Economic Freedom of the WorldThe index published in Economic Freedom of the World measures the degree to which the policies and institutions of countries support economic freedom। The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property. Forty-two data points are used to construct a summary index and to measure the degree of economic freedom in five broad areas:
(1) size of government;
(2) legal structure and security of property rights;
(3) access to sound money;
(4) freedom to trade internationally; and
(5) regulation of credit, labor and business.
Economic freedom has grown considerably in recent decades
-The chain-linked summary index (exhibit 1.5) permits comparison over time. The average economic freedom score rose from 5.4 (out of 10) in 1980 to 6.6 in 2005, the most recent year for which data are available
-Of the 102 jurisdictions with scores in the chain-link index in 1980 and in the most recent index, 90 had increases in score, nine had decreases in scores, and three had the same score, when changes are rounded to one decimal point.
-Five nations increased their score by more than three points since 1980: Hungary (3.0), Peru (3.0), Uganda (3.2), Ghana (3.6), and Israel (3.7). Only three nations decreased their score by more than one point: Zimbabwe (−1.7), Venezuela (−1.7) and Myanmar (−1.3). Other nations that saw reductions are: Nepal (−0.7), Bahrain (−0.3), Hong Kong (−0.2), Malaysia (−0.2), the Republic of Congo (−0.2), and Haiti (−0.1).
-In this year’s main index, Hong Kong retains the highest rating for economic freedom, 8.9 out of 10. The other top scorers are: Singapore (8.8), New Zealand (8.5), Switzerland (8.3), Canada (8.1), United Kingdom (8.1), United States (8.1), Estonia (8.0), Australia (7.9), and Ireland (7.9).
-The rankings of other large economies are Germany, 18 (7.6); Japan, 22 (7.5); Mexico, 44 (7.1); France, 52 (7.0); Italy, 52 (7.0); India, 69 (6.6); China, 86 (6.3); Brazil, 101 (6.0); and Russia, 112 (5.8).
-The majority of nations ranked in the bottom fifth are African and all the nations in the bottom 10 are African, with the exceptions of Venezuela and Myanmar. They are: Zimbabwe (2.9), Myanmar (3.8), the Democratic Republic of the Congo, (4.0), Angola (4.2), the Republic of the Congo, (4.3), Central Africa Republic, (4.6), Venezuela (4.9), Burundi (5.0), Chad (5.1), and Niger (5.1). Botswana’s ranking, tied for 39th with a score of 7.2, is the best among continental sub-Saharan African nations.
Nations that are economically free out-perform non-free nations in indicators of well-being
-Nations in the top quartile of economic freedom have an average per-capita GDP of US$26,013, compared to US$3,305 for those nations in the bottom quartile (exhibit 1.6).
-The top quartile has an average per-capita economic growth rate of 2.25%, compared to 0.35% for the bottom quartile (exhibit 1.7).
-In nations of the top quartile, the average income of the poorest 10% of the population is US$7,334, compared to $905 for those in the bottom quartile (exhibit 1.10).
-Life expectancy is 78.7 years in the top quartile but 56.7 years in the bottom quartile (exhibit 1.11).
-Nations in the top quartile of economic freedom have an average score of 1.8 for political rights on a scale of 1 to 7, where 1 marks the highest level, while those in the bottom quartile have an average score of 4.4 (exhibit 1.18).
-Nations in the top quartile of economic freedom have an average score of 1.7 for civil liberties on a scale of 1 to 7, where 1 marks the highest level, while those in the bottom quartile have an average score of 4.1 (exhibit 1.18).
-Nations in the top quartile of economic freedom have an average score of 81।0 (out of 100) for environmental performance, while those in the bottom quartile have an average score of 58।9 (exhibit 1।19)
Economic Freedom of the World: 2007 Annual Report
