argentina best practices report

8/6/2019 Argentina Best Practices Report

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BestPracticeReport

Argentina January 2011

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The Best Practice Report provides a concise, comprehensive overview of a countrys status withrespect to global best practice benchmarks. The report contains a summary of compliance with

the 12 Key Standards for Sound Financial Systems in the Standards Compliance Index, as wellas a summary of performance in the Business Indicator Index and other leading global indicesaddressing related aspects of the countrys economic, business, political, and social climate.

Table of contents

I. Summary Financial Standards IndexII. Detailed Summary of Observance by Standard

III. Business Indicator Summary IV. Performance in Global Best Practice IndicesV. Credit RatingsVI. Macroeconomic Data

This report is based entirely on publicly available sources. For a list of all the sources used for the Standards Reports and the Business Indicatorsplease refer to the detailed reports available for each country and standard on www.estandardsforum.org.

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Best Practice ReportArgentina

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I. Summary Financial Standards Index

Overall: Low | Rank: 61 | Score: 35.83

MACROECONOMIC POLICY AND DATA TRANSPARENCY

FullCompliance

Compliancein Progress Enacted

IntentDeclared

NoCompliance

Insuf cientInformation

Data Dissemination X

Monetary Transparency X

Fiscal Transparency X

INSTITUTIONAL AND MARKET INFRASTRUCTURE

FullCompliance


IntentDeclared

NoCompliance


Insolvency Framework X

Accounting X

Corporate Governance X

Auditing X

Anti-Money Laundering X

Payment Systems X

FINANCIAL REGULATION AND SUPERVISION

FullCompliance


IntentDeclared

NoCompliance


Banking Supervision X

Securities Regulation X

Insurance Supervision X




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SUMMARY

Argentina achieves low overall compliance with international standards and codes, with a score of 35.83 out of 100 in our FinancialStandards Index. Macroeconomic Policy and Data Transparency standards are for the most part observed, however, there havebeen serious concerns about the independence of the Central Bank of Argentina and doubts about the accuracy of in ation data.Credible implementation of Argentina's comprehensive legal framework for scal transparency remains one of the country's toppriorities. Argentina is working towards greater compliance with Institutional and Market Infrastructure standards. InternationalFinancial Reporting Standards will be adopted by listed companies (with some exceptions) from January 1, 2012. The prospective

timeframe for adoption of International Standards on Auditing would be 2011 for entities of public interest, and 2014 for allother entities. Although the corporate insolvency regime in Argentina is consistent with the World Bank's principles, the adoptionof a new legal mechanism instituting a consensual, out-of-court, corporate workout framework is recommended. In the areaof corporate governance, the National Securities Commission mandated listed companies in October 2007 to annually comply or explain their adoption with a minimum set of governance standards. Compliance with Financial Regulation and Supervisionstandards is low due to the scarcity of information for banking and insurance supervision.

II. Detailed Summary of Observance by Standard1. MACROECONOMIC POLICY AND DATA TRANSPARENCY

Data Dissemination: Compliance in ProgressArgentina is a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS). The IMF'sSDDS website discloses that Argentina meets SDDS speci cations for coverage, periodicity, and timeliness of the data. Thewebsite also indicates that Argentina satis es the conditions for the access dimension of the SDDS for all data categories, exceptfor the advance dissemination of a release calendar for population data. Several reports have put in doubt the reliability of datareleased by the National Institute of Statistics and Censuses (INDEC), par ticularly that of the Consumer Price Index, despite thefact that in 2009 the national government passed Decree No. 927 for the implementation of greater control over the INDECsdata revision process.

Monetary Transparency: EnactedThe last comprehensive assessment of Argentinas monetary policy transparency was performed by Oxford Analytica (OA)in 2006. On this occasion, the rating of Argentina's overall compliance with this standard was downgraded from "Compliancein Progress" to "Enacted." Over the last years there have been grave concerns about the independence of the Central Bank of Argentina (BCRA). The ousting of Martin Redrado as BCRAs President over the use of foreign-exchange central banksreserves in February 2010 con rmed these concerns. In addition, serious doubts about in ation data have emerged in therecent past. Several publications have stated that in ation, and indeed in ation data, are a cause of concern since there areserious doubts as to the accuracy of the Consumer Price Index published by the National Institute of Statistics and Censuses.

