EconomyEconomic freedom advanced in the first year of AMLO,...

Economic freedom advanced in the first year of AMLO, according to the Fraser Institute

Mexico ranks 64th in the economic freedom index, according to the recently published Economic Freedom of the World 2022 report by the Fraser Institute. Compared to a previous measurement, the country advanced nine positions. But it is still at levels close to El Salvador, Indonesia or Cambodia.

The ranking placed Mexico in position 64, just below El Salvador and just above Indonesia, the Philippines and Uruguay. The country governed by President Andrés Manuel López Obrador advanced 9 positions compared to the 2019 rating, when economic freedom in Mexico ranked 75th worldwide.

What does the Fraser Institute’s Index of Economic Freedom measure?

To assess the level of economic freedom, the institute evaluated 42 variables distributed in 5 main axes: size of government, legal system and right to property, money, freedom of international trade and regulation.

Size of government: takes into account the increase in public spending, taxes and companies controlled by the government. For the institute, individual elections are replaced by the government to the extent that it is larger, reducing economic freedom.

Mexico obtained its best score in the area of government size, with a score of 8.08 points, which placed it in 19th place in the world in this criterion. However, in 2020, this rating was lowered compared to 2019, when it was 8.25 points. In part, due to a reduction in consumption and investment by the State.

Legal system and property rights: In this area, Mexico’s performance improved, obtaining a rating of 4.72 points, higher than the 4.69 in 2019. However, this places it in 109th place in the world. Within this item, the worst ratings are in the lack of trust in the police and the low integrity of the entire legal system. Security and protection of property is considered an essential function of government by the Fraser Institute.

Money: Here the stability of the value of money is qualified. Until 2020, the effects of the pandemic on the supply chains that have currently driven inflation to historical records in Mexico and the world had not been seen. For this reason, Mexico still has a good rating in the 2022 report, although it ranks 104th in the world. The worst rating within the item was a 5 in the component of freedom to have accounts in foreign currency.

International Trade. By having various international trade treaties, such as the USMCA, Mexico ranks 45th in this category, with a rating of 7.7.

Regulation. In terms of regulations to enter into contracts, obtain credit, the labor market or business freedom, the Fraser Institute ranked Mexico in position 82.

It should be noted that, in the area of regulation, Mexico had a low rating in labor market regulations, ranking 121st in the world.

The countries with the greatest economic freedom

In first place is Hong Kong, followed by Singapore, Switzerland, New Zealand, Denmark, Australia, the United States and Estonia.

These economies are in the top quartile of the ranking, which classifies them as free economies, according to the Fraser Institute. Mexico, for its part, is in the second quartile, which classifies countries as mostly free economies.

In the third quartile are the most restrictive economies and in the last the most non-free economies.