Little by little, the government has been restricting our freedoms without us realizing it. The sad thing is that we are losing our direction, and there are no signs of winds of greater freedom and a better economy on the horizon.
Several friends have suggested reflecting on the concepts that generate a country’s wealth. These topics are essential to understanding why some nations progress while others stagnate. Today we will discuss real experiences from other parts of the world and how those lessons can be applied to Guatemala.
Let us begin with the basics: Economic Freedom. According to the Heritage Foundation, after 35 years of measuring economic freedom globally, it has been demonstrated that a nation’s ability to grow and prosper depends directly on the strength of its economic system and the quality of its institutions. Economic Freedom, prosperity, and resilience are closely connected.
The 2024 index is revealing. Countries with little Economic Freedom have an average per capita income of 10 thousand dollars annually. Moderately free countries reach 32 thousand, mostly free countries 61 thousand, and the countries with the greatest Economic Freedom exceed 100 thousand dollars per year. It is no coincidence: the freest countries are also the most developed.
For example, of the 15 freest countries in 2024, 9 of them are also among the richest and most developed in the world: Singapore, Switzerland, Ireland, Denmark, Sweden, Norway, the Netherlands, Finland, and Australia. Clearly, Economic Freedom is a precursor to wealth and development.
But what exactly is Economic Freedom? This concept is based on 12 fundamental pillars, among them respect for property, honesty in government, and an efficient and reliable judicial system. Guatemala, unfortunately, does not stand out in many of these aspects. Government size is also measured, where our country scores better, although it has declined in recent years. Regarding regulatory efficiency, which includes ease of doing business, monetary freedom, and labor freedom, our performance is low, especially due to rigidity in hiring and firing laws. Finally, in market openness, meaning the freedom to trade, invest, and access financing, we also lag behind.
Economic Freedom creates a space where people can freely choose their economic options with security, flexibility, and dynamism. In 1997, Guatemala and Denmark were almost at the same level in the Economic Freedom index. Today, Denmark is among the 10 freest countries, while Guatemala has fallen to 65th place, surpassed by neighbors such as Costa Rica, Panama, and the Dominican Republic.
If we want to increase wealth in Guatemala, we must strengthen our Economic Freedom. An example to follow is Australia, where there is a developed capital market, with fluid access to credit for businesses and individuals. Its openness to foreign investment and transparency in financial management are key to its economic success.
Another model to consider is Denmark. There, companies have the freedom to hire and fire personnel, allowing them to adapt quickly to economic changes. This labor flexibility, together with active employment policies, has generated an environment of innovation and growth. Furthermore, Denmark invests heavily in the continuous training of its workers, ensuring that they are always skilled and employed.
Likewise, in Guatemala we must improve the protection of property and contracts by implementing a transparent judicial system and clear rules. Honesty in government is not solely the responsibility of the State, but also of citizens committed to virtue and integrity. After all, public officials come from society itself.
In summary, Economic Freedom creates a space where people can freely choose their economic options with security, flexibility, and dynamism. In 1997, Guatemala and Denmark were almost at the same level in the Economic Freedom index. Today, Denmark is among the 10 freest countries, while Guatemala has fallen to 65th place, surpassed by neighbors such as Costa Rica, Panama, and the Dominican Republic.
The problem is that, little by little, the government has been restricting our freedoms without us realizing it. The sad thing is that we are losing our direction, and there are no signs of winds of greater freedom and a better economy on the horizon. Let us reflect on this before it is too late.