While back in 2002, the BCRA aimed for a fully operational in ation-targeting regime, it appears now to have adopted a moreexible regime. The BCRA's monetary policy is based on the control of monetary aggregates through the establishment of

quarterly quantitative targets on the aggregate M2 and the private sector M2. According to the BCRA's 1st Quarter In ationReport for 2010, monetary targets for both the aggregate M2 and private sector M2 were within the target ranges establishedin the 2009 Monetary Program. The information on monetar y policy is considered to be reliable and comprehensive on a widerange of monetary variables. The BCRA's charter clearly establishes the responsibilities and goals for the BCRA.




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Fiscal Transparency: EnactedIn the last available comprehensive assessment against the IMF's Code of Good Practices on Fiscal Transparency, OxfordAnalytica (OA) in 2006 rated Argentina as "Enacted." The assessment reasoned that Argentina's legal framework providesclear guidelines for scal management and transparency. These guidelines have been enhanced by the enactment of the Fiscal

Responsibility Law (LRF) in 2004. Fiscal data disclosure at the national level is adequate, but the disclosure standards at theprovincial level vary. The LRF is meant to increase the scal ef ciency of sub-national governments and limit future spendingand debt issuance by the provinces. Enforcement of Argentina's comprehensive legal framework for scal transparency remainsone of the country's top priorities. Adherence to the LRF could substantially improve scal data reliability and the developmentof homogeneous indicators. However, scal transparency has been negatively affected by the weak control over the use of resources of duciary funds. Fur thermore, in late 2009, Congress suspended the LRF for a two-year period in order to providerelief to cash-strapped provinces hurt by the global economic downturn that year.

2. INSTITUTIONAL AND MARKET INFRASTRUCTURE

Insolvency Framework: EnactedAccording to a 2002 World Bank assessment of Argentina's insolvency and creditor rights system, the legal framework for enforcement of both secured and unsecured rights and the Argentine corporate insolvency regime are largely consistent with

the World Bank's Principles and Guidelines for Effective Insolvency and Creditor Rights System as issued in 2001. Nevertheless, the assessment identi ed some needed improvements. Due to the lack of appropriate incentives for debtors and creditors, thelegal framework for informal workouts is rarely used. Also, years of economic recession have signi cantly increased the number of insolvencies, over-burdening the insolvency courts in most jurisdictions. As a result, the World Bank has recommended theimplementation of a new mechanism for instituting a consensual, out-of-court, corporate workout framework. This mechanismshould incorporate needed reforms to the insolvency system, leaving less-urgent amendments for a later time. In the medium

term, Argentina should focus on changing the legal and institutional framework for creditors' rights and adopting other amendments to the insolvency regime.

Accounting: No ComplianceThe Argentine Federation of Professional Councils of Economic Sciences (FACPCE) coordinates the issuance of professionalaccounting and auditing standards. According to a 2010 Ernst & Young report, in 1998 the FACPCEs Governing Boarddeveloped a plan to adapt Argentine accounting standards to International Financial Reporting Standards (IFRSs) issued by theInternational Accounting Standard Board (IASB). On December 8, 2000, the FACPCE approved Technical Resolutions (TRs)16 through 19, thus completing the rst stage of the harmonization plan. Finally, on March 20, 2009, the FACPCE approvedTR 26, which adopted IFRSs as issued by the IASB in effect as of 2009. However, in order for the companies to start applying

the new standards, they have to be approved by the respective industry regulator. In December 2009, the National SecuritiesCommission (CNV) passed General Resolution No. 562, which incorporated TR 26 and provided for the legal implementationof IFRSs for listed companies (except banks, nancial trusts, insurance companies, and cooperatives) starting January 1, 2012,with early application after January 1, 2011 allowed. The Resolution includes the commitment to incorporate all new IFRSs andmodi cations to the existing ones as they become available in the future. In its turn, as pointed out on the Deloittes IAS Pluswebsite, the BCRA also announced its intention to require IFRSs, most likely beginning in 2014. According to a 2010 publicationby PricewaterhouseCoopers, regulators other than the CNV and the BCRA, have not yet announced any plans to introduceIFRSs. According to Deloittes IAS Plus website, on December 3, 2010, through Technical Resolution No. 29 the FACPCEadopted IFRS for Small and Medium-sized Entities (SMEs) effective January 1, 2012, with ear lier application permitted for annual

nancial statements beginning on or after January 1, 2011. Companies exempt from the application of IFRSs and IFRS for SMEsmay either apply the international standards or continue to follow Argentine Generally Accepted Accounting Principles issuedby the FACPCE, which differ from the international standards.




