Monday, April 5, 2021

THE 2021 CHECKS & BALANCES INDEX

"Equilíbrense los poderes y se mantendrá la pureza de la administración" — Mariano Moreno

Agustín Mackinlay | @agumack

The latest edition of our Checks & Balances Index is out! [See previous editions: 2017, 2014, 2013, 2012, 2011, 2010, 2009, 2008, 2007 I, 2007 II]. Finland, once again, tops the rankings. This is a particularly interesting result, since the Nordic country is also on top of the World Happiness Report rankings [see], which is based on completely different indicators. As usual, I am taking Currency Swap Agreements with the European Central Bank and the Federal Reserve Bank as a proxy for central bank independence. These are the countries with an asterisk. The index computes the Fraser Institute's measurement of judicial independence [see], the 2020 World Press Freedom Index [see], and the World Economic Forum's Network Readiness Index [see]. 

* * *

Nordic countries, as always, do very well in the index. This includes Iceland, as its central bank has now a currency swap agreement in place with Sweden's Riksbank. There are four monarchies in the top-ten positions, a remarkable situation. This reflects the subtle impact of the 'weak form' of the monarchical principle: in the (unlikely) event of a vacuum of power, a monarch stemming from a house with a long tradition of respect for the rule of law would step in order to find a consensus-based solution. This virtually eliminates the 'Strongman risk' that plagues most Latin American republics.

Finally, in countries with good grades on the index, the cost of capital is usually very low. Top-rated countries are AAA-rated by most credit rating agencies. This makes it possible for businesses to pay relatively high wages and for governments to deploy a substantial safety net to the benefit of their citizens. 

[1] Finland: 7.98 (Judicial indep. 7.68; press freedom 9.21; network readiness 8.02) (*)
[2] Denmark: 7.94 (Judicial indep. 7.57; press freedom 9.19; network readiness 8.22) (*)
[3] Switzerland: 7.94 (Judicial indep. 7.70; press freedom 8.93; network readiness 8.04) (*)
[4] Norway: 7.90 (Judicial indep. 7.52; press freedom 9.22; network readiness 7.94) (*)
[5] Sweden: 7.89 (Judicial indep. 7.31; press freedom 9.08; network readiness 9.17) (*)
[6] New Zealand: 7.84 (Judicial indep. 7.65; press freedom 8.93; network readiness 7.33) (*)
[7] Netherlands: 7.75 (Judicial indep. 7.27; press freedom 9.00; network readiness 8.14) (*)
[8] Australia: 7.60 (Judicial indep. 7.50; press freedom 7.98; network readiness 8.34) (*)
[9] Canada: 7.52 (Judicial indep. 7.16; press freedom 8.47; network readiness 7.49) (*)
[10] Ireland: 7.47 (Judicial indep. 7.01; press freedom 8.74; network readiness 7.21) (*)

[11] Estonia: 7.46 (Judicial. indep. 7.01; press freedom 8.74; network readiness 7.03) (*)
[12] Luxemburg: 7.44(Judicial. indep. 7.00; press freedom 8.45; network readiness 7.53) (*)
[13] Germany: 7.43 (Judicial. indep. 6.79; press freedom 8.78; network readiness 7.75) (*)
[14] Iceland: 7.41 (Judicial. indep. 7.01; press freedom 8.49; network readiness 7.06) (*)
[15] Austria: 7.30 (Judicial. indep. 6.78; press freedom 8.42; network readiness 7.29) (*)
[16] Belgium: 7.30 (Judicial. indep. 8.74; press freedom 8.74; network readiness 7.07) (*)
[17] Japan: 7.24 (Judicial. indep. 7.16; press freedom 7.11; network readiness 7.35) (*)
[18] United States: 7.23 (Judicial. indep. 6.84; press freedom 7.62; network readiness 7.89) (*)
[19] Hong Kong: 7.17 (Judicial. indep. 7.00; press freedom 7.05; network readiness 7.19) (*)
[20] United Kingdom: 7.18 (Judicial. indep. 6.75; press freedom 7.71; network readiness 7.63) (*)

[21] Portugal: 7.08 (Judicial. indep. 6.35; press freedom 8.82; network readiness 6.44) (*)
[22] France: 6.85 (Judicial. indep. 6.16; press freedom 7.71; network readiness 7.32) (*)
[23] Spain: 6.82 (Judicial. indep. 6.19; press freedom 7.78; network readiness 6.73) (*)
[24] Cyprus: 6.66 (Judicial. indep. 5.95; press freedom 7.91; network readiness 6.07) (*)
[25] Czech Republic: 6.54 (Judicial. indep. 5.69; press freedom 7.74; network readiness 6.66) (*)
[26] Slovenia: 6.46 (Judicial. indep. 5.49; press freedom 7.71; network readiness 7.6) (*)
[27] Italy: 6.32 (Judicial. indep. 5.25; press freedom 7.63; network readiness 6.64) (*)
[28] South Korea 6.30 (Judicial indep. 5.06; press freedom 7.63; network readiness 7.46) (*)
[29] Malta: 6.29 (Judicial. indep. 5.45; press freedom 4.48; network readiness 8.14) (*)
[30] Singapur: 5.82 (Judicial. indep. 5.82; press freedom 7.71; network readiness 7.6) (*)

