In economics, the evidence is clear: the freest countries are, almost without exception, the most prosperous. This is not a political slogan, but a pattern repeated from Singapore to Switzerland, from Ireland to Taiwan. According to the Economic Freedom Index, Singapore has a GDP per capita of 91 thousand dollars, Switzerland 103 thousand, Ireland 107 thousand, Taiwan — three times richer than mainland China — exceeds 35 thousand, and Luxembourg leads with 137 thousand dollars. The lesson is evident: economic freedom creates the conditions for capital accumulation, innovation, and sustained growth.
If we transfer that inevitable question to Latin America — does the same happen in our region? — the answer is yes, although with nuances and particularities. The diversity of models, political decisions, and circumstances has produced a map where economic freedom explains a large part of performance, but not all of it. Even so, the data shows an unmistakable pattern: the freest countries tend to grow more, withstand crises better, and make more efficient use of investment.
When analyzing the evolution of economic freedom over the last ten years, six groups can be distinguished. The first includes those that have remained the freest: Chile, Uruguay, Costa Rica, Panama, Paraguay, Peru, and the Dominican Republic. The second includes those that have moved from moderately restricted to freer economies, such as Guatemala and Belize. The third groups those that were once very free and have regressed, such as Mexico, Colombia, and El Salvador. A fourth block consists of those that have remained moderately restricted: Honduras, Guyana, Brazil, and Nicaragua. The fifth includes those that moved from restricted economies to moderately restricted ones, such as Ecuador and Argentina. Finally, the sixth corresponds to those that remain restricted economies: Haiti, Bolivia, Venezuela, and Cuba.
Guatemala’s position in the second group is key: it is one of the few countries that has expanded its economic freedom over the last decade, and this has had a direct impact on its stability and growth. The freest countries in the region — Costa Rica, Panama, the Dominican Republic, and Guatemala — have recorded average growth rates equal to or greater than 3.5% over the last ten years. In other cases, high growth has been due to specific circumstances: Belize grew 8.1% in 2024 thanks to extraordinary factors; Paraguay reached 4.2% that same year; and Argentina, driven by the libertarian reforms of Javier Milei, projects 5% growth in 2025.
On the contrary, the loss of economic freedom usually translates into stagnation or decline. Chile, which for decades led in growth, has seen its dynamism slowed since the arrival of Gabriel Boric. Mexico, with a forecast of barely 0.3% growth for 2025, Colombia with 0.7% in 2023 and 1.7% in 2024, and El Salvador, with the worst performance in Central America (2.4%), are clear examples. At the opposite extreme, Haiti, Bolivia, Venezuela, and Cuba remain trapped in the harshest corner of bitterness and lost hope, with permanent contractions of their economies by their own choice.
The role of foreign direct investment is decisive. In most Latin American countries, FDI as a percentage of GDP exceeds economic growth, implying that much of the dynamism depends on external capital. However, there are six exceptions: Uruguay, Paraguay, Peru, Guatemala, Guyana, and Argentina, which have managed to grow more than the FDI they receive. This fact reveals an internal capacity to generate growth that does not depend exclusively on the flow of foreign investment.
The quality of investment matters as much as its quantity. A revealing indicator is the reinvestment of profits: Uruguay and Guyana reinvest 99% of the FDI they receive, and Guatemala reaches an impressive 97%. This means that foreign companies not only arrive, but also find reasons to stay and expand.
If we do not act now, others will, and they will keep the capital and talent we could have conquered.
If we add to this that Guatemala has grown an average of 3.5% over the last ten years with FDI equivalent to only 1.7% of GDP, the conclusion is clear: the Guatemalan economy absorbs and multiplies foreign capital with uncommon efficiency in the region.
In addition, the country has achieved significant diversification. In 1980, four products — coffee, sugar, cardamom, and bananas — represented 58% of Guatemalan exports. Today, 65% of exports are distributed among coffee, apparel, sugar, bananas, plastics, edible oils, fruits, beverages, cardamom, pharmaceuticals, paper and cardboard, cereal-based products, textiles, soaps and detergents, and chemical products. Guatemala ceased to be a banana republic and also became a manufacturer and exporter of highly sophisticated products such as plastics, pharmaceuticals, chemicals, and even freezers.
The sum of these factors places Guatemala in an enviable position: it is among the nine freest countries in Latin America, among the six with the highest average growth over the last decade, it grows above the foreign investment it receives, it has one of the highest profit reinvestment rates in the region, and yet it receives little FDI in absolute terms. This makes it an undervalued market: fertile ground that is still not saturated.
Turning this potential into reality requires a determined agenda. A foreign investment attraction law must guarantee legal certainty, a one-stop shop for procedures, and fiscal stability. A general reduction of the corporate Income Tax is unavoidable if the country wants to compete globally. Ireland lowered its rate from 50% to 12.5% and attracted the world’s leading technology companies. Poland maintains a 19% corporate tax, Bulgaria 10%, and Georgia, one of the boldest cases, offers 5%, taxing profits only when distributed.
On the domestic front, it is essential to protect private property and eliminate bureaucracy that paralyzes investments. It is unacceptable for an environmental license to take three years to be approved. The ethanol bill initiative must be reviewed to allow open competition and avoid sectoral privileges. Anti-money laundering legislation should not be expanded indiscriminately, as it risks suffocating formalization and restricting credit. Furthermore, Guatemala has strategic geological resources: with 37 volcanoes, it possesses volcanic silicon — key for manufacturing computer chips — rare earth elements, and high-value minerals. If it manages to transform them into advanced manufacturing, it will be able to diversify its economy toward high-margin technological sectors.
Before us, we have several options. First, continue as we are, without making radical changes. The possible result is that the threats looming over us push us backward: Donald Trump’s tariffs, a possible decline in remittances — which until now have sustained consumption — or changes in government decrees or in Congress that further hinder the attraction of capital. Second, choose, as El Salvador, Colombia, and Mexico have done, to restrict freedoms, lose our republican system of checks and balances, or elect a future government that wants to change the rules against wealth creation and investment attraction. In that case, the growth rates during the second six-year term of Mexico’s “Fourth Transformation” show us that a country can stagnate, lose what it has gained, and generate more poverty. The third option is to create a great national agreement, change the rules for attracting investors and capital, and move toward the path of the freest and most prosperous countries in the region: Panama, Costa Rica, and the Dominican Republic.
The window of opportunity is not eternal. If we do not act now, others will, and they will keep the capital and talent we could have conquered. Prosperity is knocking at our door: let us open it and allow it in with vision, care, and respect before it decides to go elsewhere.
