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Index of Economic Freedom

From Academic Kids

The Index of Economic Freedom is an annual report published by The Wall Street Journal and the Heritage Foundation.

The index measures how countries score on a list of 50 independent variables divided into 10 broad factors of economic freedom. The higher a country's score on a factor, the greater the level of government intervention in the economy and the less economic freedom there is. The Heritage Foundation's view is that countries with the most economic freedom also have higher rates of long-term economic growth and are more prosperous than are those with less economic freedom.

These 50 variables are grouped into the following categories:

Depending on their score, countries are then separated into four categories: Free, Mostly Free, Mostly Unfree, and Repressed.

Contents

Current ratings

The most current ratings are for 2005. Note: countries sharing the same rank received a tie score. For example, Ireland and New Zealand are tied for the rank of 5th most economically free country. Also note that a detailed description of the conditions in each country can be found here: [1] (http://www.heritage.org/research/features/index/countries.cfm).

Free Mostly Free Mostly Unfree Repressed
  1. Hong Kong, SAR
  2. Singapore
  3. Luxembourg
  4. Estonia
  5. Ireland
    New Zealand
  6. United Kingdom
  7. Denmark
    Iceland
  8. Australia
  9. Chile
  10. Switzerland
    United States
  11. Sweden
  12. Finland
  13. Canada
  14. Netherlands
  1. Germany
  2. Austria
  3. Bahrain
  4. Belgium
    Cyprus
  5. Lithuania
  6. El Salvador
  7. Bahamas
  8. Italy
  9. Taiwan
  10. Latvia
  11. Malta
    Norway
  12. Spain
  13. Barbados
  14. Czech Republic
    Israel
  15. Hungary
  16. Slovak Republic
  17. Botswana
    Portugal
  18. Japan
  19. Trinidad and Tobago
  20. Poland
  21. Armenia
  22. Uruguay
  23. France
  24. South Korea
    Slovenia
  25. Belize
  26. Madagascar
    United Arab Emirates
  27. Bolivia
    Mongolia
  28. Bulgaria
    Panama
  29. Costa Rica
    Kuwait
  30. Peru
    South Africa
  31. Jordan
  32. Greece
  33. Jamaica
    Oman
  34. Cape Verde
  35. Cambodia
    Mexico
  36. Mauritius
    Nicaragua
  37. Albania
    Mauritania
  38. Macedonia
  39. Malaysia
  40. Thailand
  41. Saudi Arabia
    Senegal
  1. Croatia
    Uganda
  2. Lebanon
  3. Moldova
    Swaziland
  4. Guyana
    Sri Lanka
  5. Namibia
    Qatar
  6. Tunisia
  7. Bosnia and Herzegovina
  8. Guatemala
    Mali
    Morocco
  9. Colombia
    Ukraine
  10. Brazil
    Philippines
  11. Ivory Coast
  12. Burkina Faso
    Fiji
    Guinea
    Kenya
  13. Kyrgyzstan
  14. Djibouti
    Ghana
  15. Georgia
    Mozambique
  16. Lesotho
  17. Azerbaijan
    Chad
    Egypt
  18. Gabon
    The Gambia
    Zambia
  19. Tanzania
  20. Honduras
  21. Paraguay
  22. China
    Turkey
  23. Algeria
    Argentina
    Ecuador
  24. Central African Republic
  25. Equatorial Guinea
    India
    Niger
  26. Dominican Republic
    Indonesia
    Rwanda
  27. Russia
  28. Romania
  29. Cameroon
    Nepal
  30. Benin
  31. Malawi
  32. Kazakhstan
  33. Togo
  34. Yemen
  35. Ethiopia
    Pakistan
  36. Sierra Leone
  37. Republic of the Congo
  38. Vietnam
  39. Guinea-Bissau
  40. Syria
  41. Suriname
  42. Bangladesh
    Nigeria
  43. Belarus
  1. Tajikistan
  2. Haiti
  3. Venezuela
  4. Uzbekistan
  5. Iran
  6. Cuba
  7. Laos
  8. Turkmenistan
    Zimbabwe
  9. Libya
  10. Myanmar (Burma)
  11. North Korea

Note: Due to economic or political instability, Afghanistan, Angola, Burundi, the Democratic Republic of the Congo, Iraq, Somalia, Sudan and Serbia and Montenegro were not ranked. There is also no data for countries with very small populations including Andorra, Antigua and Barbuda, Bhutan, Dominica, East Timor, Grenada, Liechtenstein, Micronesia, Monaco, San Marino, Saint Lucia, Sao Tome and Principe, Saint Vincent and the Grenadines, Saint Kitts and Nevis, Vatican City, Tonga, Tuvalu, and Seychelles.

Developments

  • Overall, 86 countries worldwide are freer than they were last year and 57 are less free.
  • The 10 most-improved countries this year were Madagascar, Ukraine, Poland, Bulgaria, Iceland, Indonesia, Hungary, Malaysia, Mongolia and Uzbekistan.

Similar Indices

Research

Many peer-reviewed articles have used these indices. [2] (http://scholar.google.com/advanced_scholar_search?q=economic+freedom&hl=en&lr=) [3] (http://www.freetheworld.com/papers.html) One question has been what subcomponents are responsible for economic growth. Strong property rights and low inflation may be particularly important. Regarding the size of government and free trade there is much conflicting evidence.

Criticism

Some economists and commentators have criticized the Index on several grounds—asking, for instance, if Canada's slightly higher income tax rates make it a less economically free country than the United States. Critics of the index's methodology most commonly take issue with its equation of regressive taxation, low tax rates generally, and weak worker protection regulations with economic freedom. Some critics go further, saying that the index judges countries against a specious list of 'ideal' economic and fiscal policies, which reflect the Heritage Foundation and Wall Street Journal 's own laissez-faire economic and fiscal policy ideas more than they do a substantive concept of economic freedom. For such critics, the list is simply a promotional tool for laissez-faire policy, rather than a meaningful index of economically free countries.

In response, proponents point out that the indexes and their subcomponents have been used in much independent research published in numerous peer-reviewed papers. That the creators of the indexes support laissez-faire capitalism does not invalidate the empirical research.

See also

External links

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