The Bahamas' economy ranked 46th in a listing of the world's freest economies

Bahamas: 46th in list of world's freest economies
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A "poor trade regime" and "intrusive" bureaucracy prevented the Bahamas from ranking higher on this year's Index of Economic Freedom.

The Bahamas' economy ranked 46th in a listing of the world's freest economies according to the Heritage Foundation's 2011 Index of Economic Freedom.

The Bahamas also ranked eighth out of 29 countries in the South and Central America/Caribbean region with its overall score, coming in higher than the regional and world averages, said the website.

The country's overall score - or economic freedom - came in at 68 "due primarily to higher scores in fiscal freedom, government spending, and monetary freedom", according to data collected by the research and educational institution.

However a "poor trade regime remains one of the most cumbersome challenges," said the think tank.

The report added that "an abundance of tariff and non-tariff barriers continues to create a costly trade burden."

"Intrusively bureaucratic approval processes hinder investment freedom and undermine development of a more vibrant private sector," the organisation said.

The Bahamas scored 55 in freedom from corruption due to ongoing software, music and movie piracy, and reports that drug trafficking and money laundering involve police, coast guard, and other government employees.

"Violent crime has escalated sharply. Even though internet gambling is illegal, many online gambling sites are reportedly based in the Bahamas, sometimes using internet cafés as fronts. The Bahamas has neither signed nor ratified the UN Convention Against Corruption," noted the survey.

Business freedom was ranked at 72.5 out of 100, and while the report said that the Bahamas' regulatory environment is advantageous to private-sector development, "the process for obtaining a business licence is not always transparent and straightforward, and officials have considerable discretionary power". Government recently passed a new Business Licence Act - which came into force on January 1 - aimed at streamlining the process for applying for a business licence and removing the red tape involved.

Trade freedom and investment freedom scored the lowest coming in at 42.2 and 30 respectively.

"High tariffs and a stamp tax on most imports, high duties that protect a few agricultural items and consumer goods, occasional import bans, and some import licencing and permits add to the cost of trade," noted the report. "Ten points were deducted from the Bahamas' trade freedom score to account for non-tariff barriers."

Investment freedom got the lowest scoring due to the many areas of business reserved solely for Bahamians and the barriers for international investors.

The Heritage Foundation is a think-tank based in Washington, DC which defines economic freedom as "the fundamental right of every human to control his or her own labor and property".

The Foundation measures ten components of economic freedom - business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labour freedom - using a scale from 0 to 100, where 100 represents the maximum freedom.

These scores are then averaged to give an overall economic freedom score for each country.

Hong Kong, Singapore and Australia were the top three countries respectively, while the United States placed ninth with an overall score of 77.8.

January 22, 2011

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