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T&T gets high ranking for economic freedom
T&T has been ranked among the best places in Latin America for the economic freedom it offers to foreign direct investors. In the 2013 Economic Freedom of the World (EFW ranking T&T ranks 79th out of the 152 countries and territories for economic freedom. It scored 6.95 out of a possible ten points—above the worldwide average of 6.83—across five identified key measures that comprise economic freedom. The components included how well a country protects the rights of private property ownership, whether it exercises fair and consistent enforcement of contracts, the stability of its monetary environment, rate of taxation, barriers to domestic and international trade and degree of reliance on government spending.
Among South American countries, only Chile, Peru and Uruguay ranked ahead of T&T in overall economic freedom. In the whole of Latin America, Brazil and Mexico, together comprising almost two-thirds of South America’s GDP, placed low on the overall EFW index at 102 and 94, respectively. Argentina, with the second-largest GDP in South America, was ranked only 137th out of 152 countries and territories. And Venezuela placed last among the countries that were ranked. A total of 42 distinct variables were included in the measurements. The EFW report has been compiled annually for 25 years by Canadian think-tank, the Fraser Institute. The Institute’s goal is to identify the countries where, across the board, it’s easiest to do business with the fewest restrictions.
The Institute’s tracking over decades has shown that a country’s degree of economic freedom exerts a profound impact on its economic prosperity across several categories. Political and civil liberties are considerably higher in economically free nations, an indicator that affects the stability of foreign direct investment (FDI). Of perhaps greatest significance for FDI is that countries with more economic freedom have notably higher per-capita incomes. In the case of T&T, it ranked third highest of 13 Caribbean countries in 2012 with GDP per capita at US$18,010. T&T placed a strong fifth in its regulatory environment ranked against the other 20 Caribbean and Latin American countries examined. The ranking considered the labour market, credit market and business regulation. In freedom of international trade, T&T was ranked eighth in the Latin American and Caribbean region.
The EFW report also indicates that foreign direct investors in Trinidad can be confident of protection and fairness, thanks to the country’s legal system and its consistent recognition of property rights. T&T ranked higher than more than half of the 21 Latin American and Caribbean countries surveyed in this regard. T&T also performed well among countries worldwide. It placed in the top 40 per cent for the degree to which free markets (rather than government controls) guide access to its resources. Components examined within the category included government consumption as a share of total consumption, taxation rates, and the extent to which private investment and enterprise were used (rather than government investment) to direct resources. (InvesTT)