[31] Greece: 5.94 (Judicial. indep. 4.93; press freedom 7.12; network readiness 5.52) (*)
[32] Slovak Republic: 5.94 (Judicial. indep. 4.57; press freedom 7.73; network readiness 6.08) (*)
[33] Romania: 5.92 (Judicial. indep. 4.80; press freedom 7.41; network readiness 5.42) (*)
[34] Bulgaria: 5.77 (Judicial. indep. 4.85; press freedom 6.49; network readiness 5.50) (*)
[35] Croatia: 5.76 (Judicial. indep. 4.55; press freedom 7.15; network readiness 5.59) (*)
[36] Hungary: 5.75 (Judicial. indep. 4.53; press freedom 6.92; network readiness 6.01) (*)
[37] Brazil: 5.68 (Judicial. indep. 4.71; press freedom 6.60; network readiness 5.09) (*)
[38] Bahamas: 5.66 (Judicial indep. 7.15; press freedom 7.62; network readiness 5.64)
[39] Uruguay: 5.64 (Judicial. indep. 6.82; press freedom 8.42; network readiness 5.64)
[40] Poland: 5.62 (Judicial. indep. 4.15; press freedom 7.14; network readiness 5.62) (*)

[41] Serbia: 5.53 (Judicial. indep. 4.27; press freedom 6.84; network readiness 5.30) (*)
[42] Costa Rica: 5.48 (Judicial. indep. 6.33; press freedom 6.95; network readiness 5.42)
[43] Lithuania: 5.36 (Judicial. indep. 6.27; press freedom 7.88; network readiness 6.47) (*)
[44] Barbados: 5.31 (Judicial. indep. 6.55; press freedom 7.62; network readiness 5.64) 
[45] Latvia: 5.27 (Judicial. indep. 6.07; press freedom 8.14; network readiness 6.05) (*)
[46] Chile: 5.75 (Judicial. indep. 6.47; press freedom 7.27; network readiness 5.41) 
[47] Belize: 5.23 (Judicial. indep. 6.79; press freedom 7.25; network readiness 3.55)
[48] Mexico: 5.20 (Judicial indep. 4.19; press freedom 5.46; network readiness 5.97) 
[49] Jamaica: 5.18 (Judicial. indep. 4.71; press freedom 8.95; network readiness 4.74) 
[50] Albania: 5.12 (Judicial. indep. 3.56; press freedom 6.98; network readiness 4.42) (*)

[51] Taiwan: 5.11 (Judicial. indep. 5.67; press freedom 7.62; network readiness 7.46)
[52] South Africa: 5.00 (Judicial. indep. 5.99; press freedom 7.76; network readiness 4.53)
[53] Trinidad & Tobago: 4.94 (Judicial. indep. 5.69; press freedom 7.68; network readiness 5.64)
[54] Mauritius: 4.91 (Judicial. indep. 6.55; press freedom 7.20; network readiness 4.98) 
[55] Namibia: 4.91 (Judicial. indep. 5.86; press freedom 8.08; network readiness 3.61) 
[56] Cabo Verde: 4.88 (Judicial. indep. 5.72; press freedom 7.99; network readiness 4.20) 
[57] Botswana: 4.85 (Judicial. indep. 5.91; press freedom 7.64; network readiness 3.69)
[58] Israel: 4.84 (Judicial indep. 5.52; press freedom 6.92; network readiness 6.98) 
[59] Macedonia: 4.81 (Judicial. indep. 2.90; press freedom 6.87; network readiness 4.83) (*)
[60] Malaysia: 4.66 (Judicial. indep. 5.41; press freedom 6.69; network readiness 6.14) 

