2017 Index of Economic Freedom

Macau

overall score70.7
world rank32
Rule of Law

Property Rights60.0

Government Integrity37.1

Judicial Effectiveness60.0

Government Size

Government Spending92.8

Tax Burden72.3

Fiscal Health100.0

Regulatory Efficiency

Business Freedom60.0

Labor Freedom50.0

Monetary Freedom70.8

Open Markets

Trade Freedom90.0

Investment Freedom85.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 0.6 million
  • GDP (PPP):
    • $65.4 billion
    • -20.3% growth
    • 4.2% 5-year compound annual growth
    • $98,135 per capita
  • Unemployment:
    • 1.8%
  • Inflation (CPI):
    • 4.6%
  • FDI Inflow:
    • $3.9 billion
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As a free port, Macau has long benefited from global trade and investment. The entrepreneurial environment is generally efficient and streamlined, and property rights are generally well respected. Taxation is low and relatively efficient. Since opening up the gaming industry in 2002, Macau has attracted more foreign investment. Other growth areas include finance, insurance, and real estate. New measures to accelerate the registration processes for trademarks and patents have been implemented.

The services sector accounts for almost 90 percent of GDP and over 70 percent of total employment. Investment in resort and entertainment projects and related infrastructure has transformed Macau into one of the world’s leading tourism destinations.

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Background

Macau, colonized by the Portuguese in the 16th century, became a Special Administrative Region of China in 1999, and its chief executive is appointed by Beijing. Macau is one of the world’s largest gaming centers and the only place in China where casinos are legal. Gaming-related taxes account for approximately 80 percent of government revenue. Over the past three years, China’s anticorruption campaign has caused tourism and gambling traffic from the mainland to decrease. As a result, the city’s small economy shrank by 20 percent last year. Two ongoing structural problems are a lack of attractions for nongambling tourists and high travel expenses.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Government Integrity 37.1 Create a Graph using this measurement

Judicial Effectiveness 60.0 Create a Graph using this measurement

Private ownership of property and contractual rights are well established. There are no restrictions on foreign ownership of property. Macau has its own judicial system with a high court, and its legal framework is based largely on Portuguese law. Although the population was politically quiescent in the past, the frequency of public protests against a range of issues such as corruption, favoritism, and nepotism has increased in recent years.

Government SizeView Methodology

The top personal income tax rate is 12 percent, and the top corporate tax rate is 39 percent. Gambling tax revenues are quite high. The overall tax burden equals 33.2 percent of total domestic income. Government spending has amounted to 15.5 percent of total output (GDP) over the past three years, and budget surpluses have averaged 21.4 percent of GDP. Macau has no public debt.

Regulatory EfficiencyView Methodology

The overall regulatory environment is relatively transparent and efficient, with license requirements varying by type of economic activity. The economy lacks a dynamic and broad-based labor market. The government sets minimum standards for the terms and conditions of employment. Monetary stability has been relatively well maintained, but the government funds generous subsidies to households, the elderly, and students.

Open MarketsView Methodology

Trade is extremely important to Macau’s economy; the value of exports and imports taken together equals 115 percent of GDP. The average applied tariff rate is 0.0 percent. There are few nontariff barriers to trade, and Macau is relatively open to foreign investment. The small financial system functions without undue government influence. Credit is allocated on market terms, and relatively sound regulation assures free flows of financial resources.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Hong Kong89.81.2
2Singapore88.60.8
3New Zealand83.72.1
4Australia810.7
5Taiwan76.51.8
6South Korea74.32.6
7Malaysia 73.82.3
8Macau70.70.6
9Brunei Darussalam69.82.5
10Japan69.6-3.5
11Kazakhstan695.4
12Vanuatu67.46.6
13Thailand 66.22.3
14Philippines65.62.5
15Azerbaijan63.63.4
16Fiji63.44.6
17Tonga633.4
18Indonesia61.92.5
19Kyrgyz Republic 61.11.5
20Cambodia59.51.6
21Bhutan58.4-1.1
22Samoa58.4-5.1
23Tajikistan58.26.9
24China57.45.4
25Sri Lanka57.4-2.5
26Nepal55.14.2
27Solomon Islands558.0
28Bangladesh 551.7
29Mongolia54.8-4.6
30Micronesia54.12.3
31Laos544.2
32Pakistan 52.8-3.1
33India52.6-3.6
34Burma52.53.8
35Vietnam52.4-1.6
36Uzbekistan52.36.3
37Papua New Guinea50.9-2.3
38Kiribati50.94.7
39Maldives50.3-3.6
40Afghanistan48.9N/A
41Turkmenistan47.45.5
42Timor-Leste46.30.5
43North Korea4.92.6
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