The UK ranks 12th out of 165 countries and territories included in the Economic Freedom of the World: 2021 Annual Report, released today by the Institute of Economic Affairs in conjunction with Canada’s Fraser Institute. Last year, the UK ranked 13th.
Hong Kong and Singapore again top the index, continuing their streak as 1st and 2nd respectively. New Zealand, Switzerland, Georgia, the United States, Ireland, Lithuania, Australia and Denmark round out the top 10.
The report, based on 2019 data (the most recent comparable data), warns that recent events in Hong Kong will likely cause its score to fall as data become available for 2020 and 2021.
The 10 lowest-rated countries are Central African Republic, Democratic Republic of Congo, Syria, Republic of Congo, Iran, Zimbabwe, Algeria, Libya, Sudan and Venezuela. (Despotic countries such as North Korea and Cuba can’t be ranked due to lack of data.) Other notable rankings include Japan (18th), Germany (22nd), Italy (47th), France (53rd), Russia (100th), India (108th) and China (116th).
According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives.
For example, countries in the top quartile of economic freedom had an average per-capita GDP of US$50,619 in 2019, compared to US$5,911 for bottom quartile countries. And poverty rates are lower. In the top quartile, 0.9 per cent of the population experienced extreme poverty (US$1.90 a day) compared to 34.1 per cent in the lowest quartile.
Finally, life expectancy is 81.1 years in the top quartile of countries compared to 65.9 years in the bottom quartile.
James Forder, Academic and Research Director at the Institute of Economic Affairs, said:
“The Economic Freedom of the World Report demonstrates to us, once again, that economies with less government intervention are richer, grow faster, and have healthier citizens.
“While it’s great news that the UK now ranks 12th in the index – up one position from last year – we are still a long way away from the impressive 4th position we held in 2000. Indeed, in some areas, specifically within the ‘size of government’ component, the UK ranks among one of the worst in the world. As this report looks at data from 2019, the growth of government and its continued interference in our lives over the last two years should be a cause of great concern to anyone who cares about keeping the size of government under control.”
The UK’s 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: changed to 6.56 from 6.61 in the last year’s report
- Legal system and property rights: changed to 7.7 from 7.37
- Access to sound money: changed to 9.6 from 9.46
- Freedom to trade internationally: changed to 8.4 from 8.5
- Regulation of credit, labour and business: changed to 8.4 from 8.47
NOTES TO EDITORS
Contact: Emily Carver, Head of Media, 07715 942 731
IEA Spokespeople are available for further comment
Economic Freedom of the World: 2021 Annual Report is under embargo until 10.00AM GMT on Tuesday 14thSeptember. An embargoed copy of the report can be found here: https://iea.org.uk/wp-content/uploads/2021/09/Economic-Freedom-2021.pdf