2014 Index of Economic Freedom

The Bahamas

overall score69.8
world rank36
Rule of Law

Property Rights70.0

Freedom From Corruption66.6

Limited Government

Government Spending84.1

Fiscal Freedom97.3

Regulatory Efficiency

Business Freedom70.7

Labor Freedom81.5

Monetary Freedom75.1

Open Markets

Trade Freedom52.2

Investment Freedom30.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 0.4 million
  • GDP (PPP):
    • $11.1 billion
    • 2.5% growth
    • -0.6% 5-year compound annual growth
    • $31,382 per capita
  • Unemployment:
    • 11.0%
  • Inflation (CPI):
    • 2.3%
  • FDI Inflow:
    • $1.1 billion
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The Bahamas’ economic freedom score is 69.8, making its economy the 36th freest in the 2014 Index. Its overall score has decreased by 0.3 point, with a notable decline in freedom from corruption outweighing a gain in trade freedom. The Bahamas is the 4th freest out of 29 countries in the South and Central America/Caribbean region, and its overall score remains higher than the regional and world averages.

Over the 20-year history of the Index, The Bahamas’ economic freedom has deteriorated by 2 points. Although the score for trade freedom has improved by over 30 points, declines have occurred in six of the 10 economic freedoms, notably property rights and business freedom, which plummeted 20 points or more. The Bahamas had been a “mostly free” economy during the first 15 years but has been on a declining path of economic freedom since 2009 and has dropped into the ranks of the “moderately free” in the 2014 Index.

The island economy is equipped with a dynamic financial sector and has a competitive tax regime. There are no personal income or corporate taxes. However, a poor investment framework, characterized by government interference and lingering corruption, continues to undermine the Bahamas’ overall economic freedom and long-term prospects for broader-based economic expansion.



The Bahamas is a member of the British Commonwealth and is governed as a constitutional parliamentary democracy. 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 and accounts for more than 60 percent of GDP. Financial and business services account for more than one-third of GDP. Due to its geographic location, the Bahamas often serves as a major transshipment point 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 66.6 Create a Graph using this measurement

Corruption remains a problem at all levels of government. Top officials frequently face allegations of administrative graft, domestically and from abroad. The largely well-functioning judicial system, headed by the Supreme Court and a court of appeals, is independent and based on British common law. However, the judicial process tends to be very slow. Violent crime, often drug-related, continued to escalate in 2012.

Limited GovernmentView Methodology

The Bahamas has some of the world’s lowest tax rates, with no individual or corporate income taxes or value-added taxes (VATs). Instead, the government imposes national insurance taxes, property taxes, tariffs, and a stamp tax. The overall tax burden is 16.4 percent of gross domestic output. Government spending is 23 percent of the total economy, and public debt amounts to about 50 percent of GDP.

Regulatory EfficiencyView Methodology

An efficient regulatory framework generally facilitates business formation and productivity growth, but the absence of major regulatory reforms in recent years has undermined the Bahamas’ international competitiveness. Hiring and dismissal regulations are not burdensome, and the influence of unions is limited. The government influences domestic prices for such “breadbasket” items as medicines, gasoline, and petroleum gas.

Open MarketsView Methodology

The average tariff rate of 18.9 percent is quite high due to the country’s reliance on tariffs to finance the government. New foreign investment is subject to screening, and the current government has suggested nationalization of the Bahamas Telecommunications Company. The 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 Lucia70.70.3
4The Bahamas69.8-0.3
5Uruguay 69.3-0.4
8Saint Vincent and the Grenadines670.3
9Costa Rica 66.9-0.1
10Jamaica 66.7-0.1
11El Salvador 66.2-0.5
13Panama 63.40.9
14Trinidad and Tobago62.70.4
15Paraguay 620.9
16Dominican Republic61.31.6
17Guatemala 61.21.2
18Nicaragua 58.41.8
19Honduras 57.1-1.3
28Venezuela 36.30.2
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