2013 Index of Economic Freedom

The Bahamas

overall score70.1
world rank35
Rule of Law

Property Rights70.0

Freedom From Corruption73.0

Limited Government

Government Spending84.9

Fiscal Freedom97.0

Regulatory Efficiency

Business Freedom71.3

Labor Freedom81.6

Monetary Freedom75.8

Open Markets

Trade Freedom47.0

Investment Freedom30.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 0.3 million
  • GDP (PPP):
    • $10.8 billion
    • 2.0% growth
    • -0.5% 5-year compound annual growth
    • $30,959 per capita
  • Unemployment:
    • 13.7%
  • Inflation (CPI):
    • 2.5%
  • FDI Inflow:
    • $1.5 billion
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The Bahamas’ economic freedom score is 70.1, making its economy the 35th freest in the 2013 Index. Its overall score has increased by 2.1 points, with notable gains in freedom from corruption and trade freedom. The Bahamas’ overall score has become competitively higher than the regional and world averages, and the island economy is the third freest out of 29 countries in the South and Central America/Caribbean region.

The Bahamas registered one of the largest increases in economic freedom this year. The foundations of economic freedom have been enhanced, and the perceived level of corruption declined significantly. A modest reduction of high tariff rates has opened the economy more fully to global trade, advancing competitiveness.

The Bahamas’ overall regulatory system is conducive to entrepreneurial activity, and there are no individual or corporate income taxes. However, the emergence of a more dynamic private sector is still held back by crime, lingering protectionism, and bureaucracy that undermines the investment environment.



The Bahamas is a British-style parliamentary democracy with two principal political parties. In May 2012, former Prime Minister Perry Christie led the Progressive Liberal Party back to power by defeating Prime Minister Hubert Ingraham’s Free National Movement. The Bahamas is one of the Caribbean’s most prosperous nations. Tourism generates about half of all jobs, accounts for more than 60 percent of GDP, and, after dropping sharply during the 2008–2009 global economic recession, has recovered modestly. However, financial and business-services profits, which account for more than one-third of GDP, remain anemic. Stricter financial regulations have caused some international businesses to leave the country. The Bahamas is a haven for drug smugglers and illegal aliens seeking to enter the United States.

Rule of LawView Methodology

Property Rights 70.0 Create a Graph using this measurement

Freedom From Corruption 73.0 Create a Graph using this measurement

The judicial system, regarded as functioning well for the most part, is independent and based on British common law. Enforcement of laws prohibiting bribery and corruption among government officials is effective. However, the judicial process tends to be very slow. Enforcement of intellectual property rights is weak. Violent crime, often drug-related, has escalated sharply, and Internet gambling, although illegal, is pervasive.

Limited GovernmentView Methodology

The Bahamas has one of the world’s lowest tax burdens. The government imposes national insurance, property, and stamp taxes but no income tax, corporate income tax, capital gains tax, value-added tax (VAT), or wealth tax. Government spending amounts to about 22 percent of total domestic output, with deficits hovering around 4 percent of GDP. Public debt has increased to about half the size of the economy.

Regulatory EfficiencyView Methodology

Starting a business costs about 10 percent of the level of average annual income, and no minimum capital is required. No major reforms have been implemented in recent years. The labor market is relatively flexible, and enforcement of the labor codes is somewhat lax. Inflation has moderated, but state influence on domestic prices for such items as medicines, gasoline, and petroleum gas interferes with market adjustments.

Open MarketsView Methodology

Reliance on tariffs for revenues results in an average tariff rate of 21.5 percent that is one of the world’s highest. An abundance of tariff and non-tariff barriers distorts the market and is a significant burden for consumers. Intrusively bureaucratic approval processes hinder investment and undermine development of a more vibrant private sector. The well-diversified banking sector remains stable, although the number of non-performing loans has increased.

Country's Score Over Time

Bar Graph of The Bahamas Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing The Bahamas to other economic country groups

Regional Ranking

rank country overall change
2Saint Lucia70.4-0.9
3The Bahamas70.12.1
4Uruguay 69.7-0.2
8Costa Rica 67-1.0
9Jamaica 66.81.7
10El Salvador 66.7-2.0
11Saint Vincent and the Grenadines66.70.2
13Panama 62.5-2.7
14Trinidad and Tobago62.3-2.1
15Paraguay 61.1-0.7
16Guatemala 60-0.9
17Dominican Republic59.7-0.5
18Honduras 58.4-0.4
21Nicaragua 56.6-1.3
28Venezuela 36.1-2.0
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