2013 Index of Economic Freedom

Macau

overall score71.7
world rank26
Rule of Law

Property Rights60.0

Freedom From Corruption51.0

Limited Government

Government Spending91.5

Fiscal Freedom73.5

Regulatory Efficiency

Business Freedom60.0

Labor Freedom55.0

Monetary Freedom81.3

Open Markets

Trade Freedom90.0

Investment Freedom85.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 0.6 million
  • GDP (PPP):
    • $28.7 billion
    • 26.4% growth
    • $48,923 per capita
  • Unemployment:
    • 2.9%
  • Inflation (CPI):
    • 5.8%
  • FDI Inflow:
    • $4.4 billion
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Macau’s economic freedom score is 71.7, making its economy the 26th freest in the 2013 Index. Its overall score is essentially the same as last year, with gains in the control of public spending and corruption offset by declines in fiscal and monetary freedom. Macau is ranked 7th out of 41 countries in the Asia–Pacific region, and its overall score is well above the world and regional averages.

Flexibility and openness to global trade and investment have been the cornerstones of Macau’s dynamic economic expansion. As a Special Administrative Region of China, Macau largely maintains its own transparent, free-market economic structure. The overall entrepreneurial environment is generally adequate. Tax rates are competitively low, tariff and non-tariff barriers are nonexistent, and foreign investors can conduct business on the same terms as nationals. The rule of law is relatively well respected, though more effective anti-corruption measures are needed.

Macau has attracted significant investment since opening up its gaming industry in 2002. Ever-growing investment in resort and entertainment projects and related infrastructure has made Macau one of the world’s leading tourism destinations, with the services sector accounting for almost 90 percent of GDP and over 70 percent of total employment. The vibrant free port economy, however, needs more committed structural reforms to improve business and labor regulations and enhance prospects for more broad-based long-term economic development.

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Background

Macau became a Special Administrative Region of China in 1999. Like Hong Kong, it retains much of its historic political governance structure and economic system. Its chief executive is appointed by Beijing. Gambling revenues reportedly amounted to $23.5 billion in 2010, and direct taxes on gambling account for well over half of all government revenue. Manufacturing of textiles and garments, once the mainstay of the economy, has largely migrated to the mainland. Macau’s currency enjoys full convertibility with the Hong Kong dollar, which is pegged to the U.S. dollar.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Freedom From Corruption 51.0 Create a Graph using this measurement

Macau has its own judicial system with a high court; the legal framework is based largely on Portuguese law. Property rights and commercial contracts are secure, but enforcement of intellectual property rights remains weak and inefficient. The government’s image has been damaged by corruption scandals and rising popular discontent linked to the perception that the growth of gambling has not benefited society more widely.

Limited GovernmentView Methodology

The top income tax rate is 12 percent, and the top corporate tax rate is 39 percent. Gambling tax revenues are quite high, and overall tax revenue is equal to 31.4 percent of GDP. Government spending is equivalent to 16.8 percent of total domestic output. Gambling revenue has outpaced the growth of public spending, generating considerable surpluses.

Regulatory EfficiencyView Methodology

The overall regulatory environment lags behind similar economies in efficiency. License requirements vary by type of economic activity, but general business activities such as retail, wholesale, and business consultancies do not require a license. The continuing lack of a dynamic and broad-based labor market is due in part to the absence of serious reform efforts. Monetary stability has been relatively well maintained.

Open MarketsView Methodology

The trade regime is open, with no tariffs imposed on imports and relatively low interference resulting from non-tariff barriers. The government does not officially discriminate between foreign and domestic investors, but there are a few restrictions in services markets. A relatively small financial sector, dominated by banking, provides easy access to financing. Capital markets remain underdeveloped.

Country's Score Over Time

Bar Graph of Macau Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Macau to other economic country groups

Regional Ranking

rank country overall change
1Hong Kong89.3-0.6
2Singapore880.5
3Australia82.6-0.5
4New Zealand81.4-0.7
5Taiwan72.70.8
6Japan71.80.2
7Macau71.7-0.1
8South Korea70.30.4
9Malaysia 66.1-0.3
10Thailand 64.1-0.8
11Kazakhstan63-0.6
12Mongolia61.70.2
13Sri Lanka60.72.4
14Azerbaijan59.70.8
15Kyrgyz Republic 59.6-0.6
16Cambodia58.50.9
17The Philippines58.21.1
18Fiji57.2-0.1
19Samoa57.1-3.4
20Indonesia56.90.5
21Vanuatu56.60.0
22Tonga56-1.0
23India55.20.6
24Pakistan 55.10.4
25Bhutan55-1.6
26Papua New Guinea53.6-0.2
27Tajikistan53.40.0
28Bangladesh 52.6-0.6
29China51.90.7
30Vietnam51-0.3
31Nepal50.40.2
32Micronesia50.1-0.6
33Laos50.10.1
34Maldives49-0.2
35Uzbekistan460.2
36Kiribati45.9-1.0
37Solomon Islands45-1.2
38Timor-Leste43.70.4
39Turkmenistan42.6-1.2
40Burma39.20.5
41North Korea1.50.5
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