January 11, 2012
WASHINGTON, JAN. 12, 2012—When it comes to holding down government spending, no region in the world performed better in 2011 than South and Central America and the Caribbean.
The region’s 29 economies measured in the 2012 Index of Economic Freedom, published annually by The Wall Street Journal and The Heritage Foundation, had the best combined score in the category of government spending. The region also scored well in fiscal freedom and monetary freedom and exceeded the world average in investment freedom.
In the overall score for economic freedom, South-Central America and the Caribbean finished third among the six regions measured.
However, low scores in the categories of freedom from corruption and protection of private property kept the region’s income levels mired in fifth place. The Index editors called these “major problem areas” that reflect “long traditions of poor governance and weak rule of law.”
Chile, which has regained its hold on a top 10 spot in the Index, was the world’s seventh-freest economy in 2011. Cuba was next to last, ahead of only North Korea. The other 27 countries of the region arranged themselves along a bell-shaped curve as 14 improved and 13 declined.
Launched in 1995, the Index evaluates countries in four broad areas of economic freedom: rule of law; regulatory efficiency; limited government; and open markets. Based on its aggregate score, each of 179 countries was classified as “free” (i.e. combined scores of 80 or higher); “mostly free” (70-79.9); “moderately free” (60-69.9); “mostly unfree” (50-59.9); or “repressed” (under 50).
The world average score for economic freedom dipped to 59.5, a drop of two-tenths of a point, and the second-lowest score of the past 10 years. Scores improved for 75 of the 179 countries rated and declined for 90. Scores for 14 others stayed the same.
All but six countries in the region scored as “mostly unfree” or “moderately free.” Guyana showed the most improvement, climbing by 1.9 points out of the “repressed” category and into “mostly unfree.”
Brazil, the region’s largest economy, rose 1.6 points to 57.9, moving it closer to the world average; however, it remains a “mostly unfree” economy. Venezuela finished next to last in the world, and the editors expressed concern that its influence over Bolivia, Ecuador, Nicaragua and Dominica could worsen economic freedom throughout the region. Argentina lost 3.7 points – the largest decline in the region and tied with Saudi Arabia for the third-worst decline in the world.
Index results continued to demonstrate that when countries adopt policies leading to high scores, they also enjoy prosperity and economic security. The freest countries in each region had incomes averaging three to 12 times higher than the least free.
Overall, only five countries in the region were classified as free. A total of 23 were rated “mostly free”, 62 “moderately free” and 89 “mostly unfree” or “repressed.”
The 2012 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for International Trade and Economics; Kim Holmes, Ph.D., Heritage’s vice president for foreign policy studies and director of the Davis Institute for International Studies; and Edwin J. Feulner, Ph.D., Heritage’s president. Copies of the Index (484 pages, $24.95) may be ordered online at www.heritage.org/index or by calling 1-800-975-8625. The full text, including charts and graphs, is available online.
About The Wall Street Journal
The Wall Street Journal, the world’s leading business publication, has more than 2 million subscribers and is the largest U.S. newspaper by total paid circulation. The franchise, with a global print audience of 3.5 million, also includes The Wall Street Journal Asia and The Wall Street Journal Europe. The Wall Street Journal Online at WSJ.com is the leading provider of business and financial news and analysis on the Web, attracting more than 1 million subscribers and 32 million visitors per month worldwide.WSJ.com is the flagship site of The Wall Street Journal Digital Network, which includes MarketWatch.com, Barrons.com, AllThingsD.com and SmartMoney.com. The Journal holds 34 Pulitzer Prizes for outstanding journalism, and, in 2011, was ranked No. 1 in BtoB’s Media Power 50 for the 12th consecutive year.
About The Heritage Foundation
The Heritage Foundation is the nation’s most broadly supported public policy research institute, with more than 710,000 individual, foundation and corporate donors. Founded in 1973, Heritage develops public policy solutions that advance free enterprise, limited government, individual freedom, traditional values and a strong national defense.