Institutional Quality Index 2017

The Institutional Quality Index (IQI) is elaborated by the Argentinian professor Martin Krause, board member of Fundación Libertad y Progreso of the Liberal Network for Latin America (RELIAL). The IQI contains two subcategories which evaluate the quality of Public Institutions in a specific country, it analyses its “Political Institutions” for one part, and its “Market Institutions” for the other. The index takes into consideration multiple international country evaluators published by the World Bank, the World Economic Forum, Transparency International, Fraser Institute, Heritage Foundation and Freedom House.

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Institutional Quality in Latin America

It is noticeable that many countries in Latin America have progressed above some African and Asian countries. Chile (81.98%) is currently leading Latin America, followed by Costa Rica (75.65%), Uruguay (69.87%), Panama (62.20%) and Peru (55.96%). While Venezuela (6.08%) ranks the lowest on the IQI, followed by Cuba (21.38%), Haiti (22.72%), Ecuador (26.08%) and Bolivia (26.57%). Nevertheless, some countries, such as Honduras and Nicaragua, have not displayed much progress throughout the years.

In Central America, Costa Rica leads the IQI with a 69.38% score; followed by El Salvador (50.34%); Guatemala (42.37%); Nicaragua (36.14%); and Honduras (34.96%).

Institutional Quality of Honduras

As of 2017, Honduras ranks number 151 within the “Political Institutions” subcategory, with a 25.17% evaluation; and ranks number 98 in the “Market Institutions” subcategory, with a 44.74% evaluation. Within the IQI indicators, Honduras gets the following evaluations:

  • The Heritage Foundation’s Index of Economic Freedom:  37.08%
  • The Fraser Institute’s Economic Freedom of the World report: 60.38%
  • The World Economic Forum’s Global Competitiveness Report:  36.23%
  • The World Bank’s Doing Business Report:  45.26%
  • The World Bank’s Rule of Law Indicator:  17.22%
  • The World Bank’s Voice and Accountability Indicator:  32.35%
  • The Transparency International’s Corruption Perceptions Index:  26.86%
  • The Freedom House freedom of Press Report:  24.26%

Taking into consideration all of the indicators analyzed by the IQI, Honduras is listed in the 28th position in America and 127th in the world. Since 1996, Honduras has decreased 51 positions in the Institutional Quality Index, 14 since 2007, and 5 since 2016. The main challenges faced by political institutions include a coup against the Constitutional Chamber of the Supreme Court in 2012; an illegal reelection bid by President Hernández; widespread corruption within the Public Administration and links between public officials and politicians with organized crime such as international drug cartels.

There is also a constant jeopardy to press freedom, as there is a 90% impunity rate in crimes against journalists, lawyers, and judges who are coerced to avoid the proper administration of justice. On the other hand, “Market Institutions” are negatively impacted by high tax and regulatory burdens; as well as lack of proper protection to property rights.

Institutional Quality on a Global Perspective

For a country to be included the IQI, it must appear in not less than four of the indicators analyzed, and at least once in each subdivision (Political and Market Institutions). On 2017, rising from second place in 2016, New Zealand leads the IQI with a 96.58% score, followed by Switzerland (96.45%), Denmark (95.79%), Finland (94.51%) and Sweden in the 5th place (93.84%). The United States has a 91.01% score.

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