[61] Gambia: 4.56 (Judicial. indep. 5.35; press freedom 6.94; network readiness 2.94)
[62] Montenegro: 4.54 (Judicial. indep. 5.41; press freedom 5.62; network readiness 5.10)
[63] Ghana: 4.94 (Judicial. indep. 5.17; press freedom 7.77; network readiness 3.70)
[64] Kuwait: 4.51 (Judicial. indep. 6.32; press freedom 6.57; network readiness 5.23) 
[65] UAE: 4.44 (Judicial. indep. 5.30; press freedom 5.73; network readiness 6.44) 
[66] China: 4.39 (Judicial. indep. 3.75; press freedom 2.15; network readiness 5.84) (*)
[67] Oman: 4.33 (Judicial. indep. 5.30; press freedom 5.66; network readiness 5.53)
[68] Qatar: 4.31 (Judicial indep. 5.12; press freedom 5.75; network readiness 6.03) 
[69] Indonesia: 4.28 (Judicial. indep. 5.10; press freedom 6.32; network readiness 4.67)
[70] India: 4.26 (Judicial. indep. 5.50; press freedom 5.47; network readiness 4.16) 

[71] Tunisia: 4.22 (Judicial. indep. 4.80; press freedom 7.06; network readiness 4.13)
[72] Liberia: 4.22 (Judicial. indep. 4.75; press freedom 6.88; network readiness 2.88)
[73] Guyana: 4.20 (Judicial. indep. 4.87; press freedom 7.34; network readiness 3.00)
[74] Jordan: 4.19 (Judicial. indep. 5.11; press freedom 5.79; network readiness 4.75) 
[75] Niger: 4.17 (Judicial. indep. 4.86; press freedom 7.18; network readiness 3.04) 
[76] Sri Lanka: 4.15 (Judicial. indep. 5.12; press freedom 5.18; network readiness 4.27)
[77] Mongolia: 4.13 (Judicial. indep. 5.62; press freedom 7.04; network readiness 4.14)
[78] Benin: 4.11 (Judicial indep. 4.98; press freedom 6.49; network readiness 3.23) 
[79] Lesotho: 4.07 (Judicial. indep. 4.81; press freedom 6.96; network readiness 2.78)
[80] Argentina: 4.06 (Judicial. indep. 4.27; press freedom 7.12; network readiness 5.04)

[81] Morocco: 4.06 (Judicial. indep. 5.02; press freedom 5.77; network readiness 3.97)
[82] Georgia: 4.02 (Judicial. indep. 4.23; press freedom 7.14; network readiness 4.80)
[83] Malawi: 3.97 (Judicial. indep. 4.60; press freedom 7.07; network readiness 2.52)
[84] Thailand: 3.96 (Judicial. indep. 4.78; press freedom 5.51; network readiness 4.66) 
[85] Armenia: 3.95 (Judicial. indep. 4.01; press freedom 7.14; network readiness 5.19) 
[86] Peru: 3.90 (Judicial. indep. 4.17; press freedom 6.91; network readiness 4.37)
[87] Senegal: 3.90 (Judicial. indep. 4.02; press freedom 7.60; network readiness 3.69)
[88] Burkina Fasso: 3.89 (Judicial indep. 4.20; press freedom 7.65; network readiness 2.58) 
[89] Pakistan: 3.81 (Judicial. indep. 4.78; press freedom 5.45; network readiness 3.33)
[90] El Salvador: 3.81 (Judicial. indep. 4.06; press freedom 7.03; network readiness 3.73)

[91] Nepal: 3.79 (Judicial. indep. 4.34; press freedom 6.49; network readiness 3.18)
[92] Côte d'Ivoire: 3.78 (Judicial. indep. 4.10; press freedom 7.11; network readiness 3.12)
[93] Moldova: 3.78 (Judicial. indep. 3.86; press freedom 6.88; network readiness 4.71)
[94] Tanzania: 3.76 (Judicial. indep. 4.45; press freedom 5.98; network readiness 3.39) 
[95] Kenya: 3.73 (Judicial. indep. 3.94; press freedom 6.63; network readiness 4.32) 
[96] Bahrain: 3.71 (Judicial. indep. 4.67; press freedom 3.99; network readiness 5.76)
[97] Panama: 3.69 (Judicial. indep. 3.68; press freedom 7.02; network readiness 4.47)
[98] Kyrgyz Republic: 3.68 (Judicial indep. 3.80; press freedom 6.98; network readiness 3.86) 
[99] Guatemala: 3.68 (Judicial. indep. 4.08; press freedom 6.43; network readiness 3.85)
[100] Colombia: 3.66 (Judicial. indep. 4.10; press freedom 5.73; network readiness 4.68)