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Corporate Governance: EnactedCorporate governance reform started in Argentina in 2001 when Decree No. 677 was passed promoting the adoption of goodcorporate governance practices for publicly-traded companies. Argentina is considered to be relatively developed in corporategovernance matters compared to similar countries, according to a paper published by the Center for Financial Stability in 2005.

However, only modest progress has been recorded since, and evidence shows that there is still a need to improve corporategovernance practices for publicly-traded companies, privately-held rms and nancial institutions. Enforcement mechanisms and

the regulators supervisory powers also need to be strengthened. In September 2004, the Argentine Institute for CorporateGovernance published a Code of Good Practices for Corporate Governance in conjunction with KPMG and the Institutefor Enterprise Development in Argentina. The Code is primarily intended for listed companies, but can also be applied toprivately held and small and medium-sized enterprises. Its recommendations are based on the Organization for Economic Co-operation and Development's (OECD) Principles on Corporate Governance and the recommendations of the OECD's 2003

White Paper on Corporate Governance in Latin America. The Code is voluntary in nature and companies who adhere to theprinciples of the Code must make a public declaration regarding their compliance with it. In October 2007, the CNV issuedGeneral Resolution No. 516, which mandated listed companies to annually disclose their compliance with a minimum set of governance standards established by the CNV or to explain the reason for not doing so.

Auditing: Intent DeclaredOn July 4, 2003 the FACPCE issued Technical Resolution No. 284 whereby it approved a project to adopt InternationalStandards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board of the International Federationof Accountants (IFAC). The adoption was set to take effect as of June 30, 2004. The Resolution stipulated that the FACPCEwould retain the right to adopt ISAs either in full or in part, and the text of the approved standard should include: (1) ISAs

translated into Spanish, using Argentine vocabulary and expressions on the basis of a translation that the FACPCE will prepareor adopt; (2) differences stemming from the particular conditions in Argentina; (3) a manual on ISAs for small entities, and(4) stipulation of future modi cations. However, as explained by Godoy 2008 in the FACPCEs Imagen Professional Magazine,subsequent FACPCE resolutions postponed the application of ISAs in the country and, at the time of the writing of the article,

the discussions about the introduction of ISAs were focused on what type of entities should be required to have their nancial

statements audited in accordance with ISAs and whether the implementation should be gradual or wholesale. In a July 2008response to the Part 3 of the IFACs Member Body Compliance Program, the FACPCE explains that the deadlines for theadoption of ISAs were to be determined by the end of 2008. According to Lattucas 2009 presentation on Argentinas adoptionof ISAs, the prospective timeframe for adoption would be by 2011 for entities of public interest (yet to be de ned), and by 2014 for all other entities.

Anti-Money Laundering: No ComplianceThe Financial Action Task Force (FATF) conducted a joint Mutual Evaluation with the Financial Action Task Force on Money Laundering in South America (GAFISUD) of Argentinas Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT) regime against the FATFs 40 Recommendations and nine Special Recommendations in 2009. The FATF publishedits ndings in a report in October of 2010. The 2010 Mutual Evaluation report pointed to several signi cant shortcomings in

Argentinas AML/CFT framework. The report nds that Argentina either did not comply or only partially complied with anoverwhelming majority of the recommendations. Notably, among the six core recommendations and special recommendations,

the FATF rated Argentina partially compliant with three and noncompliant with three. The FATF considers a country to have aneffective AML/CFT regime only if it achieves a rating of largely compliant or compliant with all of its core recommendations. TheFATF expressed its disappointment and grave concern with Argentinas failure to establish an ef cient and effective AML/CFTsystem. The FATF concludes that Argentina has not made any progress since its last mutual evaluation in 2004. The FATF stated

that it will work closely with Argentina to guarantee that the country corrects these de ciencies. Despite Argentina being one




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of the jurisdictions that have undertaken to implement the FATF's recommendations, Argentina has failed to make signi cantprogress in terms of its AML/CFT regime. In December of 2010, the FATF gave Argentina ten months to make serious changes

to its AML/CFT regime, or else be the rst G20 country to ever be placed on a blacklist of jurisdictions in which nancial transactions present a high risk of criminal activity.

