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January 10, 2013

Index: Economic Freedom Contracts in Central and South America

For Immediate Release
Jim Weidman, (202) 675-1761, jim.weidman@heritage.org
Sara Blask, (212) 416-2312, sara.blask@dowjones.com


Belize suffers world’s worst decline; Chile retains position in global top 10

WASHINGTON, JAN. 10, 2013economic freedom lost ground last year in South and Central America and the Caribbean, pulling the region from third down to fourth among six in the world.

On the plus side, the region’s 29 economies measured in the 2013 Index of Economic Freedom, published annually by The Wall Street Journal and The Heritage Foundation, continued the previous year’s trend of better than average scores in fiscal freedom and monetary freedom. It also improved in controlling government spending.

But South and Central America and the Caribbean also maintained its trend of low scores in the categories of freedom from corruption and protection of private property. The Index editors called these low scores a reflection of “long-standing issues of poor governance and political instability in the region.”

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 177 countries graded in the 2013 Index 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).

Chile retained its seventh-place ranking in the 2013 Index, achieving the largest annual gain in economic freedom among the top 10. Cuba saw very modest gains in economic freedom but failed to improve its ranking as the second-worst economy in the world. The other 27 countries of the region arranged themselves along a bell-shaped curve as eight improved and 19 declined.

All but nine countries in South and Central America and the Caribbean scored as “moderately free” or “mostly unfree.” Five countries changed status over the year. Bolivia and Haiti dropped from “mostly unfree” to “repressed.” Belize and the Dominican Republic fell from “moderately free” to “mostly unfree.” The Bahamas stood out as the only country in the region to improve in classification, becoming “mostly free.”

Index editors singled out Colombia for its gain of 1.6 points, calling it a prime example of a nation that “turned the global economic crisis into an opportunity to upgrade its economic system.”

As a whole, the region suffered the worst decrease in economic freedom. Belize, Panama, Haiti, Bolivia, and Trinidad & Tobago accounted for five of the 10 nations with the greatest declines in economic freedom. Belize suffered the world’s worst decline, losing 4.6 points.

The world average score of 59.6 was only one-tenth of a point above the 2012 average. Indeed, the editors note, “the advance toward economic freedom has ground to a halt.” The overall trend, however, was positive: Among the 177 countries ranked in the 2013 Index, scores improved for 91 countries and declined for 78.

The 2013 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for International Trade and Economics; Kim Holmes, Ph.D., Heritage’s Distinguished Fellow; and Edwin J. Feulner, Ph.D., Heritage’s president. Copies of the Index (494 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 is theworld’s leading business publication with more than two million subscribers and is the largest U.S. newspaper by total paid circulation. The Wall Street Journal franchise comprises The Wall Street Journal, The Wall Street Journal Asia, The Wall Street Journal Europe, and The Wall Street Journal Online at WSJ.com, the leading provider of business and financial news and analysis on the Web with more than one million digital subscribers and 36 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 2012, was ranked No. 1 in BtoB’s Media Power 50 for the 13th 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.

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