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  • The San Juan Daily Star

In debut, Puerto Rico ranks last for economic freedom in North America


Ángel Carrión Tavárez, director of research and public policy at the Institute for Economic Freedom


By THE STAR STAFF


Puerto Rico occupied the last position in the Economic Freedom of North America 2022 report, which is published by the Fraser Institute and measures the degree of economic freedom in various jurisdictions in Canada, the United States and Mexico.


The Fraser Institute, an independent, nonpartisan Canadian public policy think tank, included Puerto Rico for the first time in its Economic Freedom of North America 2022 report.


Economic freedom is defined as the ability of people to act in the economic sphere without undue restrictions, and is regarded as fundamental to prosperity. Consequently, the Economic Freedom of North America report examines government spending, taxes and labor market restrictions to assess economic freedom in different places.


In the U.S. subnational index (which compares jurisdictions within the United States), Florida ranks first as the most economically free state, with a score of 7.94 out of 10, and New Hampshire, with 7.84, ranks second. Rounding out the five most economically accessible states are South Dakota, with 7.75, and Texas and Tennessee, tied with 7.66.


At the other end of the index, Puerto Rico occupies the last position with 2.04 — less than half the score of the least free state. Among states, New York (at 4.25) is the least accessible for the eighth consecutive year, followed by California, Hawaii, Vermont and Oregon. Scores are based on data from 2020, the year with the most recent complete information available.


“These results show the gap between Puerto Rico and the United States in terms of economic freedom,” said Ángel Carrión Tavárez, director of research and public policy at the Institute for Economic Freedom. “Instead of a convergence with the freest states, there is a divergence — a distancing from the island even from the least free states.”


The co-authors of Economic Freedom of North America 2022 are Dean Stansel, José Torra, Fred McMahon and Carrión Tavárez. The report derives from the Economic Freedom of the World, published by the Fraser Institute. It results from more than a quarter of a century of work by more than 60 academics, including three Nobel laureates.


“Hundreds of independent studies have produced overwhelming evidence that higher levels of economic freedom are associated with more opportunity, more prosperity, higher economic growth, and more jobs,” said Dean Stansel, a research associate professor at the Cox School of Business at Southern Methodist University.


Economic Freedom of North America 2022 includes a full chapter on Puerto Rico that explains the process of incorporating the island into the report and how it compares poorly with all U.S. states in the components and variables used in the subnational index.


“Puerto Rico’s per capita income of $13,318 in 2020, its high poverty rate of 43.4%, its notorious low labor participation rate, the wage gaps between the island and the States, and the net migration out of the island demonstrate that the lack of economic freedom is at the center of many of Puerto Rico’s socioeconomic problems,” Carrión Tavárez said.


Economic Freedom of North America has been cited in more than 340 articles in academic journals and public policy studies around the world. In the past 18 months alone, it has been cited more than 55 times, demonstrating the credibility and standing of the publication in the international community.


The inclusion of Puerto Rico in Economic Freedom of North America 2022 was the result of the efforts made by the Institute of Economic Freedom for the island to have a presence in the leading indices and reports used to measure and compare the situation of various jurisdictions and establish the public policy necessary to improve people’s lives.

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