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Encyclopedia > Index of Economic Freedom
Map of Economic Freedom released by the Heritage Foundation. According to the research, the wealthiest nations are those with a high Index of Economic Freedom.
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Map of Economic Freedom released by the Heritage Foundation. According to the research, the wealthiest nations are those with a high Index of Economic Freedom.

The Indexes of Economic Freedom are several similar indexes released annually. One is published by The Wall Street Journal and the conservative think-tank Heritage Foundation. A different index is published by the Fraser Institute. Image File history File linksMetadata Download high resolution version (1090x773, 500 KB) http://www. ... Image File history File linksMetadata Download high resolution version (1090x773, 500 KB) http://www. ... The Wall Street Journal is an influential international daily newspaper published in New York City, New York with an average daily circulation of 1,800,607 (2002). ... The Heritage Foundation, a think tank located in Washington, D.C., is an influential public policy research institute whose stated mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. ... The Fraser Institute is a fiscally conservative Canadian think tank. ...

Contents


Methodology

The Heritage index measures how countries score on a list of 50 variables. They include:

  • Corruption in the judiciary, customs service, and government bureaucracy;
  • Non-tariff barriers to trade, such as import bans and quotas as well as strict labeling and licensing requirements;
  • The fiscal burden of government, which encompasses income tax rates, corporate tax rates, and trends in government expenditures as a percent of output;
  • The rule of law, efficiency within the judiciary, and the ability to enforce contracts;
  • Regulatory burdens on business, including health, safety, and environmental regulation;
  • Restrictions on banks regarding financial services, such as selling securities and insurance;
  • Labor market regulations, such as established work weeks and mandatory separation pay; and
  • Informal market activities, including corruption, smuggling, piracy of intellectual property rights, and the underground provision of labor and other services.

These are divided into 10 broad factors of economic freedom:

  • Trade policy,
  • Fiscal burden of government,
  • Government intervention in the economy,
  • Monetary policy,
  • Capital flows and foreign investment,
  • Banking and finance,
  • Wages and prices,
  • Property rights,
  • Regulation, and
  • Informal market activity

The higher a country's score on a factor the less economic freedom there is. The 10 factors are given equal weight in determining the final score. Depending on their score, countries are then separated into four categories: Free, Mostly Free, Mostly Unfree, and Repressed.


Current ratings

The most current ratings are for 2006. Note: countries sharing the same rank received a tie score. For example, Iceland and the United Kingdom 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 on: http://www.heritage.org/research/features/index/countries.cfm. 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ...

