Download TRINIDAD AND TOBAGO

TRINIDAD AND TOBAGO
Economic Freedom Score
25
Least
free 0
World Rank:
73
Regional Rank:
T
BACKGROUND: Keith Rowley of the People’s National
Movement became prime minister in September 2015 after
defeating Kamla Persad-Bissessar. Persad-Bissessar and
her People’s Partnership coalition government were hit by
repeated reports of incompetence, favoritism, and malpractice. Trinidad and Tobago is one of the Caribbean’s wealthiest
nations. Hydrocarbons account for more than 40 percent of
GDP and 80 percent of exports. Oil production has declined
over the past decade as the country has focused on natural
gas, but the government is providing fiscal incentives for
investments in onshore and deep-water acreage to boost oil
reserves. A Heritage and Stabilization Fund established in
2007 as a countercyclical backstop has helped the government to sustain several years of fiscal deficits and survive a
recent drop in oil and gas export prices. Financial services
and construction have been among the strongest non-energy
subsectors. Tourism has the potential for significant growth.
How Do We Measure Economic Freedom?
See page 467 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
100 free
62.9
Freedom Trend
rinidad and Tobago’s economy relies heavily on oil,
which accounts for over half of exports. The country
is the world’s largest exporter of ammonia and methanol.
Decreases in global oil prices emphasize the need for economic diversification.
Corruption is prevalent in the police force, and the
judicial system is subject to frequent delays. Drugrelated violence continues. There are many state-owned
enterprises, and uncertainty regarding the equal treatment of foreign investors is growing.
75
Most
14
ECONOMIC FREEDOM SNAPSHOT
• 2016 Economic Freedom Score: 62.9 (down 1.2 points)
• Economic Freedom Status: Moderately Free
• Global Ranking: 73rd
• Regional Ranking: 14th in the South and Central America/
Caribbean Region
• Notable Successes: Trade Freedom and Labor Freedom
• Concerns: Rule of Law and Financial Freedom
• Overall Score Change Since 2012: –1.5
50
66
65
64
63
62
61
2012
2013
2014
2015
2016
Country Comparisons
Country
62.9
World
Average
60.7
Regional
Average
59.8
Free
Economies
83.9
0
20
40
60
80
100
Quick Facts
Population: 1.4 million
GDP (PPP): $43.4 billion
1.1% growth in 2014
5-year compound annual growth 0.8%
$32,139 per capita
Unemployment: 4.0%
Inflation (CPI): 7.0%
FDI Inflow: $2.4 billion
Public Debt: 37.6% of GDP
2014 data unless otherwise noted.
Data compiled as of September 2015.
425
TRINIDAD AND TOBAGO (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Property Rights
Freedom from Corruption
Country
World Average
50.0
38.0
0
20
40
60
80
Rank
1–Year
Change
54th
87th
0
0
100
Corruption, much of it drug-related, undermines the business environment and rule of law in
Trinidad and Tobago. Narcotics-related corruption in the police force is endemic. The judicial
branch is independent but subject to some political pressure and corruption. Rising rates of
crime and very high levels of violent crime have produced long delays in the court system.
Property rights are well protected.
Fiscal Freedom 79.4
GOVERNMENT
Government Spending 62.3
SIZE
82nd
108th
0
20
40
60
80
+0.4
–7.0
100
The top personal income tax rate and the standard corporate tax rate are 25 percent. Other
taxes include a value-added tax and a property tax. The total tax burden equals 28.4 percent
of total domestic income. Government spending has risen to 35.5 percent of GDP. The budget
deficit has been fluctuating around 3 percent of GDP, and public debt equals about 38 percent
of total domestic output.
REGULATORY
EFFICIENCY
Business Freedom
Labor Freedom
Monetary Freedom
69.5
72.8
68.5
68th
31st
155th
0
20
40
60
80
+4.2
–3.8
–5.8
100
Despite some progress, the regulatory system lacks transparency and clarity, and regulations
are enforced inconsistently. A relatively flexible labor market facilitates the matching of supply and demand for the highly educated labor force. Despite years of fiscal deficits and a recent
drop in oil and gas export prices, the IMF has reported that energy subsidies in the government’s expansionary budget rose by 1.6 percentage points of GDP.
OPEN
MARKETS
Trade Freedom
Investment Freedom
Financial Freedom
78.6
60.0
50.0
81st
83rd
72nd
0
20
40
60
80
0
0
0
100
Trinidad and Tobago’s average tariff rate is 5.7 percent. Auto parts and jewelry imports are subject to high tariffs. Foreign investment in private business is not subject to limitations, but the
overall investment regime is not stable enough to drive dynamic growth in long-term investments. The financial sector has been under strain following the collapse of a large financial
group and the subsequent bailout.
Long-Term Score Change (since 1996)
RULE OF LAW
Property Rights
Freedom from
Corruption
426
–40.0
–12.0
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
+14.9
–15.2
REGULATORY
EFFICIENCY
Business Freedom
Labor Freedom
Monetary Freedom
2016 Index of Economic Freedom
OPEN MARKETS
–0.5
–6.2
–7.4
Trade Freedom
+43.6
Investment Freedom –30.0
Financial Freedom
–20.0