Payment Systems: Insuf cient InformationAccording to a report jointly prepared by the Center for Latin American Monetary Studies (CEMLA) and the World Bank in2000, the Central Bank of Argentina (BCRA) rede ned the regulatory and operational framework for payment systems, and

took the lead in implementing payments reforms in 1996. Per a 2003 CEMLA and World Bank report, these reforms included the creation of a real-time gross settlement system, the main system employed for large-value funds transfers; the ElectronicPayment Means, operated by the BCRA; the privatization of automated low-value clearinghouses throughout the country;and the development of large value automated clearinghouses owned and operated by the private sector. The ArgentineInterbank Commission for Payment Means of the Republic of Argentina (CIMPRA) was created in the mid-1990s to manage

the development of the National Payment System plan, coordinate its implementation, and implement future improvements in the payment systems. Similarly, according to the World Banks 2008 report on Global Payment Systems, the national payment

system has been undergoing a reform of the legal and regulatory framework of its large-value funds transfer and of its retailpayment systems, among others. This reform was triggered by the need to minimize systemic risk and ameliorate the overallef ciency of the payment system. However, as at the time of this report there was no update publicly available as to whether

these reforms have been passed into law and there is no publicly available source addressing Argentina's compliance with theCore Principles for Systemically Important Payment Systems. Moreover, the 2008 Latin America report by the World Bank asserts that the weak regulatory basis and absence of a unit specialized in payments policy issues within the BCRA limit theeffectiveness of the supervisory authority.

3. FINANCIAL REGULATION AND SUPERVISION

Banking Supervision: Insuf cient InformationAn assessment of the transparency aspects of the Basel Core Principles (BCPs) for banking supervision in Argentina wasconducted in 1999 by the IMF. The report found at the time of the assessment that Argentina had an effective legal basis for banking regulation and that its supervisory practices appeared to be consistent with the disclosure aspects of the BCPs. Thereport also found that the relevant laws and regulations in Argentina were effectively implemented. The Argentine bankinglegal framework separates banking regulation from supervision, the latter being the responsibility of the Superintendency of Financial and Exchange Institutions (SEFyC), a unit within the BCRA. However, the IMF assessment was conducted prior

to the 2001-2002 nancial crisis in Argentina. Since then there has been insuf cient information publicly available regardingArgentina's compliance with the BCPs. According to a 2004 IMF report, the BCRA is making progress in strengthening bankingsupervision. Financial reporting obligations by all banks have now been fully reinstated as was the case prior to the 2001-2002crisis. In addition, a capital adequacy regime was reintroduced in January 2004 requiring banks to gradually amass adequatecapital relative to their exposure to sovereign and interest rate risks. In 2007, the BCRA issued a statement of intent for

the implementation of all three Basel II Pillars by January 2010, as well as a detailed timeline for the implementation process.However, there has since been little information regarding Argentinas recent progress with Basel II implementation.

Securities Regulation: EnactedA self-assessment conducted by the CNV in 1999 and published by the IMF indicated that Argentina's legislation comportswith the majority of the Objectives and Principles of Securities Regulation promulgated by the International Organizationof Securities Commissions (IOSCO). However, this statement was not veri ed by IMF staff. The CNV, which regulates thesecurities markets in Argentina, is an autonomous entity; however, its independence is restricted due to its dependence on the




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national budget for funding, and the appointment and removal of its board by the President. Also, according to a 2004 articleby Weitz, the CNVs regulatory and supervisory powers over different market participants (stock exchanges, rating agencies,mutual funds, open market operators, nancial trusts, and the public offering of securities) are notably asymmetric. In particular,

the CNV has limited capacity to sanction stockbrokers for violation of the legal and regulatory framework, and enforcement

is mainly under the control of the stock exchanges. More recently, a 2010 study by Pasquini analyzed Argentinas securitiesmarket regulations degree of implementation of the rst 13 IOSCO principles, which concern the regulator, self-regulatory organizations, enforcement, and supervisory cooperation. The report found that when all indicators were averaged, Argentinascores approximately 65 percent implementation, ranking third out of the four countries analyzed behind Brazil and Chile,and ahead of Peru. A 2010 report by the U.S. Department of Commerce notes that securities and accounting standards are

transparent and consistent with international standards.

