83.8

Tax Burden97.1

Fiscal Health42.3

Regulatory Efficiency

Business Freedom68.5

Labor Freedom71.5

Monetary Freedom77.0

Open Markets

Trade Freedom50.6

Investment Freedom50.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 0.4 million
  • GDP (PPP):
    • $9.2 billion
    • 0.5% growth
    • 0.9% 5-year compound annual growth
    • $25,167 per capita
  • Unemployment:
    • 14.4%
  • Inflation (CPI):
    • 1.9%
  • FDI Inflow:
    • $384.9 million
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There is little momentum for economic reform in the Bahamas, which appears gradually to be losing competitiveness vis-Ă -vis other nations that are moving more rapidly to expand economic opportunity. The emergence of a more dynamic and sustainable private sector is held back by the weak rule of law, lingering protectionism, and bureaucracy that undermines the investment environment.

Nevertheless, the overall regulatory system is conducive to entrepreneurial activity, and there are no individual or corporate income taxes. Relatively sound management of fiscal policy contributes to macroeconomic stability, and investment management and financial services play a vital role in sustaining overall economic strength.



Prime Minister Perry Christie of the long-dominant center-left Progressive Liberal Party, in office since 2012, says he will seek another five-year term in the May 2017 elections. Although tourism accounts for more than 60 percent of GDP, a record-high murder rate in 2015 heightened concerns that violent crime will have a negative impact. The Bahamas will soon set a record for the longest-running accession to the World Trade Organization, having initiated the still-incomplete process in 2001. Politicians and the private sector remain at loggerheads about how to replace the tariff revenues that would be lost. The Bahamas is a major transshipment point both for smuggling illegal drugs into the United States and Europe and for smuggling illegal migrants into the U.S.

Rule of LawView Methodology

Property Rights 45.3 Create a Graph using this measurement

Government Integrity 38.2 Create a Graph using this measurement

Judicial Effectiveness 48.7 Create a Graph using this measurement

Property registration is difficult and time-consuming, but the introduction of new rules of civil procedure has made enforcement of contracts easier. Although the independent legal system is based on British common law, the inefficiency of the judicial process causes trials to be delayed. Retaliatory crimes against both witnesses and alleged perpetrators have increased. Money laundering and corruption are problems at all levels of government.

Government SizeView Methodology

The government imposes national insurance, property, and stamp taxes but no income, corporate income, capital gains, value-added, or wealth taxes. The overall tax burden equals 16.9 percent of total domestic income. Government spending has amounted to 23.3 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.5 percent of GDP. Public debt is equivalent to 65.7 percent of GDP.

Regulatory EfficiencyView Methodology

There is no minimum capital requirement for starting a company, but it takes almost a month on average to launch a business. No major reforms have been implemented in recent years. The labor market is relatively flexible, but the existing labor codes are not enforced effectively. Subsidies to the state-owned Bahamas Electricity Corporation and the Water and Sewerage Corporation continue to be a drag on government finances.

Open MarketsView Methodology

Trade is important to the Bahamas’ economy; the value of exports and imports taken together equals 93 percent of GDP. Government finances are heavily reliant on tariffs, and the average applied tariff rate is 19.7 percent. Financial services are competitive, and domestic and offshore activities contribute around 15 percent of GDP. The diversified banking sector remains stable, although the number of nonperforming loans has increased.

Country's Score Over Time

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Regional Ranking

rank country overall change
3United States75.1-0.3
5Uruguay 69.70.9
6Jamaica 69.52.0
8Panama 66.31.5
9Saint Vincent and the Grenadines65.2-3.6
10Saint Lucia65-5.0
11Costa Rica 65-2.4
12El Salvador 64.1-1.0
15Guatemala 631.2
16Dominican Republic62.91.9
17Paraguay 62.40.9
18Trinidad and Tobago61.2-1.7
19The Bahamas61.1-9.8
20Nicaragua 59.20.6
21Honduras 58.81.1
32Venezuela 27-6.7
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