Yearly worldwide index of economic freedom
published by The Wall Street Journal and The Heritage Foundation
Rank Country Index
2006 2006 2005 2004 2003
1 Flag of Hong Kong Hong Kong 1.28 1.35 1.34 1.44
2 Flag of Singapore Singapore 1.56 1.60 1.61 1.61
3 Flag of Republic of Ireland Ireland 1.58 1.70 1.79 1.73
4 Flag of Luxembourg Luxembourg 1.60 1.63 1.76 1.68
5 Flag of Iceland Iceland 1.74 1.81 2.05 1.98
5 Flag of United Kingdom United Kingdom 1.74 1.75 1.84 1.88
7 Flag of Estonia Estonia 1.75 1.65 1.76 1.68
8 Flag of Denmark Denmark 1.78 1.76 1.85 1.71
9 Flag of New Zealand New Zealand 1.84 1.75 1.70 1.68
9 Flag of United States United States 1.84 1.90 1.85 1.86
9 Flag of Australia Australia 1.84 1.84 1.93 1.95
12 Flag of Canada Canada 1.85 1.91 1.98 2.00
12 Flag of Finland Finland 1.85 1.90 2.00 1.85
14 Flag of Chile Chile 1.88 1.86 1.91 2.06
15 Flag of Switzerland Switzerland 1.89 1.85 1.84 1.88
16 Flag of Netherlands Netherlands 1.90 1.95 2.09 2.00
16 Flag of Cyprus Cyprus 1.90 2.13 2.00 2.14
18 Flag of Austria Austria 1.95 2.09 2.13 2.08
19 Flag of Germany Germany 1.96 2.00 2.08 2.03
19 Flag of Sweden Sweden 1.96 1.89 1.95 1.88
21 Flag of Czech Republic Czech Republic 2.10 2.31 2.39 2.35
22  Belgium 2.11 2.13 2.24 2.10
23 Flag of Lithuania Lithuania 2.14 2.18 2.19 2.21
24 Flag of Malta Malta 2.16 2.28 2.46 2.71
25 Flag of Bahrain Bahrain 2.23 2.15 2.13 2.09
26 Flag of Barbados Barbados 2.25 2.35 2.41 2.24
27 Flag of Bahamas Bahamas 2.26 2.25 2.25 2.15
27 Flag of Japan Japan 2.26 2.46 2.53 2.36
27 Flag of Armenia Armenia 2.26 2.58 2.63 2.59
30 Flag of Norway Norway 2.29 2.33 2.35 2.28
30 Flag of Botswana Botswana 2.29 2.49 2.55 2.54
30 Flag of Portugal Portugal 2.29 2.44 2.43 2.40
33 Flag of Spain Spain 2.33 2.34 2.36 2.31
34 Flag of Slovakia Slovakia 2.35 2.43 2.44 2.71
36 Flag of Israel Israel 2.36 2.41 2.41 2.45
37 Republic of China Republic of China (Taiwan) 2.38 2.34 2.48 2.34
38 Flag of El Salvador El Salvador 2.41 2.64 2.70 2.86
39 Flag of Latvia Latvia 2.43 2.31 2.41 2.35
40 Flag of Hungary Hungary 2.44 2.40 2.55 2.50
41 Flag of Poland Poland 2.49 2.59 2.81 2.83
42 Flag of Trinidad and Tobago Trinidad and Tobago 2.50 2.54 2.40 2.54
42 Flag of Italy Italy 2.50 2.28 2.31 2.31
44 Flag of France France 2.51 2.63 2.68 2.74
45 Flag of South Korea Republic of Korea 2.63 2.64 2.64 2.75
46 Flag of Uruguay Uruguay 2.69 2.60 2.55 2.50
46 Flag of Costa Rica Costa Rica 2.69 2.76 2.66 2.76
46 Flag of Cape Verde Cape Verde 2.69 2.84 2.86 3.30
49 Flag of Panama Panama 2.70 2.74 2.83 2.64
50 Flag of Kuwait Kuwait 2.74 2.81 2.75 2.58
50 Flag of South Africa South Africa 2.74 2.83 2.79 2.63
52 Flag of Albania Albania 2.75 2.93 3.10 3.23
