Three indices were published last week: the Human Development Index produced by the United Nations Development Program, the Economic Freedom Index prepared by the Fraser Institute and the Corruption Perceptions Index prepared by Transparency International.
Although it would seem that these three indices have no relation to each other, in reality what happens in two areas, economic freedom and corruption, does have a strong impact on the process and level of economic development experienced by each country. In this regard, the international evidence is overwhelming: those countries that have traditionally enjoyed greater economic freedom and have had a lower incidence of corruption are, simultaneously, those that have a higher level of human development in its three main dimensions: life expectancy, years of schooling and income level per inhabitant.
The greater the economic freedom enjoyed by private agents, individuals and companies, particularly with regard to the efficient definition and legal guarantee of private property rights, the freedom of international trade, the regulation of markets and the macroeconomic stability, the more efficient the functioning of the economy will be, which tends to translate into a higher level of economic development.
On the other hand, we know that corruption acts as a tax on economic development. The different types of corruption, among which bribes to avoid a fine or to access public services, the appropriation of rents by public officials who administer an inefficient and excessive regulation of the markets, bribes to police, public ministries and judges in the processes of procurement and administration of justice, the diversion and appropriation of public resources by officials and the direct and non-transparent allocation of government contracts that leads to “moches”, cost overruns and lower quality, are a cancer that corrodes institutions and generates a socially inefficient allocation of resources. Corruption costs a lot, negatively impacting development.
How is Mexico in these three indices?
In the Index of Economic Freedom, the global score assigned was 7.12/10, which places us in 64th place out of a total of 165 countries evaluated. The sub-index scores were: size of government 8.1; macroeconomic stability 8.2; freedom of international trade 7; credit market regulation 8.7; labor market regulation 5.6; market regulation (anti-competitive barriers to entry) 6.7 and, finally, the worst evaluated line with a rating of 4.7 (ranked 109/165) the definition, protection and judicial guarantee of private property rights and compliance with contracts . Given the global score and the position within the group of countries analyzed, Mexico is considered to be a mostly free country, but with a notable deficiency in government respect and judicial guarantee of private property rights, which has a negative impact on investment and to economic growth and development, as we have experienced during the government of President López.
In the Corruption Perceptions Index, of a total of 190 countries evaluated, Mexico is considered notoriously corrupt, ranking 124th and with a score of 31/100. This historically low rating is not surprising given the persistence of the different forms that corruption takes and, particularly in recent years, the very high and very non-transparent direct allocation of contracts by the federal government, as well as the diversion of resources public.
Finally, in the Human Development Index, Mexico ranked 86th out of a total of 191 countries with a score of 0.758, which is why it is considered moderately developed. It highlights that in the last three years, so far in the current government, there has been a drop of 12 places and, in terms of scores, it has returned to the level of 10 years ago due to a four-year drop in life expectancy due to the Terrible handling of the pandemic and a cumulative drop of almost 12% in GDP per inhabitant in 2019 and 2020. A resounding failure of this government in terms of development.
Finally, for comparison purposes, the place occupied in the three indices by Mexico and Denmark, the obsession of President López. Mexico: ILE: 64; CPI: 124; HDI: 86. Denmark: ILE: 5; CPI: 1; HDI: 6. Obsessed, but with the decisions he makes, he pushes us further and further away.
Twitter: @econoclasta