Insurance Supervision: Insuf cient InformationIn 1998, Argentina conducted a self-assessment of its observance of the International Association of Insurance Supervisions(IAIS) Insurance Supervisory Principles of 1997. The self-assessment is unpublished but available to the public upon request

to the Superintendency of Insurance (SSN). The assessment stated that a majority of IAISs 1997 Principles were satis ed,

either by provisions in Argentine law or through resolutions issued, monitored, and enforced by the SSN. A 1999 report by the IMF stated that, according to the self-assessment, supervision of insurance risk by local insurance companies and on-sitesupervision were the two main areas where compliance was lacking. However, the Insurance Supervisory Principles of 1997were superseded by the Insurance Core Principles (ICPs) of 2000, and the latter were further amended in 2003. In 2008, theSSN hosted an insurance training workshop for other countries in the region, in which the SSN reevaluated its compliancewith some of the 2003 ICPs. The assessment analyzed the SSNs compliance with ICPs 11, 14, 18, 19, 20, and 23, and found

that it observed or partially observed almost all essential criteria of these principles. However, the SSN did nd shortcomingsin the areas of market analysis, risk management, and capital adequacy. Although the self-assessment addressed Argentinascompliance with some of the ICPs, it does not constitute a comprehensive assessment of Argentina's overall compliance with

the new, more stringent ICPs

III. Business Indicator Summary

Overall: In Progress | Rank: 67 | Score: 7.07 With an overall score of 7.07/12, Argentina is at standard on the economic, legal, and political indicators that make up our Business Index. Argentina is a market-based economy with a steadily growing role of the state. Energy and transport in particular are dominated by the public sector. Unorthodox policies have been employed to contain in ation, such as imposing pressureon the private sector to limit price increases on some consumer goods, export taxes, and export bans. Argentinian totalgovernment expenditure, including consumption and transfer payments is moderate. Although registering a foreign business isfairly simple, and most local companies may be wholly owned by foreign investors, foreign investment is prohibited in varioussectors. The most signi cant deterrent to investors is the legal uncertainty concerning creditor, contract, and property rights. Theexecutive branch in uences Argentina's judiciary, the courts are notoriously slow and inef cient, and foreign investors resort tointernational arbitration. The legal framework to protect intellectual property has improved in recent years although enforcementis uneven. According to the World Bank's worldwide governance indicators, public sector corruption in Argentina is a seriousproblem. Corruption appears particularly frequent in procurement, tax collection, healthcare, and regulatory systems. The countr ysexcessive perceived level of corruption as reported by Transparency Internationals Corruption Perception Index supports these

ndings. The current president Cristina Fernandez de Kirchner was elected in October 2007, succeeding her husband, Nestor Kirchner. The next presidential election will be held in 2011.




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IV. Performance in Global Best Practice Indices

Argentina is ranked from the 2nd to the 5th quintile in the global indices benchmarking its political, economic, business and human

capital climate below. On the one hand this re ects its principal commitment to market democracy. On the other hand, thiscommitment is subject to a continuous political struggle between populist protectionism and economic and nancial liberalization.Combined with the government's inability to cut red tape in its business environment these factors result in a low ranking in

the Economic Freedom in the World Index, the Global Competitiveness Index, and the World Bank's Doing Business Index. Theinstitutional environment in Argentina is ranked among the worst in the world, due in large part to public distrust of politiciansand doubts in the strength of the rule of law. The high perceived level of corruption, re ected in its low score in Transparency International's Index, is particularly noteworthy.

Index Year Rank Score Quintile

Bertelsmann Transformation Status Index 2010 29/128 7.25/10 2

Heritage Foundation Economic Freedom Index 2011 138/183 51.7% 4Economic Freedom of the World Index 2010 114/141 5.99/10 5

World Economic Forum Global Competitiveness Index 2010 87/139 3.95/7 4

Milken Institute Capital Access Index 2010 75/122 3.84/10 4

World Bank Ease of Doing Business Index 2010 118/183 N/A 4

UNDP Human Development Index 2010 46/169 0.78/1 2

Transparency International Corruption Perceptions Index 2010 105/178 2.9/10 3

Freedom House Index 2010 Free 2/7

V. Credit Ratings

Fitch: B/StableMoody's: B3/StableStandard & Poor's: B-/Stable

VI. Macroeconomic Data

2009 GDP (estimate) (IMF) 2010 Forecast (IMF) 2008 FDI (UNCTAD) Of cial Development Assistance$310.3 billion Real GDP Growth: 1.5 Inward: $8.9 billion Received: 82 million (2007 OECD)

