Economic Audits

Index of Economic Freedom Drives Reform in Spain

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Atlas Network partner Fundación para el Avance de la Libertad (Foundation for the Advancement of Liberty, Fundalib) has published their 2021 Índice de Libertad Económica de las Ciudades Española (Index of Economic Freedom for Spain’s Cities, ILECE). Fundalib has published the report since 2018, winning them both an Atlas Network grant and the 2020 Europe Liberty Award. Using official sources, the index ranks Spain’s fifty largest cities on their level of economic freedom using seventeen data points in four significant categories: spending and debt, taxes, privatization of services, and payroll. Cities are given a score out of 100 possible points. This year, rankings ranged from Alicante at 64.87 points to Marbella at 38.27 points.

The index is not just a simple statement of facts, however. Fundalib includes recommendations—both general and specific to individual cities—for improving prosperity and economic freedom. Starting this year, Fundalib also offers to conduct even more in-depth research on a specific city if the city government requests it.

The index has sparked an interest in economic freedom and has fueled political change. Mayors respond to the report every year, pushing change for more economic freedom, paying off debt, and lowering taxes. For example, in 2019, the city of La Laguna ranked twenty-third. While both the mayor and lieutenant mayor belong to Spain’s Socialist Party, they recognized the value of Fundalib’s recommendations, instituting reforms along both the general and city-specific guidelines. They cut the cost of government and sought to make the city a more attractive place for businesses. In 2020, La Laguna jumped to tenth place on the index with an improvement of 3.34 points. Media outlets at the national and regional levels have published stories on the index, expanding its reach.

Fundalib is stepping up its efforts. They expanded coverage from thirty to fifty cities in 2019, and this year they published their first equivalent report on the thirty largest cities in Europe, the Local Economic Freedom Index (LEFI).

Atlas Network supported this project with a grant.