2013 Index of Economic Freedom

Samoa

overall score57.1
world rank106
Rule of Law

Property Rights60.0

Freedom From Corruption39.0

Limited Government

Government Spending34.3

Fiscal Freedom80.6

Regulatory Efficiency

Business Freedom72.4

Labor Freedom80.4

Monetary Freedom78.5

Open Markets

Trade Freedom66.0

Investment Freedom30.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 0.2 million
  • GDP (PPP):
    • $1.1 billion
    • 2.1% growth
    • 0.6% 5-year compound annual growth
    • $5,965 per capita
  • Unemployment:
  • Inflation (CPI):
    • 2.9%
  • FDI Inflow:
    • $12.0 million
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Samoa’s economic freedom score is 57.1, making its economy the 106th freest in the 2013 Index. Its score is 3.4 points worse than last year due to a major loss in control of government spending and more modest declines in trade freedom and freedom from corruption. Samoa ranks 19th out of 41 countries in the Asia–Pacific region, and its overall score is now below the world and regional averages.

Samoa has been losing ground on economic freedom, and the economy underperforms in many critical policy areas. The absence of an independent and fair judiciary weakens the rule of law and undermines prospects for long-term sustainable economic development. Corruption is pervasive, and the efficiency of government services is poor. Public debt has increased due to reconstruction projects following a devastating tsunami in 2009 and attempts at stimulus spending.

Open-market policies have not advanced, with layers of non-tariff barriers and lingering investment restrictions undercutting the growth of productivity. High tariffs further undermine overall trade freedom. The lack of political commitment to regulatory efficiency hinders the emergence of a more vibrant private sector and diversification of the economy, which has become more dependent on foreign aid and remittances in recent years.

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Background

Samoa is a small South Pacific archipelago with a population of less than 200,000. Independent from administration by New Zealand since 1962, it is now a multi-party democracy, although its government is dominated politically by the Human Rights Protection Party. After the 2011 parliamentary elections, a few politicians were found guilty of bribery, but the HRPP remained in power. The economy is based mostly on fishing, agriculture, and tourism. Remittances from Samoans working abroad account for about 24 percent of national income. A sizable tsunami in 2009 killed over 200 people and significantly damaged infrastructure and property. To facilitate better trade with Australia and New Zealand, Samoa officially moved west of the International Date Line in 2011.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Freedom From Corruption 39.0 Create a Graph using this measurement

Samoa’s legal system is based on British common law. The judiciary is independent and conducts generally fair public trials. However, a modern and well-functioning legal framework for land ownership and enforcement of property rights is not firmly in place. More than 80 percent of the land is owned by extended families represented by their chiefs. Government bans on media reporting of corruption have caused concern.

Limited GovernmentView Methodology

The top income and corporate tax rates are 27 percent. Other taxes include a value-added tax (VAT) and excise taxes. The overall tax burden equals 21.9 percent of total domestic income. Government spending has risen precipitously to 46.8 percent of GDP. The budget deficit has fallen to 6.5 percent of GDP from 10 percent of GDP, but public debt continues to be over 50 percent of total domestic output.

Regulatory EfficiencyView Methodology

The regulatory framework, improved by reforms in recent years, supports entrepreneurial activity, but application of the commercial codes is not always straightforward. A well-functioning modern labor market is not fully developed, and informal labor activity remains substantial. Monetary stability has been difficult to maintain, with inflation levels varying erratically from year to year.

Open MarketsView Methodology

The trade-weighted average tariff rate is quite high at 12 percent, and non-tariff barriers add to the cost of trade. Non-transparent regulations and a deficient investment regime continue to deter dynamic growth in private investment and long-term capital flows. Scarce access to banking and financial services continues to keep much of the population outside of the formal banking sector.

Country's Score Over Time

Bar Graph of Samoa Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Samoa 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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