This study explores the extent to which Latin America's failure to embrace a system of laws and regulations generally viewed as conducive to capital formation and the broad creation of wealth may be an important factor impairing economic development. The argument here is that the region's adherence to a legal system based on civil law is a factor contributing to Latin America's ongoing lack of economic progress. A composite measure of economic freedom served as the basis for a two-group discriminant analysis of the civil law countries of Latin America and common law countries. The objective was to test for and explain any statistically significant between-group differences in levels of economic freedom. © 2006 Wiley Periodicals, Inc.