Per capita: $7,732 CPI: 5.6% Outward: $1.35 Disbursed: N/A million (2007 OECD)

Unemployment: 7.9% (CIA 2008)




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Methodology Note

I. The Financial Standards Index

This index measures a countrys level of compliance with the 12 international standards and codes. Compliance with each of the 12standards is measured on a scale of six levels of compliance and then converted into a numerical score. The Index ranks countriesfrom 1 (most compliant) to 81 (least compliant) and provides a score from 0 (worst performance) to 100 (best performance).Overall compliance is determined as follows:

Very high 80 to 100

high 60 to 80

medium 40 to 60

low 20 to 40

very low 0 to 20

The chart provided with the summary of a countrys performance against the Financial Standards Indexprovides the exact levelsof compliance with the 12 international standards and codes. The descending order of compliance is as follows: Full Compliance,Compliance in Progress, Enacted , Intent Declared , No Compliance, and Insuf cient Information. A exact de nition of each compliancelevel and the methodology used to determine them is available on the eStandardsForum website.

II. Detailed Summary of Observance of Standards & Codes

This section provides the executive summaries of eStandardsForums country compliance reports against the 12 Key internationalstandards and codes. The full assessments are available on the eStandardsForum website.

The three standards grouped under Data and Macroeconomic Policy Transparency are the IMFs Special (or General) DataDissemination Standard, the Code of Good Practices in Monetary and Financial Policies, and the Code of Good Practices onFiscal Transparency.

The six standards grouped under Institutional and Market Infrastructure are the World Banks Principles and Guidelines for Effective Insolvency and Creditor Rights Systems, the International Accounting Standard Boards International AccountingStandards, the OECDs Principles of Corporate Governance, the International Federation of Accountants InternationalStandards on Auditing, the Financial Action Taskforces Recommendations on Money Laundering, and the Bank for InternationalSettlements Core Principles for Systemically Important Payment Systems.

The three standards grouped under the Financial Regulation and Supervision sub-section are the Basel Committees CorePrinciples for Effective Banking Supervision, the International Organization of Securities Commissions Principles of EffectiveSecurities Regulation, and the International Association of Insurance Supervisors Insurance Core Principles.

III. The Business Indicator Index

This index measures a countrys attractiveness to foreign investment by analyzing various economic, legal, and political indicators.Countries are ranked from 1 to 81 according to a score ranging from 0 (least attractive) to 12 (most attractive). The overall scorealso determines whether a country is:




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At Standard 9 to 12

Progressing toward standard 6 to 9

Below standard 0 to 6

The three standards grouped under the Financial Regulation and Supervision sub-section are the Basel Committees CorePrinciples for Effective Banking Supervision, the International Organization of Securities Commissions Principles of EffectiveSecurities Regulation, and the International Association of Insurance Supervisors Insurance Core Principles.

IV. Performance in Global Indices

In this section, the rank and score of a country in nine distinct global indices is summarized. The countrys relative position in theseindices is made more comparable by calculating the quintile corresponding to the countrys rank. In addition, a short summary interpreting the countrys performance in the nine indices is provided. The following nine indices are used:

The Freedom in the World Survey is published annually by Freedom House. The political rights and civil liberties categories containnumerical ratings between 1 and 7 for each country or territory, with 1 representing the most free and 7 the least free. The statusdesignation of Free, Partly Free, or Not Free, which is determined by the combination of the political rights and civil libertiesratings, indicates the general state of freedom in a country or territory.Source: http://www.freedomhouse.org/

The Bertelsmann Transformation Status Indexshows the development achieved by states on their way toward democracy and amarket economy. States with functioning democratic and market-based structures receive the highest scores. The Status Indexsoverall result represents the mean value of the scores for the dimensions Political Transformation and Economic Transformation.The rating is based on a system of points ranging from 1 (worst score) to 10 (best score).Source: http://www.bertelsmann-transformation-index.de/16.0.html?&L=1

The Heritage Foundation Economic Freedom Indexmeasures economic freedom against a list of 50 independent variables dividedinto 10 broad factors of economic freedom. For each factor, a country receives a 0 to 100 percentage score, indicating the degreeof economic freedom in the country.Source: http://www.heritage.org/research/features/index/index.cfm

