January 27, 2015
Venezuela slides most in region; Chile remains 7th in world ranking
WASHINGTON, JAN. 27, 2015—The South and Central America/Caribbean region became less economically free last year, reversing some of its latest gains and making it one of two regions to decline in the 2015 Index of Economic Freedom, published by The Wall Street Journal and The Heritage Foundation.
Launched in 1995, the Index evaluates countries in four broad policy areas that affect economic freedom: rule of law; limited government; regulatory efficiency; and open markets. There are 10 specific categories: property rights, freedom from corruption, fiscal freedom, government spending, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, and financial freedom. Scores in these categories are averaged to create an overall score.
No economy in South and Central America/Caribbean ranks as “free”, but three “mostly free” economies lead the region: Chile, Saint Lucia, and Colombia, which recorded its highest score in the life of the Index. Fourteen economies fall into the “moderately free” category. Trinidad and Tobago raised its score by 1.4 points, and Haiti -- despite its continuing status as a “repressed” economy -- emerged as the region’s most improved, with a rating hike of 2.4 points.
Yet “the stark reality across the region is that economies are underperforming and stagnating due to a loss of economic freedom,” the editors write. “The foundations of well-functioning free-market democracy remain fragile in the South and Central America/Caribbean region.” Widespread corruption and the weak protection of property rights are among the problems holding the region back..Argentina and Venezuela continued to drop in the rankings, edging closer to the region’s least free economy, Cuba (which did, however, add almost a full point to its Index score). Ecuador’s 1.2-point rise puts it less than a point away from escaping the “repressed” category. Guatemala’s 0.8-point slide nearly caused it to join the ranks of the “mostly unfree,” while The Bahamas recorded a 1.1-point loss last year, falling further into the economic freedom category of “moderately free.”
The world average score of 60.4 is only one-tenth of a point above the 2014 average, but represents a 2.8-point overall improvement since the inception of the Index in 1995. Thirty-seven countries, including Taiwan, Israel, Poland and Colombia, achieved their highest-ever Index scores. Among the 178 countries ranked, scores improved for 101 countries and declined for 73.
The 2015 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for Trade and Economics and Center for Data Analysis; and Anthony B. Kim, senior policy analyst in the Center for Trade and Economics. Copies of the Index (492 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, also is available online.