Ranked by the Heritage Foundation and the Wall Street Journal.
The Heritage Foundation and the Wall Street Journal recently released their 13th annual Index of Economic Freedom, which identifies the variables that comprise economic freedom and analyzes the interaction of freedom with wealth. The Index measures 157 countries across 10 specific factors of economic freedom.
Canada’s economy is 78.7% free. A strong rule of law ensures property rights, a low level of corruption, and transparent application of the country’s admittedly thorough commercial code. However, as in many European democracies, government spending is high because Canada maintains elaborate social programs and a welfare state.
Switzerland’s economy is 79.1% free. Commercial operations are protected by the regulatory environment and aided by a flexible labor market. The national financial sector leads the world and is both protective of privacy and open to foreign institutions. But as in many other European social democracies, personal income taxes are high.
Luxembourg’s economy is 79.3% free. The average tariff rate is low (though non-tariff barriers include EU subsidies), and business regulation is efficient. The financial sector is regarded as a global financial hub that maintains depositor secrecy. However, total government spending is more than two-fifths of GDP.
Ireland’s economy is 81.3% free. Entrepreneurship is made easy by the light regulatory hand of government. Inflation is low, but Ireland’s monetary score suffers somewhat from distortionary EU agricultural subsidies. Property rights are well protected by an efficient, independent judiciary.
6. United Kingdom
The United Kingdom’s economy is 81.6% free. The average tariff rate is low, although the government does implement distortionary European Union agricultural tariffs. Support for private enterprise is a world model, and the financial sector is modern and a historic world hub. The judiciary should be the envy of the world.
5. New Zealand
New Zealand’s economy is 81.6% free. A globally competitive financial system based on market principles attracts many foreign banks, helped by low inflation and low tariff rates. A strong rule of law protects property rights, and New Zealand is the world’s second most corruption-free country.
4. United States
The economy of the United States is 82% free. The average tariff rate is low, although there are several non-tariff barriers. Financial markets are open to foreign competition and are the world’s most dynamic and modern. Corruption is low and the labor market is highly flexible.
Australia’s economy is 82.7% free. Its low inflation and low tariff rates buttress a globally competitive financial system. A strong rule of law protects property rights and tolerates virtually no corruption. Businesses enjoy considerable flexibility in licensing, regulation and employment practices.
Singapore’s economy is 85.7% free. Virtually all commercial operations are performed with transparency and speed, and private enterprise has boomed. Inflation is low, and foreign investment is welcomed and given equal treatment. There are no tariffs. Singapore’s legal system is highly protective of private property.
1. Hong Kong
Hong Kong’s economy is 89.3% free. Income and corporate tax rates are extremely low. Business regulation is simple, and the labor market is highly flexible. Inflation is low, although the government distorts the prices of several staples. Investment in Hong Kong is wide open.