2021 Index of Economic Freedom

Argentina

OVERALL SCORE52.7
WORLD RANK148
Rule of Law

Property Rights46.1

Judicial Effectiveness45.7

Government Integrity54.0

Government Size

Tax Burden70.4

Government Spending52.8

Fiscal Health38.4

Regulatory Efficiency

Business Freedom59.5

Labor Freedom46.3

Monetary Freedom41.9

Open Markets

Trade Freedom62.6

Investment Freedom55.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 44.9 million
  • GDP (PPP):
    • $911.6 billion
    • -2.2% growth
    • -0.3% 5-year compound annual growth
    • $22,947 per capita
  • Unemployment:
    • 9.8%
  • Inflation (CPI):
    • 53.5%
  • FDI Inflow:
    • $6.2 billion

Argentina’s economic freedom score is 52.7, making its economy the 148th freest in the 2021 Index. Its overall score has decreased by 0.4 point, primarily because of a decline in monetary freedom. Argentina is ranked 26th among 32 countries in the Americas region, and its overall score is below the regional and world averages.

Economic freedom in Argentina has begun to sink back toward the repressed category where it was mired until 2017. The new government’s agenda, intended to reverse many of the reforms made by the previous center-right administration, includes import and currency controls, expropriation of firms in key sectors, and new subsidies. Those policies will likely degrade economic freedom in several areas.

IMPACT OF COVID-19: As of December 1, 2020, 38,928 deaths had been attributed to the pandemic in Argentina, and the economy was forecast to contract by 11.8 percent for the year.

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Background

Argentina, once one of the world’s wealthiest nations, is South America’s second-largest country. It has vast agricultural and mineral resources and a highly educated population, but it also has a long history of political and economic instability. Peronist President Alberto Fernández and Vice President Cristina Fernández de Kirchner, Fernández’s predecessor as president, began their four-year terms in December 2019 and control both chambers of Congress. In 2020, the government struck a preliminary deal with bondholders to resolve the most recent of its nine sovereign debt defaults. Popular disillusionment remains widespread because of Argentina’s weak economy and public debt crisis. A key witness and a prosecutor involved in an investigation of Kirchner have died under suspicious circumstances.

Rule of LawView Methodology

Property Rights 46.1 Create a Graph using this measurement

Judicial Effectiveness 45.7 Create a Graph using this measurement

Government Integrity 54.0 Create a Graph using this measurement

In 2020, facing crushing debt and a cash crunch, the government tried to expropriate a leading privately owned grain exporter, calling into question whether secured interests in real property will be enforced, but it dropped the plan after an intense backlash. The judicial system is plagued by inefficiencies and delays and is susceptible to political manipulation, particularly at lower levels. Corruption scandals are common, and prominent members of the political class, including former presidents, have been charged with malfeasance.

Government SizeView Methodology

The top individual income tax rate is 35 percent, and the top corporate tax rate is 30 percent. Other taxes include value-added, wealth, and financial transactions taxes. The overall tax burden equals 28.9 percent of total domestic income. Government spending has amounted to 39.6 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.4 percent of GDP. Public debt is equivalent to 88.7 percent of GDP.

Regulatory EfficiencyView Methodology

Starting a business has been made more complicated and more time-consuming. Dealing with construction permits has become more expensive. Power outages are more common. Argentina is notorious for the rigidity of its labor laws. With the economy mired in one of South America’s worst recessions, Argentina’s traditionally high inflation rate was set to exceed 40 percent in 2020 as state subsidies increased.

Open MarketsView Methodology

Argentina has eight preferential trade agreements in force. The trade-weighted average tariff rate is 13.7 percent, and 144 nontariff measures are in effect. The state’s heavy involvement in the economy slows the investment approval process. Introduction of a bill to encourage foreign investment in the energy sector has been postponed. In the financial sector, government policies limiting financial account transactions have been in place since August 2019.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Canada77.9-0.3
2Chile75.2-1.6
3United States74.8-1.8
4Uruguay69.30.2
5Jamaica690.5
6Colombia68.1-1.1
7Peru67.7-0.2
8Saint Lucia67.5-0.7
9Saint Vincent and the Grenadines66.3-0.5
10Panama66.2-1.0
11Mexico65.5-0.5
12Barbados653.6
13The Bahamas64.60.1
14Costa Rica64.2-1.6
15Guatemala640.0
16Paraguay62.6-0.4
17Dominican Republic62.11.2
18El Salvador61-0.6
19Honduras59.8-1.3
20Trinidad and Tobago590.7
21Belize57.50.1
22Guyana57.41.2
23Nicaragua56.3-0.9
24Brazil53.4-0.3
25Dominica53-7.8
26Argentina52.7-0.4
27Ecuador52.41.1
28Haiti50.8-1.5
29Suriname46.4-3.1
30Bolivia42.7-0.1
31Cuba28.11.2
32Venezuela24.7-0.5
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