Human Rights and
International Democratic Solidarity

Research Reports

November 12, 2007

Democracy, Markets and Transparency 2007

This report argues that development stands on three pillars: democratic liberties, a market economy and transparency in government.
By Gabriel C. Salvia y Hernán Alberro

New Zealand heads the 2007 Global “Democracy, Markets & Transparency Index”. New Zealand is a parliamentary democracy composed of a single 120-member legislative chamber and an independent judiciary. It displays high levels of freedom of expression and is also the fifth freest economy, as well as one of the least three corrupt countries in the world. Denmark tops the European Union list, while Chile leads in Latin America and Uruguay in MERCOSUR. Myanmar occupies the last spot in the global ranking, while Cuba holds that distinction in Latin America. This report argues that development stands on three pillars: democratic liberties, a market economy and transparency in government.

By Gabriel C. Salvia y Hernán Alberro
Contributions by Pablo Brum and Mariana Dambolena

Executive Summary

New Zealand heads the 2007 Global Ranking
“Democracy, Markets & Transparency”.

The 2007 “Democracy, Markets and Transparency” global average score is 0,523. 67 countries rank above that mark, while 85 score below it. Heading the ranking is New Zealand while the last place is occupied by Myanmar and the African nation of Benin is the closest to the global average.

With 27 members in all, the European Union has an average score of 0,768. None of those members, including recent additions Romania and Bulgaria, are below the global average. Thirteen EU countries rank in the first twenty positions of the global ranking. The group is headed by Denmark, whose 0,903 score places it in second position worldwide.

NAFTA has a slightly higher average than the EU, scoring at 0,769. Canada holds the highest score in the bloc, 0,881, placing it 9th in the global ranking. The US, with 0,836 is 14th worldwide. The third member, Mexico, places considerably lower in the global ranking, at 53rd with a 0,590 score.

This report argues that development stands on three pillars: democratic liberties, a market economy and transparency in government. Accordingly, countries that may be defined as “developed” must retain each of these three necessary parts of political, economic and institutional progress.

It is noteworthy that combining the above mentioned pillars in an index places nations that cannot be considered world powers in the first nine of those ten places. On the other hand, the last places are occupied by countries that are undeniably governed by corrupt dictatorships and where poverty is generalized.

Combining degrees of respect for civil, political and economic liberties with transparency levels helps in easily understanding why some countries enjoy a better quality of life than others, and it also opens up an analysis of each country’s strengths and weaknesses.

The present report is based on data appearing in the following publications: Freedom of the World, by Freedom House; the Index of Economic Freedom by the Heritage Foundation and the Wall Street Journal and finally the Corruption Perceptions Index by Transparency International. The scores these three publications provide for each country are tallied equally and result in the “Democracy, Markets and Transparency” report.

Democracy, Markets and Transparency in Latin America

Chile once again leads the Latin American ranking, placing globally at the 17th place - above Belgium, Estonia and Japan. Chile scores 0,817, which is way above the region’s general average of 0,528 and even NAFTA’s 0,769. Uruguay holds the second place with a score of 0,776. For comparison purposes, this is in proximity to the European Union’s average. Furthermore, Uruguay heads the MERCOSUR ranking, where it easily outranks the other members. It places 24thglobally. Costa Rica, which by popular referendum just approved its entry into CAFTA, places third in Latin America and 38th worldwide. The region scores an average barely above the global 0,528. Only nine Latin American countries score below that mark: Nicaragua, Honduras, Bolivia, Guatemala, Paraguay, Ecuador, Venezuela, Haiti and Cuba.

As for the general average of commercial blocs from Latin America, CAFTA ranks first with 0,587, followed by the countries of MERCOSUR with 0,543 and finally the Andean Community of Nations with 0,500. In this way, globally, each commercial bloc has a similar score to the following countries: CAFTA to Mexico, MERCOSUR to Senegal and the ACN to Guyana.

MERCOSUR in its original grouping –which includes Argentina, Brazil, Paraguay and Uruguay-, has a 0,588 average, which is higher than the rest of the commercial blocs in the region. However, with the addition of Venezuela the bloc’s average drops to 0,543. Brazil scores closest to the group’s average.

The report compares the score of each country member of MERCOSUR with its colsest in the global rankin: Uruguay and Spain; Brazil and Croatia; Argentina and Georgia; Paraguay and Tanzania and finally Venezuela and Bangladesh.

Finally, the report shows that the three African countries with the best scores are Botswana, Mauritius and Cape Verde. They are all considered to be free and constitute electoral democracies and are compared with MERCOSUR members. Alongside with South Africa, these three countries have the lowest levels of corruption in Africa. They scored better that the countries of MERCOSUR, except for Uruguay: Botswana at 38th, Cape Verde at 49th and Mauritius at 53rd. Excluding Uruguay, Mauritius and Botswana constitute much freer economies than those of MERCOSUR. These two countries are ranked 34th and 38th (with Uruguay at 33rd, Brazil 70th, Argentina 95th, Paraguay 99th and Venezuela 144th). Cape Verde is ranked 88th, much lower than the other two countries. Nonetheless, it is freer than Argentina, Paraguay and Venezuela.



Gabriel C. Salvia y Hernán Alberro
Gabriel C. Salvia y Hernán Alberro