THE BAHAMAS

Economic Freedom Score

50
25 75
Least Most
free 0 100 free
World Rank: 41 Regional Rank: 4 68.7

Thasheeconomy
Bahamas’ economic freedom score is 68.7, making its
the 41st freest in the 2015 Index. Its overall score
decreased by 1.1 points, with notable declines in finan-
Freedom Trend
72
cial freedom and labor freedom offsetting improvements in
freedom from corruption and monetary freedom. The Baha- 71
mas’ overall score continues to be higher than the regional
and world averages, and its economy is the 4th freest out of 70
29 countries in the South and Central America/Caribbe-
an region.
69
Over the past half-decade, economic freedom in the Bahamas
has improved by 0.7 point despite score declines in the past 68
two years. Gains in economic freedom have been led by strong
improvements in freedom from corruption and trade free-
67
dom, which have advanced by 16 and 10 points, respectively.
More modest improvements have occurred in monetary and 2011 2012 2013 2014 2015
fiscal freedoms.
Despite some improvement, corruption remains a problem, Country Comparisons
and regulatory inefficiency continues to hold back the eco-
nomic dynamism that should result from the competitive Country 68.7
financial sector and a tax regime with no personal or corpo-
rate income tax. Ultimately, it is the government’s ability to World
Average 60.4
promote more broad-based reforms that will determine the
prospects for a long-term and diversified economic expansion. Regional
59.7
Average
BACKGROUND: In 2012, Prime Minister Perry Christie and
his Progressive Liberal Party won a five-year term. The Baha- Free
Economies 84.6
mian economy centers on tourism, international banking,
0 20 40 60 80 100
investment management, and financial services, with tour-
ism accounting for more than 60 percent of GDP. While acces-
sion to the World Trade Organization would be a positive
step, politicians and the private sector are locked in a dispute Quick Facts
about how to replace the revenues that would be lost. Due to Population: 0.4 million
its geographic location just 50 miles off the coast of Florida, GDP (PPP): $11.4 billion
the country is a major transshipment point for illegal drugs, 1.9% growth in 2013
particularly shipments to the U.S. and Europe, and is used for 5-year compound annual growth 0.4%
smuggling illegal migrants into the U.S. $32,036 per capita
Unemployment: 13.6%
Inflation (CPI): 0.3%
FDI Inflow: $1.1 billion
Public Debt: 56.3% of GDP
How Do We Measure Economic Freedom?
See page 475 for an explanation of the methodology 2013 data unless otherwise noted.
or visit the Index Web site at heritage.org/index. Data compiled as of September 2014.
113
THE BAHAMAS (continued)
THE TEN ECONOMIC FREEDOMS
1–Year
Score Country World Average Rank Change

RULE OF Property Rights 70.0 30th 0

LAW Freedom from Corruption 71.0 22nd +4.4
0 20 40 60 80 100
Corruption remains a problem at all levels of government and may be exacerbated by a reported
increase in cocaine transshipment through the Bahamas in 2014. Ongoing concerns include
money laundering and allegedly extensive nepotism, cronyism, and favoritism in government.
The largely well-functioning legal system, based on British common law, is independent, but
the judicial process tends to be very slow. Property registration is difficult and time-consuming.

GOVERNMENT Fiscal Freedom 97.8 6th +0.5

SIZE Government Spending 83.2 38th –0.9
0 20 40 60 80 100
The Bahamas imposes no individual or corporate income taxes and has one of the world’s low-
est tax burdens. Government revenue, which equals 15 percent of the domestic economy, is
reliant on tariffs and national insurance, property, and stamp taxes. Government spending
has reached 23.7 percent of gross domestic product, and public debt amounts to 56 percent of
domestic income.

REGULATORY Business Freedom 68.9 70th –1.8

EFFICIENCY Labor Freedom 75.3 42nd –6.2
Monetary Freedom 78.8 65th +3.7
0 20 40 60 80 100
The overall regulatory environment is efficient and facilitates business formation, although no
major reforms have been implemented in recent years. The labor market is relatively flexible,
but enforcement of the labor codes remains ineffective. The government influences domestic
prices for such “breadbasket” items as medicines, gasoline, and petroleum gas and subsidizes
state-owned corporations.

OPEN Trade Freedom 52.2 176th 0

MARKETS Investment Freedom 30.0 149th 0
Financial Freedom 60.0 39th –10.0
0 20 40 60 80 100
The average tariff rate is 18.9 percent, and tariffs are a major source of government revenue.
Some agricultural imports are restricted. New foreign investment is subject to a lengthy review
process. The financial sector, the second most important contributor to the economy, is fair-
ly competitive. However, nonperforming loans have increased to around 14 percent of total
bank lending.

Long-Term Score Change (since 1995)

GOVERNMENT REGULATORY
RULE OF LAW SIZE EFFICIENCY OPEN MARKETS

Property Rights –20.0 Fiscal Freedom +0.1 Business Freedom –31.1 Trade Freedom +33.2
Freedom from +1.0 Government –3.7 Labor Freedom –4.7 Investment Freedom 0
Corruption Spending Monetary Freedom –3.8 Financial Freedom –10.0

114 2015 Index of Economic Freedom