52 Flag of Madagascar Madagascar 2.75 2.73 3.14 2.85
54 Flag of Jamaica Jamaica 2.76 2.76 2.81 2.68
55 Flag of Belize Belize 2.78 2.71 2.69 2.69
55 Flag of Croatia Croatia 2.78 2.95 3.06 3.06
57 Flag of Greece Greece 2.80 2.80 2.85 2.79
57 Flag of Republic of Macedonia Republic of Macedonia 2.80 3.00 3.09 3.18
57 Flag of Jordan Jordan 2.80 2.79 2.78 2.80
60 Flag of Mongolia Mongolia 2.83 2.75 2.85 2.96
60 Flag of Mexico Mexico 2.83 2.84 2.90 2.81
62 Flag of Saudi Arabia Saudi Arabia 2.84 2.99 3.05 3.09
63 Flag of Peru Peru 2.86 2.83 2.88 2.91
64 Flag of Bulgaria Bulgaria 2.88 2.74 2.98 3.26
65 Flag of United Arab Emirates United Arab Emirates 2.93 2.73 2.65 2.25
66 Flag of Uganda Uganda 2.95 3.00 2.70 2.95
67 Flag of Bolivia Bolivia 2.96 2.75 2.64 2.54
68 Flag of Cambodia Cambodia 2.98 2.89 2.90 2.73
68 Flag of Malaysia Malaysia 2.98 2.91 3.16 3.14
68 Flag of Georgia (country) Georgia 2.98 3.29 3.14 3.40
71 Flag of Kyrgyzstan Kyrgyzstan 2.99 3.34 3.41 3.46
71 Flag of Thailand Thailand 2.99 3.03 2.81 2.71
73 Flag of Lebanon Lebanon 3.00 3.10 3.13 3.04
74 Flag of Oman Oman 3.01 2.81 2.75 2.70
74 Flag of Bosnia and Herzegovina Bosnia and Herzegovina 3.01 3.16 3.30 3.54
74 Flag of Guatemala Guatemala 3.01 3.18 3.16 3.01
77 Flag of Mauritius Mauritius 3.03 2.90 2.99 2.96
78 Flag of Swaziland Swaziland 3.04 3.11 3.18 3.05
78 Flag of Qatar Qatar 3.04 3.05 2.81 2.78
Rank Country Index
2006 2006 2005 2004 2003
80 Flag of Nicaragua Nicaragua 3.05 2.90 2.99 3.14
81 Flag of Mauritania Mauritania 3.08 2.98 2.99 3.15
81 Flag of Brazil Brazil 3.08 3.20 3.10 3.06
83 Flag of Senegal Senegal 3.10 3.04 3.05 3.33
83 Flag of Maldives Maldives 3.10 3.11 3.09 3.13
85 Flag of Turkey Turkey 3.11 3.41 3.39 3.50
85 Flag of Guyana Guyana 3.11 3.08 3.08 3.15
85 Flag of Namibia Namibia 3.11 3.15 2.96 2.70
88 Flag of Mali Mali 3.14 3.18 3.29 3.20
88  Côte d'Ivoire 3.14 3.26 3.13 3.16
90 Flag of Fiji Fiji 3.15 3.28 3.06 3.48
91 Flag of Colombia Colombia 3.16 3.21 3.13 3.10
92 Flag of Sri Lanka Sri Lanka 3.19 3.03 3.06 3.05
92 Flag of Romania Romania 3.19 3.58 3.71 3.71
94 Flag of Tanzania Tanzania 3.20 3.41 3.24 3.49
94 Flag of Djibouti Djibouti 3.20 3.30 3.23 3.30
94 Flag of Kenya Kenya 3.20 3.23 3.26 3.21
97 Flag of Morocco Morocco 3.21 3.18 2.93 2.96
98 Flag of Philippines Philippines 3.23 3.30 3.10 3.00
99 Flag of Lesotho Lesotho 3.24 3.41 3.50 3.29
99 Flag of Tunisia Tunisia 3.24 3.14 2.94 2.91
99 Flag of Ukraine Ukraine 3.24 3.16 3.49 3.59
102 Flag of Honduras Honduras 3.28 3.43 3.53 3.24
102 Flag of Burkina Faso Burkina Faso 3.28 3.28 3.28 3.35
102 Flag of Gabon Gabon 3.28 3.40 3.43 3.18
