WORLD RANK:

67
REGIONAL RANK:

11
MEXICO
ECONOMIC FREEDOM STATUS:
MODERATELY FREE
M exico’s economic freedom score is 66.0, making its economy the
67th freest in the 2020 Index. Its overall score has increased by 1.3
points due primarily to a higher score for government integrity. Mexico
is ranked 11th among 32 countries in the Americas region, and its overall
score is above the regional and world averages.

The Mexican economy has been ranked moderately free for two
decades. Moderate GDP growth over the past five years began to slow in
2018, reflecting weak investor confidence amid the policy uncertainty of
the new administration, the unstable finances of the state-owned Pemex
oil company, and questions about future trade relations with the U.S.

Corruption remains a serious problem in Mexico. While the government

integrity indicator did improve in 2020, perhaps partly as a result of the
president’s anticorruption efforts, Mexico is still ranked in the bottom
half of the Index in this area.

ECONOMIC FREEDOM SCORE

66.0 ▲ UP 1.3 POINTS



0 50 60 70 80 100

REGIONAL AVERAGE
(AMERICAS REGION) 60.0 61.6 WORLD
AVERAGE

HISTORICAL INDEX SCORE CHANGE (SINCE 1995): +2.9

RECENT FREEDOM TREND QUICK FACTS

80

POPULATION: UNEMPLOYMENT:
124.7 million 3.3%
70
65.2 66.0 GDP (PPP): INFLATION (CPI):
64.8 64.7
63.6 $2.6 trillion 4.9%
2.0% growth in 2018
FDI INFLOW:
60 5-year compound
$31.6 billion
annual growth 2.6%
$20,602 per capita PUBLIC DEBT:
53.6% of GDP
50

2016 2017 2018 2019 2020 2018 data unless otherwise noted. Data compiled as of September 2019

BACKGROUND: The Institutional Revolutionary Party (PRI), which ruled Mexico for 70 years until its defeat
by the center-right National Action Party in 2000, regained the presidency in 2012 under Enrique Peña
Nieto. In 2018, however, Andrés Manuel López Obrador of the MORENA party won a landslide victory, and
his party took control of Congress. As president, López Obrador has pursued anticorruption measures but
also has implemented nationalistic economic policies. He has reversed many of his predecessor’s reforms
in such areas as education and energy. He has supported the U.S.–Mexico–Canada trade agreement but
also has faced intense pressure from the United States to discourage migrants from Central America who
are seeking to enter the U.S. Mexico’s powerful drug cartels contribute to surging homicide rates.

330 2020 Index of Economic Freedom

 WORLD AVERAGE | ONE-YEAR SCORE CHANGE IN PARENTHESES

12 ECONOMIC FREEDOMS | MEXICO

RULE OF LAW GOVERNMENT SIZE
(–0.8) (–0.2) (+10.4) (+0.3) (+1.1) (+4.3)

100 100

80 80

70 70

60 60

50 50

58.3 34.7 36.7 76.1 79.3 87.5

0 0
Property Judicial Government Tax Government Fiscal
Rights Effectiveness Integrity Burden Spending Health

Property rights are protected by law, but a weak judiciary,
frequent solicitation of bribes by bureaucrats and officials,
and the high incidence of criminal extortion undermine the
security of property. Mexico’s justice system is plagued by
delays, unpredictability, and corruption, leading to impunity.
One of President López Obrador’s declared top priorities is to
combat corruption, which is pervasive and fed by billions of
narco-dollars.
The top individual income tax rate is 35 percent, and the
corporate tax rate is 30 percent. Other taxes include a
value-added tax. The overall tax burden equals 16.2 percent of
total domestic income. Government spending has amounted
to 26.3 percent of the country’s output (GDP) over the past
three years, and budget deficits have averaged 2.1 percent of
GDP. Public debt is equivalent to 53.6 percent of GDP.

REGULATORY EFFICIENCY OPEN MARKETS


(–0.8) (–0.2) (–5.0) (+6.2) (No change) (No change)

100 100

80 80

70 70

60 60

50 50

67.0 58.4 70.9 87.6 75.0 60.0

0 0
Business Labor Monetary Trade Investment Financial
Freedom Freedom Freedom Freedom Freedom Freedom

Increases in some fees affecting construction permits have
affected the business environment. Uncertainty about
contract enforcement and physical insecurity are concerns
among business owners. More people work informally than is
usual for a country with a GDP per capita as high as Mexico’s.
The new government’s reversal of prior reforms has greatly
increased the cost of subsidies and the budgetary drain of
inefficient state-owned enterprises.
The total value of exports and imports of goods and services
equals 80.3 percent of GDP. The average applied tariff rate is
1.2 percent, and 240 nontariff measures are in force. Despite
a strong desire to attract more foreign investment, the invest-
ment regime lacks efficiency and is hampered by instability.
The financial sector has become more competitive and open,
and the banking system remains relatively well capitalized.

The Heritage Foundation | heritage.org/Index 331