The twenty-third edition of the Heritage Foundation's popular survey of economic liberty
Economic freedom has advanced in a majority of the world’s countries over the past year. Global average economic freedom increased by 0.2 points to a record level of 60.9. The UK ranking has stayed the same.
It is notable that 11 of the world’s 20 freest countries are in Europe, which is the only region to have a distribution of economies that is skewed toward relatively high levels of economic freedom. Most countries in the region fall into the category of “mostly free” and “moderately free”.
Seven countries (Croatia, Slovenia, Serbia, Belarus, Moldova, Russia and Greece) have economies that are rated “mostly unfree”. Ukraine, which continues to experience political and security turmoil, remains the region’s least economically free economy.
Relatively extensive and long-established free-market institutions in a number of countries allow the region to score far above the world average in most categories of economic freedom. It is over 10 points ahead in both investment freedom and financial freedom. The region’s average scores on property rights, judicial effectiveness, and government integrity lead the world averages by about 15 points or more.
However, taken as a whole, the Europe region still struggles with a variety of policy barriers to dynamic economic expansion, such as overly protective and costly labour regulations, higher tax burdens, various market-distorting subsidies, and continuing problems in public finance caused by years of public-sector-expansion. The result has been stagnant economic growth, which has exacerbated the burden of fiscal deficits and mounting debt in a number of countries in the region.
Europe has definitely benefited from economic competition over the centuries, which may help to explain why economic repression is so rare in the West. However, that competition has still not generated enough reform in some of the Eastern European countries. Many post-Communist countries, such as Russia, Belarus and Ukraine are found in the “less free” end of the distribution.
- Germany continues to be one of the world’s most powerful and dynamic economies. Business freedom and investment freedom are strong. Long-term competitiveness and entrepreneurial growth are supported by openness to global commerce, well-protected property rights, and a sound business regulatory environment.
- The increasing dynamism of Latvia‘s economy has been facilitated by openness to global trade and investment. Supported by efficient business regulations that promote entrepreneurial activity, the overall commercial environment has become conducive to business creation and risk-taking.
- The UK has continued its efforts to improve economic performance by reducing taxes and containing government spending and growth rates have picked up somewhat.
- Russia‘s economy is severely hampered by blatant disdain for the rule of law and rejection of any concept of limited government. The private sector remains marginalised by structural and institutional constraints caused by ever-growing government encroachment into the marketplace.
- Spain‘s economy has experienced a notable rebound facilitated by structural reforms. Ongoing efforts have focused on reducing the inefficient and oversized government sector and reforming the labour market. Top income tax rates on individuals and corporations have been lowered as well. Spain’s ongoing economic recovery, however, ramins highly vulnerable to challenges related to ensuring fiscal stability and restoring the financial sector’s competitiveness.
For the full index, go to the Heritage Foundation.
Read about the UK’s ranking here.
Read about Europe here.