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Puerto Rico included in ‘Economic Freedom of North America’ report

The Fraser Institute, an independent and nonpartisan Canadian public policy research and educational organization, included Puerto Rico for the first time in the 18th edition of its annual “Economic Freedom of North America” report, which measures the degree of economic freedom in various jurisdictions in Canada, the United States and Mexico.

During a news conference, “Economic Freedom of North America 2022” report co-authors Dean Stansel, Fred McMahon and Ángel Carrión-Tavárez explained that economic freedom, “defined as the ability of individuals to act in the economic sphere free of undue restrictions, is fundamental to prosperity.” José Torra, who was not present, is also one of the report’s co-authors.

The report measures government spending, taxation and labor market restrictions to assess economic freedom in different places. 

The report chapter that delves into Puerto Rico notes that the island “is not efficient in producing and disseminating statistics; and requesting data from relevant agencies and institutions can be a complex and time-consuming process; for this reason, the available published economic and fiscal data were used [in the report].”

When asked by News is My Business how the production of statistics could be improved, Carrión, who is also the director of Research and Policy at the Economic Freedom Institute, said although Puerto Rico generates statistics, the “problem is that, many times, these are dispersed or they are not accessible.”

“Or when one knocks on the doors of some institutions, well, we don’t find the door open,” Carrión said. “So, in this case, we looked for that data from sources that had already been published. How do we improve this? This is a lack [of information] at an institutional level. But the different agencies have the responsibility of compiling and making the data accessible, which at the end of the day is public information, so investigators can do their jobs.” 

Moreover, the report states in the U.S. subnational index, which compares individual jurisdictions within the same country, that Florida scored 7.94 out of 10 as the most economically free state, followed by New Hampshire at 7.84. Rounding out the top five “freest states” are South Dakota at 7.75 (3rd), and Texas and Tennessee at 7.66 (tied for 4th).

Meanwhile, at the other end of the index, Puerto Rico is the least-free jurisdiction with 2.04; the least-free state’s score was more than twice as high. New York is once again the least-free state (4.25) for the eighth consecutive year, followed by California (4.59), Hawaii (4.65), Vermont (4.7), and Oregon (4.92). Scores are based on data from 2020, the latest year of available comparable data.

“These results show the gap between Puerto Rico and the United States in terms of economic freedom. Instead of a convergence with the freest states, a divergence is observed — a distancing of the island even from the least free states,” Carrión explained.

Meanwhile, Stansel noted: “Hundreds of independent studies have produced overwhelming evidence that higher levels of economic freedom are associated with more opportunity, more prosperity, greater economic growth and more jobs.”

The chapter covering Puerto Rico explains the process of incorporating the island into the report. It also highlights how Puerto Rico 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 43.4% poverty rate, its notorious low labor-force participation rate, the wage gaps between the island and the U.S. states, and the outbound net migration of the island demonstrates that the lack of economic freedom stands at the center of many of the socioeconomic issues facing Puerto Rico,” Carrión added.

The inclusion of Puerto Rico in the report was the result of efforts undertaken by the Economic Freedom Institute so that the island has a presence in the main indices and reports used to measure and compare the situation of diverse jurisdictions and establish the necessary policies to improve residents’ quality of life.

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This story was written by our staff based on a press release.

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