January 4, 2006
WASHINGTON, JAN. 4, 2006 -No region has made more progress toward economic freedom since 1997 than sub-Saharan Africa. But, then again, no region has further to go, according to the 2006 "Index of Economic Freedom," published annually by The Wall Street Journal and The Heritage Foundation.
In the 2006 Index, the region improved its average score by 0.34 and its mean score by 0.37. The overall improvement in ratings came despite the fact that Angola and Burundi were graded for the first time since 2001. Ratings remain suspended for Congo and Sudan.
Though encouraging, the region's continuing gains arise from low levels of economic freedom. Sub-Saharan Africa still remains the world's most economically repressed region. Twenty-five of 42 countries in the region saw their Index scores improve, while 12 declined. The majority is classified as "mostly unfree" by the Index editors (Marc Miles, Kim Holmes and Mary Anastasia O'Grady) and two-Nigeria and Zimbabwe are rated "repressed."
Sub-Saharan Africa remains one of just two regions in the world, along with North Africa-Middle East, that lacks even one economy rated as "free" in the Index. It has five rated as "mostly free," including Botswana, Cape Verde, South Africa, Madagascar and Uganda (which improved just enough to jump from the "mostly unfree" category).
Thanks to improvements in its "fiscal burden of government" and government intervention scores, Botswana widened its lead in the region in economic freedom; it improved its Index score by 0.20 and now ranks 30th in the world.
But it was Benin that showed the most improvement of any country in the region. A small deterioration in its fiscal burden of government score was offset by improvements in its trade policy, informal market and government intervention scores, resulting in a gain of 0.23 points. It's still well within the "mostly unfree" category, but it reversed a decline of 0.14 last year. Tanzania also managed to improve; government spending grew, but that was more than offset by a lower tariff rate (weighted average) and a greater openness to foreign investment.
Guinea declined more than any other country in the region, with worse scores in trade policy, monetary policy and banking and finance.
As in previous years, the Index ratings reflect an analysis of 50 different economic variables, grouped into 10 categories: banking and finance; capital flows and foreign investment; monetary policy; fiscal burden of government; trade policy; wages and prices; government intervention in the economy; property rights; regulation; and informal (or black) market activity. Countries are rated one to five in each category, one being the best and five the worst. These ratings are then averaged to produce the overall Index score.
Worldwide, the scores of 99 countries improved, 51 declined and the scores of five, including Burkino Faso, are unchanged from last year's Index. Of the 157 countries ranked, 20 are classified as "free," 52 as "mostly free," 73 as "mostly unfree," and 12 as "repressed." Four countries-Congo, Iraq, Serbia-Montenegro and Sudan-were not ranked because the data was not deemed reliable. Two that had been suspended from the rankings-Angola and Burundi-were again ranked this year because of returning stability.
This is the 12th consecutive year The Heritage Foundation and The Wall Street Journal have published the Index. Marc Miles is director of Heritage's Center for International Trade and Economics, Kim Holmes is Heritage's vice president for foreign affairs, and Mary Anastasia O'Grady, who is a member of the Journal's editorial board and edits the "Americas" column.
Print versions of the 2006 Index of Economic Freedom (422 pp., US$24.95) can be ordered by calling 1-800-975-8625 and are available in English or Spanish. Additionally the full text, along with all charts and graphs, will be available via the Internet at www.heritage.org/index.
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