105 Flag of Ghana Ghana 3.29 3.25 3.35 3.54
105 Flag of Chad Chad 3.29 3.33 3.54 3.59
107  Ecuador 3.30 3.49 3.60 3.58
107 Flag of Argentina Argentina 3.30 3.49 3.43 3.09
109 Flag of Paraguay Paraguay 3.31 3.45 3.44 3.40
110 Flag of Pakistan Pakistan 3.33 3.73 3.35 3.44
111 Flag of Zambia Zambia 3.34 3.45 3.55 3.55
111  People's Republic of China 3.34 3.51 3.59 3.49
113 Flag of Kazakhstan Kazakhstan 3.35 3.61 3.65 3.50
113 Flag of Mozambique Mozambique 3.35 3.29 3.33 3.40
115 Flag of Niger Niger 3.38 3.48 3.48 3.61
116 Flag of Dominican Republic Dominican Republic 3.39 3.54 3.51 3.29
117 Flag of Benin Benin 3.40 3.63 3.49 3.56
118 Flag of Central African Republic Central African Republic 3.41 3.51 3.38 3.28
119 Flag of Cameroon Cameroon 3.46 3.60 3.63 3.54
119 Flag of Algeria Algeria 3.46 3.49 3.26 3.39
121 Flag of India India 3.49 3.53 3.53 3.58
122 Flag of Russia Russia 3.50 3.61 3.51 3.54
123 Flag of Azerbaijan Azerbaijan 3.51 3.43 3.44 3.50
123 Flag of The Gambia Gambia 3.51 3.45 3.49 3.44
125 Flag of Rwanda Rwanda 3.53 3.54 3.41 3.93
125 Flag of Nepal Nepal 3.53 3.55 3.53 3.63
127 Flag of Guinea Guinea 3.55 3.33 3.24 3.26
128 Flag of Egypt Egypt 3.59 3.43 3.33 3.44
129 Flag of Suriname Suriname 3.60 3.93 3.96 4.01
130 Flag of Malawi Malawi 3.63 3.65 3.51 3.63
131 Flag of Guinea-Bissau Guinea-Bissau 3.65 3.80 3.85 3.90
132 Flag of Burundi Burundi 3.69      
133 Flag of Ethiopia Ethiopia 3.70 3.73 3.33 3.79
134 Flag of Indonesia Indonesia 3.71 3.59 3.76 3.43
134 Flag of Togo Togo 3.71 3.68 3.78 3.86
136 Flag of Equatorial Guinea Equatorial Guinea 3.74 3.58 3.69 3.73
137 Flag of Sierra Leone Sierra Leone 3.76 3.78 3.73 3.95
137 Flag of Tajikistan Tajikistan 3.76 4.05 4.20 4.15
139 Flag of Yemen Yemen 3.84 3.75 3.70 3.73
139 Flag of Angola Angola 3.84      
141 Flag of Bangladesh Bangladesh 3.88 3.95 3.70 3.69
142 Flag of Vietnam Vietnam 3.89 3.83 3.93 3.90
143 Flag of Republic of the Congo Republic of the Congo 3.90 3.80 3.90 3.80
144 Flag of Uzbekistan Uzbekistan 3.91 4.05 4.29 4.29
145 Flag of Syria Syria 3.93 3.90 3.88 3.88
146 Flag of Nigeria Nigeria 4.00 3.95 3.90 3.99
147 Flag of Haiti Haiti 4.03 4.09 3.73 3.86
148 Flag of Turkmenistan Turkmenistan 4.04 4.36 4.31 4.21
149 Flag of Laos Laos 4.08 4.33 4.40 4.68
150 Flag of Cuba Cuba 4.10 4.24 4.13 4.47
151 Flag of Belarus Belarus 4.11 4.04 4.04 4.19
152 Flag of Venezuela Venezuela 4.16 4.09 4.23 3.76
152 Flag of Libya Libya 4.16 4.40 4.55 4.47
154 Flag of Zimbabwe Zimbabwe 4.23 4.36 4.54 4.63
155 Flag of Burkina Faso Burkina Faso 4.46 4.60 4.40 4.35
156 Flag of Iran Iran 4.51 4.21 4.31 4.30
157 Flag of North Korea Democratic People's Republic of Korea 5.00 5.00 5.00 5.00

