Barbados has slipped 25 places in ranking in the Index of Economic Freedom Report to now hold a position of 92 out of 180 countries.
The top ten ranking states considered to have the most “free” economies are Singapore, Hong Kong, New Zealand, Australia, Switzerland, Ireland, the UK, Denmark, Canada and Estonia.
The countries considered to have the most repressed economies are the Republic of Congo ranked at 176, Eretria (177), Cuba (178), Venezuela (179) and North Korea (180).
In the 2020 report, which represents the 26th edition, and based on data from the prior year, Barbados is considered “moderately free” with a score of 61.4, and is eight spots away from being considered “mostly unfree”.
Barbados is ranked behind Jamaica (49th), St Lucia (50th), St Vincent and the Grenadines (59th) and the Bahamas (69th).
In the 2019 report, the country was ranked at 67 with a score of 64.7, behind, St Lucia, Jamaica and St Vincent and the Grenadines.
The annual report, which is published by the Washington-based think tank The Heritage Foundation, examines countries’ economic policy development.
The report grades and ranks countries by measuring economic freedom based on 12 qualitative and quantitative factors grouped into four pillars – rule of law (property rights, government integrity and judicial effectiveness); government size (government spending, tax burden and fiscal health); regulatory efficiency (business freedom, labour freedom and monetary freedom); and open market (trade freedom, investment freedom and financial freedom).
It defines economic freedom as the fundamental right of every human to control his or her own labour and property, adding that in an economically free society, individuals are free to work, produce, consume and invest in any way they please.
“In economically free societies, governments allow labour, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself,” it added.
A breakdown of the data for Barbados showed that the island received a score of 56.6 when it came to property rights; judicial effectiveness (36.1); government integrity (44); tax burden (73.6); government spending (69.2); fiscal health (63.1); business freedom (69.4); labour freedom (60); monetary freedom (77.9); trade freedom (56.6); investment freedom (70); and financial freedom (60).
The scores indicated that there was an improvement in some areas including tax burden, government spending, labour freedom and property rights over the prior year.
However, there was a decline in the areas of judicial effectiveness, government integrity, business freedom and fiscal health.
“Its overall score has decreased by 3.3 points, dragged down by plummeting scores for judicial effectiveness and fiscal health. Barbados is ranked 17th among 32 countries in the Americas region and its overall score is approximately equal to the regional and world averages,” the report said.
“Although the Barbadian economy had nearly reached the mostly free category a decade ago, it fell all the way down to mostly unfree by 2017 and only this year has regained moderately free status. Economic growth during the past five years has likewise been depressed,” it said.
The report pointed out that the Mia Mottley administration was facing the challenge of enacting structural reforms to strengthen public finances against a backdrop of weak economic growth. It also acknowledged that the country had a high dependency on tourism and the offshore banking sectors, adding that “serious challenges” to medium-term economic growth remain.
“For economic freedom to resume an upward trajectory in Barbados, the government needs to build on its low tax burden and relatively strong scores for monetary and trade freedom. To restore investor confidence, efforts to shrink the country’s extremely large public debt and implement structural reforms must continue.”