This year’s Economic Freedom of the World Report shows Chile has not only one of the most prosperous and free economies in South America, but also the world.
Sound economic policy, open markets, rule of law, and a stable business environment are all facets that have enabled Chile to breach the list of the world’s top ten freest economies, and lead Latin America in economic freedom.
The report, compiled by Canadian think tank the Fraser Institute, shows that government investment in enterprise has been steadily improving in Chile over the last two decades, and entrepreneurship in the country has received a huge boost recently through programs such as StartUp Chile.
Chile’s legal system and property rights have improved over the last ten years, and international trade has benefited from the signing of a raft of free trade agreements in recent years.
A separate report released earlier this year, the 2012 Index of Economic Freedom, has Chile ranked higher still at 7th, behind only Canada, Switzerland, New Zealand, Australia, Singapore, and Hong Kong.
Finance Minister Felipe Larraín has been credited with installing sound fiscal measures that have incentivised employment and investment. Larraín also received praise last month from the International Monetary Fund for overseeing higher than expected economic growth in Chile during the European downturn.
There is still room for more growth, however. Chile is now working to make improvements to its tax policies for foreign investors, and a policy project known as the Ley Única de Fondos has been tipped to smooth the path for foreign direct investment.
The Fraser Institute’s report ranks 144 countries and measures (among other things) size of government, freedom to trade internationally, and regulation of credit, labor and business. Hong Kong tops the report’s latest ranking, while Peru represents the one other Latin American country inside the top 30.