[101] Saudi Arabia: 3.66 (Judicial. indep. 4.65; press freedom 3.79; network readiness 5.80)
[102] Dom. Republic: 3.65 (Judicial. indep. 3.50; press freedom 7.21; network readiness 4.58)
[103] Nigeria: 3.64 (Judicial. indep. 4.09; press freedom 6.44; network readiness 3.04)
[104] Mali: 3.59 (Judicial. indep. 4.00; press freedom 5.59; network readiness 2.70) 
[105] Philippines: 3.57 (Judicial. indep. 3.97; press freedom 5.65; network readiness 4.60) 
[106] Lebanon: 3.56 (Judicial. indep. 3.62; press freedom 6.68; network readiness 4.13)
[107] Guinea-Bissau: 3.56 (Judicial. indep. 3.00; press freedom 6.79; network readiness 3.00)
[108] Bosnia: 3.55 (Judicial indep. 3.41; press freedom 7.15; network readiness 4.17) 
[109] Ukraine: 3.54 (Judicial. indep. 3.40; press freedom 6.43; network readiness 3.85)
[110] Egypt: 3.52 (Judicial. indep. 3.40; press freedom 6.75; network readiness 4.94)

[111] Zambia: 3.49 (Judicial. indep. 3.85; press freedom 6.30; network readiness 3.05)
[112] Mozambique: 3.48 (Judicial. indep. 3.81; press freedom 6.68; network readiness 2.42)
[113] Madagascar: 3.44 (Judicial. indep. 3.48; press freedom 7.23; network readiness 2.58)
[114] Guinea: 3.44 (Judicial. indep. 3.69; press freedom 6.57; network readiness 2.84) 
[115] Uganda: 3.44 (Judicial. indep. 3.89; press freedom 5.91; network readiness 3.14) 
[116] Paraguay: 3.38 (Judicial. indep. 3.26; press freedom 6.70; network readiness 4.11)
[117] Iraq: 3.37 (Judicial. indep. 3.88; press freedom 4.46; network readiness 3.42)
[118] Zimbabwe: 3.33 (Judicial indep. 3.79; press freedom 5.91; network readiness 2.58) 
[119] Ecuador: 3.31 (Judicial. indep. 3.09; press freedom 6.74; network readiness 4.22)
[120] Algeria: 3.30 (Judicial. indep. 3.71; press freedom 5.45; network readiness 3.52)

[121] Rwanda: 3.29 (Judicial. indep. 3.84; press freedom 6.30; network readiness 3.05)
[122] Gabon: 3.28 (Judicial. indep. 3.46; press freedom 6.68; network readiness 2.42)
[123] Russia: 3.27 (Judicial. indep. 3.42; press freedom 7.23; network readiness 2.58)
[124] Turkey: 3.23 (Judicial. indep. 3.48; press freedom 6.57; network readiness 2.84) 
[125] Ethiopia: 3.20 (Judicial. indep. 3.25; press freedom 5.91; network readiness 3.14) 
[126] Kazahkstan: 3.19 (Judicial. indep. 3.51; press freedom 6.70; network readiness 4.11)
[127] Tajikistan: 3.18 (Judicial. indep. 3.94; press freedom 4.46; network readiness 3.42)
[128] Honduras: 3.15 (Judicial indep. 3.51; press freedom 5.91; network readiness 2.58) 
[129] Angola: 3.12 (Judicial. indep. 3.17; press freedom 6.74; network readiness 4.22)
[130] Haiti: 3.04 (Judicial. indep. 2.29; press freedom 5.45; network readiness 3.52)

[131] Bolivia: 2.60 (Judicial. indep. 3.85; press freedom 6.30; network readiness 3.05)
[132] Belarus: 2.67 (Judicial. indep. 3.81; press freedom 6.68; network readiness 2.42)
[133] Azerbaijan: 3.12 (Judicial. indep. 3.48; press freedom 7.23; network readiness 2.58)
[134] Bangladesh: 2.88 (Judicial. indep. 3.69; press freedom 6.57; network readiness 2.84) 
[135] Congo: 2.68 (Judicial. indep. 3.89; press freedom 5.91; network readiness 3.14) 
[136] Cameroon: 2.65 (Judicial. indep. 3.26; press freedom 6.70; network readiness 4.11)
[137] Cambodia: 2.51 (Judicial. indep. 3.88; press freedom 4.46; network readiness 3.42)
[138] Nicaragua: 2.03 (Judicial indep. 3.79; press freedom 5.91; network readiness 2.58) 
[139] Iran: 3.05 (Judicial. indep. 3.09; press freedom 6.74; network readiness 4.22)
[140] Burundi: 3.05 (Judicial. indep. 3.71; press freedom 5.45; network readiness 3.52)

[141] Chad: 2.54 (Judicial. indep. 3.88; press freedom 4.46; network readiness 3.42)
[142] Vietnam: 2.93 (Judicial indep. 3.79; press freedom 5.91; network readiness 2.58) 
[143] Venezuela: 1.73 (Judicial. indep. 3.09; press freedom 6.74; network readiness 4.22)
[144] Yemen: 2.27 (Judicial. indep. 3.71; press freedom 5.45; network readiness 3.52)
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