Note: Due to economic or political instability, the Democratic Republic of the Congo, Iraq, Papua New Guinea, Samoa, Serbia and Montenegro, Somalia and Sudan 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, São Tomé and Príncipe, Saint Vincent and the Grenadines, Saint Kitts and Nevis, Vatican City, Tonga, Tuvalu, and Seychelles. The Wall Street Journal is an influential international daily newspaper published in New York City, New York with a worldwide average daily circulation of more than 2. ... The Heritage Foundation, a conservative think tank located in Washington, D.C., is widely regarded as one of the worlds most influential public policy research institutes. ... Image File history File links Flag_of_Hong_Kong. ... Image File history File links Flag_of_Singapore. ... Image File history File links Flag_of_Ireland. ... Image File history File links Flag_of_Luxembourg. ... Image File history File links Flag_of_Iceland. ... Image File history File links Flag_of_the_United_Kingdom. ... Image File history File links Flag_of_Estonia. ... Image File history File links Flag_of_Denmark. ... Image File history File links Flag_of_New_Zealand. ... Image File history File links Flag_of_the_United_States. ... Image File history File links Flag_of_Australia. ... Image File history File links Flag_of_Canada. ... Image File history File links Flag_of_Finland. ... Image File history File links Flag_of_Chile. ... Image File history File links Flag_of_Switzerland. ... Image File history File links Flag_of_the_Netherlands. ... Image File history File links Flag_of_Cyprus. ... Image File history File links Flag_of_Austria. ... Image File history File links Flag_of_Germany. ... Image File history File links Flag_of_Sweden. ... Image File history File links Flag_of_the_Czech_Republic. ... Image File history File links Flag_of_Belgium_(civil). ... Image File history File links Flag_of_Lithuania. ... Image File history File links Flag_of_Malta. ... Image File history File links Flag_of_Bahrain. ... Image File history File links Flag_of_Barbados. ... Image File history File links Flag_of_the_Bahamas. ... Image File history File links Flag_of_Japan_bordered. ... Image File history File links Flag_of_Armenia. ... Image File history File links Flag_of_Norway. ... Image File history File links Flag_of_Botswana. ... Image File history File links Flag_of_Portugal. ... Image File history File links Flag_of_Spain. ... Image File history File links Flag_of_Slovakia. ... Image File history File links Flag_of_Israel. ... Image File history File links Flag_of_the_Republic_of_China. ... Motto: None Anthem: National Anthem of the ROC Capital Taipei City (de facto) Nanjing (de jure) 1 Largest city Taipei City Official language(s) Mandarin (Guoyü) Government • President • Vice President • Premier Multiparty democracy Chen Shui-bian Annette Lu Su Tseng-chang Establishment • Xinhai Revolution Declared  October 10, 1911 Established  January... Image File history File links Flag_of_El_Salvador. ... Image File history File links Flag_of_Latvia. ... Image File history File links Flag_of_Hungary. ... Image File history File links Flag_of_Poland. ... Image File history File links Flag_of_Trinidad_and_Tobago. ... Image File history File links Flag_of_Italy. ... Image File history File links Flag_of_France. ... Image File history File links Flag_of_South_Korea. ... Image File history File links Flag_of_Uruguay. ... Image File history File links Flag_of_Costa_Rica. ... Image File history File links Flag_of_Cape_Verde. ... Image File history File links Flag_of_Panama. ... Image File history File links Flag_of_Kuwait. ... Image File history File links Flag_of_South_Africa. ... Image File history File links Flag_of_Albania. ... Image File history File links Flag_of_Madagascar. ... Image File history File links Flag_of_Jamaica. ... Image File history File links Flag_of_Belize. ... Image File history File links Flag_of_Croatia. ... Image File history File links Flag_of_Greece. ... Image File history File links Flag_of_Macedonia. ... Motto: (Macedonian: Слобода или Смрт) (English: Liberty or death) Anthem: Macedonian: Денес Над Македонија (Transliteration: Denes Nad Makedonija) (Translation: Today Over Macedonia) Capital Skopje Largest city Skopje Official language(s) Macedonian1 Government President Prime Minister Parliamentary republic Branko Crvenkovski Vlado Bučkovski Independence Declared From Yugoslavia September 8, 1991 Area  - Total    - Water (%)   25,333 km² (146th... Image File history File links Flag_of_Jordan. ... Image File history File links Flag_of_Mongolia. ... Image File history File links Flag_of_Mexico. ... Image File history File links Flag_of_Saudi_Arabia. ... Image File history File links Flag_of_Peru. ... Image File history File links Flag_of_Bulgaria. ... Image File history File links