2014 Index of Economic Freedom

Press Release North America

For Immediate Release
Contacts: Jim Weidman, The Heritage Foundation, (202) 675-1761 jim.weidman@heritage.org
Rachel Manfredo, (212) 416-3834, rachel.manfredo@dowjones.com

INDEX: ECONOMIC FREEDOM STRONG BUT WANING IN NORTH AMERICA
U.S. slips out of the world’s top 10; Canada improves, becomes “free” economy; Mexico declines slightly

WASHINGTON, JAN. 14, 2014—The United States continues to slide in the rankings of the annual Index of Economic Freedom, declining by half a point in the newly released 2014 edition, and falling out of the world’s top 10 freest economies.

North America has the highest degree of economic freedom of the six regions graded in the Index, published annually by The Wall Street Journal and The Heritage Foundation. Yet only one of its three countries—Canada—improved last year. Mexico declined slightly, with notable improvements in trade freedom offset by lower scores in the areas of regulatory efficiency and government size.

Launched in 1995, the Index evaluates countries in four broad areas of economic freedom: rule of law; regulatory efficiency; limited government; and open markets. Based on an aggregate score, each of 178 countries graded in the 2014 Index is classified as “free” (i.e. combined scores of 80 or higher); “mostly free” (70-79.9); “moderately free” (60-69.9); “mostly unfree” (50-59.9); or “repressed” (under 50).

Under the Index’s grading system, Canada (ranked 6th globally) is one of only six economies worldwide ranked as “free.” The United States (12th globally) is “mostly free,” while Mexico (55th globally) is “moderately free.”

All three economies are linked by the North American Free Trade Agreement. NAFTA has been a positive force since its implementation in 1995, according to the Index editors, connecting more than 400 million people in an economic area with about one-third of total world GDP. The region benefits greatly from its openness to trade and investment.

Canada has solidified its status as a free economy, thanks to improvements in investment freedom, the management of public spending, and monetary policy. ButMexico is hampered by pervasive corruption that entrenches the power of monopolists, party bosses and other mafias, the editors note. Declining scores in business and labor freedom also have been harmful to Mexico’s economy.

The United States, while still one of the world’s freest economies, suffered the largest decline in the region, due largely to deteriorations in property rights, fiscal freedom and business freedom.

“Substantial expansion in the size and scope of government, including through new and costly regulations in areas like finance and health care, has contributed significantly to the erosion of U.S. economic freedom,” the editors write.

The world average score of 60.3—seven-tenths of a point above the 2013 average—is the highest average in the two-decade history of the Index, the editors note. Forty-three countries, including Singapore and Sweden, achieved their highest scores yet in the 2014 Index. Among the 178 countries ranked, scores improved for 114 countries and declined for 59. Four recorded no score change.

The 2014 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for International Trade and Economics; Anthony B. Kim, senior policy analyst in the Center for International Trade and Economics; and Kim Holmes, Ph.D., Heritage’s Distinguished Fellow. Copies of the Index (490 pages, $24.95) may be ordered online at www.heritage.org/index or by calling 1-800-975-8625. The full text, including charts and graphs, also is available online.

About The Wall Street Journal
The Wall Street Journal is America’s largest newspaper by paid circulation with more than 2.2 million customers. In recent years, the Journal has expanded its core content offering to include coverage of the arts, culture, lifestyle, sports, and personal health, building on its heritage as the leading source of business and financial news. Published by Dow Jones, one of the world’s largest news gathering operations with nearly 2,000 journalists in more than 80 bureaus, The Wall Street Journal now spans 12 editions in nine languages, engaging readers across newspapers, websites, magazines, social media, and video. The Journal holds 35 Pulitzer Prizes for outstanding journalism.

About The Heritage Foundation
The Heritage Foundation is the nation’s most broadly supported public policy research institute, with more than 710,000 individual, foundation and corporate donors. Founded in 1973, Heritage develops public policy solutions that advance free enterprise, limited government, individual freedom, traditional values and a strong national defense.

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