2016 Index of Economic Freedom


overall score68.8
world rank41
Rule of Law

Property Rights70.0

Freedom From Corruption73.0

Limited Government

Government Spending67.6

Fiscal Freedom77.2

Regulatory Efficiency

Business Freedom75.3

Labor Freedom62.5

Monetary Freedom71.3

Open Markets

Trade Freedom80.6

Investment Freedom80.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 3.4 million
  • GDP (PPP):
    • $70.0 billion
    • 3.3% growth
    • 5.4% 5-year compound annual growth
    • $20,556 per capita
  • Unemployment:
    • 7.0%
  • Inflation (CPI):
    • 8.9%
  • FDI Inflow:
    • $2.8 billion
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Uruguay’s history of economic openness stands out in the South and Central America/Caribbean Region, and the country is considered one of the least corrupt in Latin America. Reforms to enhance regulatory efficiency have made it a more attractive destination for international investment.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 68.8 (up 0.2 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 41st
  • Regional Ranking: 6th in the South and Central America/Caribbean Region
  • Notable Successes: Business Freedom, Investment Freedom, and Trade Freedom
  • Concerns: Financial Freedom and Monetary Freedom
  • Overall Score Change Since 2012: –1.1

Uruguay has struggled to reign in government spending but has made strides in efforts to streamline efficiency in the financial sector and promote greater use of financial institutions and services by the general public. The value-added tax rate has been cut by 2 percent.



President Tabaré Vázquez from the ruling center-left coalition took office in March 2015, pledging to maintain his predecessor’s mix of pro-market policies and a strong social safety net while seeking economic diversification. State involvement in the economy is substantial, and deregulation is needed in telecommunications, energy, and public utilities. Uruguay began a process to legalize marijuana in 2013, but drug trafficking remains a problem in urban areas. Uruguay is a founding member of MERCOSUR and signed a Trade and Investment Framework Agreement with the United States in 2007. The economy is still based largely on exports of commodities such as milk, beef, rice, and wool. Despite excellent banking services, an information-sharing agreement with unstable Argentina has reduced confidence in Uruguay as a safe haven for assets.

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

Uruguay was tied with Chile as the least corrupt country in Latin America in the 2014 edition of Transparency International’s Corruption Perceptions Index. The country’s Transparency Law criminalizes a broad range of potential abuses of power by officeholders. The judiciary is relatively independent, but the court system remains severely backlogged. Private property is generally secure, expropriation is unlikely, and contracts are enforced.

Limited GovernmentView Methodology

The top individual income tax rate is 30 percent. The top corporate tax rate is 25 percent. Other taxes include a value-added tax and a capital gains tax. The tax burden equals 27.4 percent of total domestic income. Government spending equals about 32.9 percent of GDP. Budget deficits continue, and public debt exceeds 60 percent of total domestic output. The latest budget includes increased spending on social programs and infrastructure.

Regulatory EfficiencyView Methodology

Recent reforms have considerably enhanced regulatory efficiency. It now takes about seven days to start a business. The cost of completing licensing requirements also has been reduced. The non-salary cost of employing a worker is low, but restrictions on work hours are not flexible. The new center-left government is committed to fiscal consolidation, but state spending remains high.

Open MarketsView Methodology

Uruguay’s average tariff rate is 4.7 percent. It is illegal to import used cars. Foreign and domestic investors are generally treated equally under the law. State-owned enterprises operate in the energy and telecommunications sectors. The financial sector continues to evolve, but capital markets are underdeveloped and concentrated in government debt. The state continues to influence the allocation of credit.

Country's Score Over Time

Bar Graph of Uruguay  Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
2The Bahamas70.92.2
4Saint Lucia70-0.2
5Saint Vincent and the Grenadines68.80.8
6Uruguay 68.80.2
8Jamaica 67.5-0.2
10Costa Rica 67.40.2
12El Salvador 65.1-0.6
13Panama 64.80.7
14Trinidad and Tobago62.9-1.2
15Guatemala 61.81.4
16Paraguay 61.50.4
17Dominican Republic610.0
18Nicaragua 58.61.0
19Honduras 57.70.3
28Venezuela 33.7-0.6
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