Barbados

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The economic freedom rating of Barbados has remained fairly constant during recent years; its rating was 6.2 in 1990 and 6.3 in 1997. This has resulted in a drop in its relative position from 41st in 1990 to 70th currently.

The main weaknesses of this country are price controls, economic intervention through state-owned companies, lack of trade openness to the rest of the world and capital-mobility controls. All these aspects create market distortions and reduce resource allocation efficiency in the economy. Government consumption as a percentage of the total is over 20 percent. This has not changed in the last ten years.

Among the capital controls that are worth mentioning are the prohibitions on holding foreign bank accounts and the use of foreign currency for economic transactions. These restrictions hold back many commercial activities. In addition, high and selective tariffs contribute to an unusually small amount of trade (especially for an island nation).

However, Barbados has made modest advances in terms of lowering top marginal tax rates. There has also been some improvement concerning property rights and contract enforcement.

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Last Modified: Monday, January 10, 2000