Zimbabwe ranks worst
The United Kingdom ranked joint 5th with the USA and Canada, after ranking 6th in last year’s report. However, the higher rank results from declining economic freedom in the USA and Canada rather than an improvement in the UK’s score.
Zimbabwe and Myanmar had the lowest economic freedom ratings of the 141 countries measured.
The annual peer-reviewed report uses 42 different measures to create an index ranking countries around the world based on policies that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete and security of private property.
Research shows that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms and longer life spans.
“This index measures policies that are part of a fundamental base needed to build a free and prosperous nation. A quick glance at the names of countries scoring lowest on the index quickly shows that without protection of property rights and judicial independence, there is little individual freedom and little in the way of prosperity,” said Professor Philip Booth, Editorial and Programme Director at the IEA.
The full report is available at www.freetheworld.com
The UK scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):
– Size of government: remained at 6.7, as in last year’s report
– Legal structures and security of property rights: declined to 8.7 from 8.9
– Access to sound money: remained at 9.4
– Freedom to trade internationally: declined to 7.7 from 7.9
– Regulation of credit, labour and business: increased to 7.9 from 7.6
The data suggest that the high level of government spending in the UK is limiting the country’s economic competitiveness. Declining scores in the legal structures and freedom to trade categories are also a cause for concern.
Global Spread of Economic Freedom
The 2007 edition of the Economic Freedom of the World report also includes new research from Russell Sobel, Professor of Economics at West Virginia University and Peter Leeson, Professor in the Study of Capitalism at George Mason University, showing how economic freedom spreads between countries.
Sobel and Leeson note that historically, many foreign policy decisions have been based on the notion that economic reforms in a few key nations would substantially improve the economies of other countries throughout the region – the so-called “domino effect”.
The authors conclude that while economic freedom changes in one country have only a modest impact on neighbouring countries, when multiple neighbours experience simultaneous changes in economic freedom, the impact is much greater. Broad regional changes in freedom can and do have significant impacts on surrounding countries. By liberalising trade with foreign nations, economically free countries can exert a positive, if modest, impact on economic freedom in less free nations.
“This research indicates that free-trade agreements allowing a number of nations to simultaneously coordinate trade liberalisation could have a sizeable influence on spreading economic freedom to economically repressed regions of the world,” Sobel and Leeson said.
About the Economic Freedom Index
Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom.
This year’s publication ranks 141 nations using data from 2005, the most recent year for which figures are available. The report also updates data in earlier reports in instances where data have been revised.
The annual report is published in conjunction with the Economic Freedom Network, a group of independent research and educational institutes in over 70 nations.
For more information on the Economic Freedom Network, a copy of the 2007 report and previous reports, visit www.freetheworld.com