Flag_of_the_United_Arab_Emirates. ... Image File history File links Flag_of_Uganda. ... Image File history File links Flag_of_Bolivia. ... Image File history File links Flag_of_Cambodia. ... Image File history File links Flag_of_Malaysia. ... Image File history File links Flag_of_Georgia. ... Image File history File links Flag_of_Kyrgyzstan. ... Image File history File links Flag_of_Thailand. ... Image File history File links Flag_of_Lebanon. ... Image File history File links Flag_of_Oman. ... Image File history File links Flag_of_Bosnia_and_Herzegovina. ... Image File history File links Flag_of_Guatemala. ... Image File history File links Flag_of_Mauritius. ... Image File history File links Flag_of_Swaziland. ... Image File history File links Flag_of_Qatar. ... Image File history File links Flag_of_Nicaragua. ... Image File history File links Flag_of_Mauritania. ... Image File history File links Flag_of_Brazil. ... Image File history File links Flag_of_Senegal. ... Image File history File links Flag_of_Maldives. ... Image File history File links Flag_of_Turkey. ... Image File history File links Flag_of_Guyana. ... Image File history File links Flag_of_Namibia. ... Image File history File links Flag_of_Mali. ... Image File history File links Flag_of_Cote_dIvoire. ... Image File history File links Flag_of_Fiji. ... Image File history File links Flag_of_Colombia. ... Image File history File links Flag_of_Sri_Lanka. ... Image File history File links Flag_of_Romania. ... Image File history File links Flag_of_Tanzania. ... Image File history File links Flag_of_Djibouti. ... Image File history File links Flag_of_Kenya. ... Image File history File links Flag_of_Morocco. ... Image File history File links Flag_of_the_Philippines. ... Image File history File links Flag_of_Lesotho. ... Image File history File links Flag_of_Tunisia. ... Image File history File links Flag_of_Ukraine. ... Image File history File links Flag_of_Honduras. ... Image File history File links Flag_of_Burkina_Faso. ... Image File history File links Flag_of_Gabon. ... Image File history File links Flag_of_Ghana. ... Image File history File links Flag_of_Chad. ... Image File history File links Flag_of_Ecuador_(state). ... Image File history File links Flag_of_Argentina. ... Image File history File links Flag_of_Paraguay. ... Image File history File links Flag_of_Pakistan. ... Image File history File links Flag_of_Zambia. ... Image File history File links Flag_of_the_Peoples_Republic_of_China. ... Image File history File links Flag_of_Kazakhstan. ... Image File history File links Flag_of_Mozambique. ... Image File history File links Flag_of_Niger. ... Image File history File links Flag_of_the_Dominican_Republic. ... Image File history File links Flag_of_Benin. ... Image File history File links Flag_of_the_Central_African_Republic. ... Image File history File links Flag_of_Cameroon. ... Image File history File links Flag_of_Algeria. ... Image File history File links Flag_of_India. ... Image File history File links Flag_of_Russia. ... Image File history File links Flag_of_Azerbaijan. ... Image File history File links Flag_of_The_Gambia. ... Image File history File links Flag_of_Rwanda. ... Image File history File links Flag_of_Nepal. ... Image File history File links Flag_of_Guinea. ... Image File history File links Flag_of_Egypt. ... Image File history File links Flag_of_Suriname. ... Image File history File links Flag_of_Malawi. ... Image File history File links Flag_of_Guinea-Bissau. ... Image File history File links Flag_of_Burundi. ... Image File history File links Flag_of_Ethiopia. ... Image File history File links Flag_of_Indonesia. ... Image File history File links Flag_of_Togo. ... Image File history File links Flag_of_Equatorial_Guinea. ... Image File history File links Flag_of_Sierra_Leone. ... Image File history File links Flag_of_Tajikistan. ... Image File history File links Flag_of_Yemen. ... Image File history File links Flag_of_Angola. ... Image File history File links Flag_of_Bangladesh. ... Image File history File links Flag_of_Vietnam. ... Image File history File links Flag_of_the_Republic_of_the_Congo. ... Image File history File links Flag_of_Uzbekistan. ... Image File history File links Flag_of_Syria. ... Image File history File links Flag_of_Nigeria. ... Image File history File links Flag_of_Haiti. ... Image File history File links Flag_of_Turkmenistan. ... Image File history File links Flag_of_Laos. ... Image File history File links Flag_of_Cuba. ... Image File history File links Flag_of_Belarus. ... Image File history File links Flag_of_Venezuela. ... Image File history File links Flag_of_Libya. ... Image File history File links Flag_of_Zimbabwe. ... Image File history File links Flag_of_Burkina_Faso. ... Image File history File links Flag_of_Iran. ... Image File history File links Flag_of_North_Korea. ...


