2016 Index of Economic Freedom

Hong Kong

overall score88.6
world rank1
Rule of Law

Property Rights90.0

Freedom From Corruption74.0

Limited Government

Government Spending90.7

Fiscal Freedom92.6

Regulatory Efficiency

Business Freedom97.4

Labor Freedom89.0

Monetary Freedom81.8

Open Markets

Trade Freedom90.0

Investment Freedom90.0

Financial Freedom90.0

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Quick Facts
  • Population:
    • 7.3 million
  • GDP (PPP):
    • $397.5 billion
    • 2.3% growth
    • 3.7% 5-year compound annual growth
    • $54,722 per capita
  • Unemployment:
    • 3.2%
  • Inflation (CPI):
    • 4.4%
  • FDI Inflow:
    • $103.3 billion
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The implementation of prudent economic policy within a stable and transparent legal environment has been the cornerstone of Hong Kong’s continuing achievement in maintaining the world’s freest economy. Well-secured property rights ensure vibrant commercial interactions and entrepreneurial growth. With a high level of market openness and fiscal discipline, Hong Kong continues to be a leading global business and financial hub.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 88.6 (down 1 point)
  • Economic Freedom Status: Free
  • Global Ranking: 1st
  • Regional Ranking: 1st in the Asia–Pacific Region
  • Notable Successes: Open Markets and Regulatory Efficiency
  • Concerns: Rule of Law
  • Overall Score Change since 2012: –1.3

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Background

Hong Kong became part of the People’s Republic of China in 1997. Under the “one country, two systems” agreement, China promised not to impose its socialist policies on Hong Kong and to allow Hong Kong a high degree of autonomy in all matters except foreign and defense policy for 50 years. The shape and form of the “universal suffrage” promised for 2017 by Chinese authorities is not clear. Major industries include financial services and shipping; manufacturing has largely migrated to the mainland and other Southeast Asian economies. Hong Kong’s economy has become increasingly integrated with the mainland economy through trade, tourism, and financial links.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 74.0 Create a Graph using this measurement

The sensational anti-corruption prosecution of a high-profile property developer for bribery in late 2014 illustrated why corruption rates remain low. Beijing’s ongoing efforts to erode the power of Hong Kong’s judiciary and Legislative Council and to intervene in the economy could undermine the rule of law. At least for now, however, the efficient and capable judiciary remains independent, and private property rights are well protected.

Limited GovernmentView Methodology

The standard income tax rate is 15 percent, and the top corporate tax rate is 16.5 percent. The tax system is simple and efficient, and the overall tax burden is low at 15.7 percent of GDP. Government spending amounts to 17.6 percent of GDP. Public debt is virtually nonexistent, and a budget surplus has been consistently maintained. In recent years, greater spending on social programs has increased fiscal pressures.

Regulatory EfficiencyView Methodology

The overall entrepreneurial environment remains one of the world’s most transparent and efficient. The business start-up process is straightforward, with no minimum capital required. The labor market is vibrant, and the labor force participation rate has gradually increased since 2010. The peg between the Hong Kong dollar and its U.S. counterpart has served the territory well since 1983, ensuring monetary stability and facilitating international commerce.

Open MarketsView Methodology

Hong Kong has a 0 percent average tariff rate. The country remains one of the most open economies in the world for international trade and investment. There is no general screening of foreign investment, and in most cases, foreign investors can maintain 100 percent ownership. The financial sector remains highly competitive and well capitalized, serving as a leading global hub.

Country's Score Over Time

Bar Graph of Hong Kong Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Hong Kong to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Hong Kong88.6-1.0
2Singapore87.8-1.6
3New Zealand81.6-0.5
4Australia80.3-1.1
5Taiwan74.7-0.4
6Japan73.1-0.2
7South Korea71.70.2
8Malaysia 71.50.7
9Macau70.1-0.2
10Brunei Darussalam67.3-1.6
11Thailand 63.91.5
12Kazakhstan63.60.3
13Samoa63.51.6
14Philippines63.10.9
15Vanuatu60.8-0.3
16Azerbaijan60.2-0.8
17Sri Lanka59.91.3
18Tonga59.60.3
19Kyrgyz Republic 59.6-1.7
20Bhutan59.52.1
21Indonesia59.41.3
22Mongolia59.40.2
23Fiji58.8-0.2
24Cambodia57.90.4
25India56.21.6
26Pakistan 55.90.3
27Vietnam542.3
28Maldives53.90.5
29Bangladesh 53.3-0.6
30Papua New Guinea53.20.1
31China52-0.7
32Micronesia51.82.2
33Tajikistan51.3-1.4
34Nepal50.9-0.4
35Laos49.8-1.6
36Burma48.71.8
37Solomon Islands470.0
38Kiribati46.2-0.2
39Uzbekistan46-1.0
40Timor-Leste45.80.3
41Turkmenistan41.90.5
42North Korea2.31.0
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