For last 14 years, the Heritage Foundation and the Wall Street Journal have documented the march of economic freedom around the world with an informative Index of Economic Freedom. Since 1995, the Index has brought Adam Smith’s theories about liberty, prosperity and economic freedom to life by creating 10 benchmarks that gauge the economic success of 162 countries around the world. With its user-friendly format, the Index allows readers to see how 18th-Century theories on prosperity and economic freedom are realities in this century.
The 2008 Index reveals that with an average economic freedom rating of 60.3, global economic freedom continues to hold steady. In pursuing sustainable prosperity, both the direction of policy and commitment to economic freedom are important. For the complete rankings, visit www.heritage.org/index.
1. Hong Kong Overall Score: 90.25
With its strong commitment to economic freedom, Hong Kong has been able to maintain its status of freest economy for last 14 years. The island is one of the world’s leading financial centers, and regulation of banking and financial services is non-intrusive and transparent. Property rights are protected by an independent and virtually corruption-free judiciary.
2. Singapore Overall Score: 87.38
Singapore, a city-state of 4.5 million, is the most well-developed, prosperous country in Southeast Asia. The country is a world leader in all 10 areas of economic freedom. Virtually all commercial operations are performed with transparency and speed, and private enterprise has boomed.
3. Ireland Overall Score: 82.35
Ireland’s modern, highly industrialized economy performed well throughout the 1990s and has enjoyed sustained growth, earning Ireland a reputation as the “Celtic Tiger.” The country has one of the world’s most business-friendly environments.
4. Australia Overall Score: 82
Australia, one of the Asia-Pacific region’s richest democracies, has enjoyed economic freedom and prosperity. The country rates highly in virtually all areas but is most impressive in financial freedom, property rights, and freedom from corruption.
5. United States Overall Score: 80.56
With more than two centuries of a fundamentally free, constitutionally protected economy, America benefits from its massive scale and intrastate competition. Yet America could do better. Total government spending equals more than a third of GDP. Corporate and personal taxes are moderately high and are getting relatively higher as other advanced economies reform with lower tax rates.
6. New Zealand Overall Score: 80.25
Following two decades of sound economic policies and structural reforms, New Zealand has transformed itself into a modern, flexible economy with one of the lowest unemployment rates of any member of the Organization for Economic Co-operation and Development.
7. Canada Overall Score: 80.18
One of the world’s leading free-market democracies, Canada enjoys benefits of economic freedom. A strong rule of law ensures property rights, a low level of corruption, and transparent application of the commercial code. Canada trails the world average in size and expense of government. As in many European democracies, government spending is high because of elaborate social programs and a welfare state.
8. Chile Overall Score: 79.79
Chile has pursued sound economic policies for nearly three decades, becoming a regional economic power. Foreign investment is a cornerstone of Chile’s strong growth, and allowing easy repatriation is an attraction to inbound capital. Overall, the rule of law is remarkably transparent and impartial.
9. Switzerland Overall Score: 79.72
Switzerland remains one of the world’s most competitive economies and has particularly strong financial and banking sectors. It is not a member of the European Union, even though it is at the geographical heart of Europe. Commercial operations are protected by the regulatory environment and aided by a flexible labor market.
10. United Kingdom Overall Score: 79.55
Since the market reforms instituted by Prime Minister Margaret Thatcher in the 1980s, the United Kingdom has experienced steady economic growth and has outpaced other large EU economies. Business regulation is efficient. Almost all commercial operations are simple and transparent, and support for private enterprise is a world model.