Developments

  • Overall, 99 countries worldwide are freer than they were last year and 51 are less free. Five countries remained in the same degree of freedom.
  • The 10 most-improved countries this year were: Pakistan, Romania, Kyrgyzstan, Suriname, Armenia, Turkmenistan, Georgia, Turkey, Tajikistan and Kazakhstan.
  • The 10 worst-improved countries this year were: Iran, Italy, Guinea, Bolivia, United Arab Emirates, Oman, Sri Lanka, Equatorial Guinea, Egypt and Nicaragua.

Similar Indices

The Fraser Institute is a fiscally conservative Canadian think tank. ... // Economic Freedom of the World Index Economic Freedom of the World Index is published by the Fraser Institute, a Canadian think tank. ... The World Economic Forum (WEF) is a Geneva-based foundation whose annual meeting of top business leaders, national political leaders (presidents, prime ministers and others), and selected intellectuals and journalists is usually held in Davos, Switzerland. ...

Research

Economic Freedom, as defined by the Heritage Foundation, is statistically correlated with a higher GDP/Capita.
Enlarge
Economic Freedom, as defined by the Heritage Foundation, is statistically correlated with a higher GDP/Capita.

Many peer-reviewed articles have used these indices. [1] [2] 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. Image File history File links Index2006_EFCapita. ... Image File history File links Index2006_EFCapita. ...


More economic freedom correlates strongly with higher average income per person, higher income of the poorest 10%, higher life-expectancy, higher literacy, lower infant mortality, higher access to water sources and less corruption. The share of income in percent going to the poorest 10% is the same for both more and less economically free countries. [3].


An overview of research can be found here [4], including studies showing that more economic freedom is the cause of beneficial effects.


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. A regressive tax is a tax which takes a larger percentage of income from people whose income is low. ... Laissez-faire is short for laissez faire, laissez passer, a French phrase meaning to let things alone, let them pass. First used by the eighteenth century Physiocrats as an injunction against government interference with trade, it is now used as a synonym for strict free market economics. ...


In response, proponents point out that the indexes and their subcomponents have been used in much research, independent of the creators of the indices, published in numerous peer-reviewed papers. Such peer-review includes the methodology used in creating the indices. That the creators of the indexes support laissez-faire capitalism does not invalidate the empirical research. Peer review (known as refereeing in some academic fields) is a scholarly process used in the publication of manuscripts and in the awarding of funding for research. ...


Also, this independent research does not necessarily support the ideals of laissez-faire. For example, when examining the effects of subcomponents of the index, any positive effect that a low level of taxes might have is much more disputed than the importance of rule of law, lack of corruption and functioning property rights. Some of the highest ranking countries in the index, for example Iceland (# 5), Denmark (# 8), Finland (# 12) and Sweden (# 19) are widely recognized as having some of the world's most extensive welfare states, which are strongly opposed by advocates of laissez-faire. It has been suggested that Welfare capitalism be merged into this article or section. ...


The World Bank is a strong supporter of the importance of economic growth for reducing poverty. However, the World Bank does not believe that laissez-faire policies, if they allow large inequalities of wealth to develop, are an effective way to achieve this goal. It argues that an overview of many studies shows that: Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means... Accumulated GDP growth for various countries. ... World map showing percentage of people living under national poverty lines. ...

  • Growth is fundamental for poverty reduction, and in principle growth as such does not seem to affect inequality.
  • Growth accompanied by a more egalitarian distribution of wealth is better than growth alone.
  • High initial income inequality is a brake on poverty reduction.
  • Poverty itself is also likely to be a barrier for poverty reduction; and wealth inequality seems to predict lower future growth rates.[5]

Income inequality metrics or income distribution metrics are techniques used by economists to measure the distribution of income among members of a society. ... Wealth derives from the old English word weal, which meant well-being or welfare. The term was originally an adjective to describe the possession of such qualities. ...

External links

See also

The world Lists of countries with rankings *Includes map
Geography
Demographics  
Economy
Politics
Emissions
Consumption

  Results from FactBites:
 
Economic Freedom of the World (1175 words)
The first Economic Freedom of the World Report, published in 1996, was the result of a decade of research by a team which included several Nobel Laureates and over 60 other leading scholars in a broad range of fields, from economics to political science, and from law to philosophy.
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Economic Freedom, as defined by the Heritage Foundation, is statistically correlated with a higher GDP/Capita.
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 of the highest ranking countries in the index, for example Iceland (# 5), Denmark (# 8), Finland (# 12) and Sweden (# 19) are widely recognized as having some of the world's most extensive welfare states, which are strongly opposed by advocates of laissez-faire.
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