Argentina among two best improvements, Mexico among two worst declines.

BY LATINVEX STAFF

While Latin America’s political freedom has worsened, economic freedom has improved, according to a Latinvex analysis of the latest Index of Economic Freedom from the Heritage Foundation.

Of 19 Latin American countries on the index, 15 saw improvements, while only four saw a deterioration in economic freedom.

Argentina’s economy, Latin America’s third-largest, was among the countries that most improved its score and as a result went from being classified Repressed to Mostly Unfree.

“The November 2023 election of reform-minded President Javier Milei has provided concrete momentum for reform and revitalization of Argentina’s economy,” Heritage says. “Although the economy faces daunting economic challenges, Milei’s decisive economic reform agenda has resulted in notable progress. Management of public finance has been improved and made more disciplined with the size and scope of government reduced through various fiscal and regulatory reforms. Inflation has been declining, and monetary stability has been strengthened.”

However, Argentina scores lowest on monetary freedom, followed by property rights.

The index looks at 12 aspects of economic freedom, grouped into four broad pillars: Rule of law (property rights, judicial effectiveness, and government integrity); Government size (tax burden, government spending, and fiscal health); Regulatory efficiency (business freedom, labor freedom, and monetary freedom); and Market openness (trade freedom, investment freedom, and financial freedom).

MEXICO AND BRAZIL

Mexico, Latin America’s second-largest economy, worsened its score.

“Violence and instability have severely undercut the rule of law in Mexico,” Heritage says. “Other institutional weaknesses include rampant corruption and poor protection of property rights. The government has an extensive agenda of reforms to address these deficiencies, but progress has been marginal. Uncertain enforcement of contracts, precarious security, and informality undermine business freedom. The pace of reform has slowed in comparison to other emerging economies. Labor market reforms have largely stalled, and the informal sector accounts for a large portion of economic activity.”

Mexico’s overall score is bogged down by low scores on government integrity, judicial effectiveness and property rights.

 

ECONOMIC FREEDOM INDEX
LA	GL	Country	Score	Ch 25/24
1	18	Chile	73.2	1.8
2	29	Uruguay	70.2	0.4
3	41	Costa Rica	68.6	0.9
4	54	Peru	65.9	1.1
5	56	Panama	65.5	1.4
6	59	Paraguay	65.2	5.1
7	65	Dom. Rep.	64.3	1.4
8	71	Guatemala	63.4	1
9	80	Mexico	61.3	-0.7
10	89	Colombia	59.8	0.6
11	90	Honduras	59.6	1
12	117	El Salvador	56.6	2.2
13	113	Ecuador	55.8	0.8
14	117	Brazil	55.1	1.9
15	124	Argentina	54.2	4.3
16	126	Nicaragua	54	0.6
17	164	Bolivia	44.1	0.6
18	174	Venezuela	27.6	-0.5
19	175	Cuba	25.4	-0.3
		Average	57.4	1.3
Sources: Heritage Foundation, Econmic Freedom Index 2025; Latinvex (Latin America ranking) Notes: LA=Latin America rank. GL=Global rank.

Brazil, Latin America’s largest economy, saw an improved score, but heritage warns that the country still has relatively little economic freedom.

“Brazil’s corruption and property rights scores are relatively low, and its judicial system remains vulnerable to political influence,” Heritage says. “The state’s presence in the economy continues to undercut development of a more vibrant private sector. Despite some progress, the process for organizing new investment and production remains cumbersome and bureaucratic. It is costly and time-consuming to launch or close a business. Stifling labor regulations continue to undermine employment and productivity growth.”

Paraguay was the country that saw its score improve most. The country now ranks as Latin America’s sixth freest economy, up from 9th place a year earlier.

“The reform-minded Santiago Peña administration, which took office in August 2023, has pursued a series of legislative reforms to enhance the overall entrepreneurial environment and develop a stronger private sector to generate broader-based job growth,” Heritage says. “Despite progress, however, the informal economy remains large, and institutional weaknesses continue to undermine the rule of law and hold back more dynamic investment growth.”

FREEST & MOST REPRESSED

Chile’s economy remains the freest in Latin America and ranks 18th worldwide, ahead of countries like Germany and the United States.

And Uruguay now ranked as Mostly Free instead of Moderately Free. Uruguay ranks ahead of countries like Austria and the United Kingdom.

Meanwhile, Cuba remains world’s second-most repressed economy.

“Cuba’s inefficient state-run economy performs very poorly, and its component scores are far below world averages in many categories,” Heritage says. “The absence of an independent and fair judiciary weakens the rule of law. Rigid state control has long shackled the private sector. Regulatory efficiency remains poor, and private entrepreneurship is limited. The application of regulations is inconsistent and nontransparent. The state-controlled labor market has resulted in a large informal sector. Monetary stability is vulnerable to state interference, and prices are subject to controls.”

 

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