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Central America is economically un-free

Tuesday, January 15, 2013

Central America in general does poorly in the 2013 Index of Economic Freedom, compiled by the Heritage Foundation, based in Washington, DC.

The index ranks 185 countries in five groups: Free, Mostly Free, Moderately Free, Mostly Un-free, and Repressed.

No country in the region gets into either of the top two groups. The most successful - Costa Rica, El Salvador, Guatemala and Panama - are considered Moderately Free, along with Colombia and Mexico.

That leaves Honduras and Nicaragua, which are rated as Mostly Un-free, while at least not falling into the last group, along with Cuba, Venezuela and North Korea.

Worse, all six Central American countries are falling in the rankings, especially Guatemala, which is on the verge of sinking into the second-worst category.

Among Latin American countries, Chile did best, coming in seventh position overall.

The Heritage Foundation is sometimes criticized for focusing too much on a free-market view of the world, including the fact that the rankings are biased in favor of countries with small governments – which may help explain why the top two countries in the index are Hong Kong and Singapore.

In addition, the methodology of the Index of Economic Freedom raises questions.

The Caribbean island of St. Lucia, which has population of less than 180,000, ranks higher than South Korea, one of the world's leading emerging industrial powers.

Nevertheless, the index is influential, since it is published in conjunction with the Wall Street Journal, in which case it makes for depressing reading in Central America.