The Economic Freedom of the World Index, published by the Fraser Institute, covers ve broad areas: size of government; legalstructure and security of property rights; access to sound money; freedom to trade internationally; regulation of credit, labor, andbusiness. Each component and sub-component is placed on a scale from 0 to 10 that re ects the distribution of the underlyingdata. A higher value signi es greater economic freedom.Source: http://www.freetheworld.com/index.html

The World Economic Forum Global Competitiveness Indexprovides an overview of factors that are critical to driving productivity and

competitiveness. These factors are grouped into nine distinct but interconnected pillars: (1) Institutions, (2) Infrastructure, (3) Macroeconomy, (4) Health and primary education, (5) Higher education and training, (6) Market ef ciency, (7) Technological readiness,(8) Business sophistication, and (9) Innovation. The Index is calculated from a mixture of survey and hard data, and the data for each pillar is converted into a scale from 1 to 7. A higher value indicates greater competitiveness.Source: http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm


http://www.freedomhouse.org/http://www.bertelsmann-transformation-index.de/16.0.html?&L=1http://www.heritage.org/research/features/index/index.cfmhttp://www.freetheworld.com/index.htmlhttp://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htmhttp://estandardsforum.org/http://estandardsforum.org/http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htmhttp://www.freetheworld.com/index.htmlhttp://www.heritage.org/research/features/index/index.cfmhttp://www.bertelsmann-transformation-index.de/16.0.html?&L=1http://www.freedomhouse.org/


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The Milken Institute Capital Access Indexscores the ability of entrepreneurs to gain access to nancial capital in countries around theworld. The Index is intended to measure not only the breadth, depth, and vitality of capital markets, but also openness in providingaccess without discrimination, a measure of global progress in the democratization of capital. The Index has 7 subcomponents witha score assigned from 1 to 10 for countries ranking lowest to highest in terms of capital access. The Capital Access Index is then

calculated using the weighted average of the seven subcategories.Source: http://www.milkeninstitute.org/research/research.taf?cat=indexes

The Human Development Index (HDI) is a comparative measure of life expectancy, literacy, education, and standard of living for most UN member states The index has been used since 1993 by the United Nations Development Program in its annual HumanDevelopment Report. The HDI measures the average achievements in a country in three basic dimensions (life expectancy, literacy and standard of living) of human development. These measures are then converted into a 0 to 1 scale and each of the 177 UNmember states are ranked accordingly each year.Source: http://hdr.undp.org/

The World Banks Ease of Doing Business Indexprovides measures of business regulations and their enforcement. The Doing Businessindicators are designed to indicate the regulatory costs of business and can be used to analyze speci c regulations that enhanceor constrain investment, productivity, and growth. The Index then ranks economies. The index is calculated as the ranking on thesimple average of country percentile rankings on each of the 10 topics covered.Source: http://www.doingbusiness.org/

The Transparency International Corruption Perception Index(CPI) ranks countries in terms of the degree to which corruption isperceived to exist. The CPI Score relates to these perceptions of the degree of corruption as seen by business people and country analysts from around the world, including experts who are citizens in the countries evaluated. The score ranges between 10 (highly clean) and 0 (highly corrupt).Source: http://www.transparency.org/

V. Credit Ratings:

Long-term foreign currency ratings and outlooks, indicating the likelihood of a sovereign default of the country, are provided as of the last date of upgrade or downgrade by the three leading credit rating agencies.

VI. Macroeconomic data:

This section provides the latest GDP and GDP per capita gures, projected GDP growth, and in ation as provided by the latestavailable IMFWorld Economic Outlook , unemployment gures by the CIA World Factbook ; the latest inward and outward foreigninvestment gures as reported in UNCTADs annual World Investment Report ; and the most recent gure for of cial developmentassistance (ODA) received or disbursed, as repor ted by the OECD.


http://www.milkeninstitute.org/research/research.taf?cat=indexeshttp://hdr.undp.org/http://www.doingbusiness.org/http://www.transparency.org/http://estandardsforum.org/http://estandardsforum.org/http://www.transparency.org/http://www.doingbusiness.org/http://hdr.undp.org/http://www.milkeninstitute.org/research/research.taf?cat=indexes

argentina best practices report

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