Hong Kong and Singapore top global economic freedom ranking for 22nd year running
Hong Kong and Singapore have topped a global economic freedom ranking for the 22nd year in a row, while major economies like the United States and Germany have missed out on making it to the top ten of the list.
The Economic Freedom Index measures economic freedom by assessing four broad categories of economic freedom in each country: the rule of law (property rights, freedom from corruption); limited government (fiscal freedom, government spending); regulatory efficiency (business freedom, labor freedom, monetary freedom); and open markets (trade freedom, investment freedom, financial freedom).
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Each category has a further 10 factors by which countries are assessed, and each of these is graded on a scale of 0 to 100. A country’s overall score is derived by averaging their scores.
Since the index was launched in 1995, Hong Kong and Singapore have occupied the first and second place respectively.
“The implementation of prudent economic policy within a stable and transparent legal environment has been the cornerstone of Hong Kong’s continuing achievement in maintaining the world’s freest economy,” the index document states.
It also praises the nation for its “well-secured property rights” which “ensure vibrant commercial interactions and entrepreneurial growth” and a “high level of market openness and fiscal discipline.”
While economic growth has slowed in Singapore, the city state’s “openness to global trade and investment continues to provide a solid basis for economic dynamism,” the report says.
It adds that “a transparent regulatory environment, buttressed by well-secured property rights, provides commercial security for the innovative and resilient private sector.”
The Asian nations are this year followed by New Zealand in third, Switzerland in fourth and Australia in fifth place.
Among the 178 countries ranked, scores improved for 97 countries and declined for 74.
Thirty-two countries, including Burma, Germany, India, Israel, Lithuania, the Philippines, Poland and Vietnam, achieved their highest-ever Index scores.
Five economies earned the Index’s designation of ‘free’ (scores of 80 or above), while the next 87 are classified as “mostly free” (70-79.9) or “moderately free” (60-69.9).
However, the number of economically “unfree” economies remains high: 62 are considered “mostly unfree” (50-59.9) and 24 are “repressed” (scores below 50).
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Economies rated ‘free’ or ‘mostly free’ enjoy incomes that are over twice the average in all other countries and more than four times higher than the average incomes of ‘repressed’ economies, according to the report’s editors.
Nations with higher degrees of economic freedom prosper because they capitalise more fully on the ability of the market to generate and reinforce dynamic growth through efficient resource allocation, value creation and innovation.
The Index is published annually by the Heritage Foundation and the Wall Street Journal.
See also: Nordic countries perform best in global corruption ranking
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About Winnie Agbonlahor
Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.
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