January 15, 2008

January 15, 2008 | News Releases on Democracy and Human Rights

Middle East and North Africa Lag in Economic Freedom, Index Shows

WASHINGTON, JAN. 15, 2008-The people of the Middle East and North Africa have the lowest level of economic freedom of any of five regions surveyed in the 2008 "Index of Economic Freedom" published annually by The Wall Street Journal and The Heritage Foundation.

The new edition pegs the region's overall level of economic freedom at 58.7 (on 100-point scale in which a higher score represents greater freedom). That's significantly below the world average of 60.3 and makes the Middle East/North Africa the worst region in the world based on a population-weighted average.

This matters, because the Index shows a direct correlation between economic freedom and prosperity. Countries with higher levels of freedom tend to have higher GDP per capita.

"The Middle East is the absolute world leader in only one category: fiscal freedom," write Index editors Edwin Feulner, Kim Holmes and Mary Anastasia O'Grady. They find that, because most economies in the region can rely on oil exports for a steady stream of income, they haven't done enough to advance overall economic freedom.

Still, there are positive signs. "The ongoing transformation of innovative states in Bahrain, Qatar and the United Arab Emirates (UAE) may yet light the way for economic growth regionally," the editors write. And Egypt made the biggest worldwide leap in economic freedom over the last year, gaining 4 percentage points.

Bahrain (19th in the world) ranks as region's freest economy with an Index rating of 72.2.  It's the only Middle Eastern/North African economy in the "mostly free" category.

Kuwait(68.3), Oman(67.4) and Israel(66.1) joined Bahrain in improving their Index scores, finishing in the "moderately free" category with five other regional economies. At the other end of the scale, the Middle East/North Africa is home to three "repressed" economies: Syria, Iran and Libya. Even though it improved its score this year, Libya still finished with a dismal 38.7. Overall, eight countries in the region saw their economic freedom scores increase, while nine lost ground.

To compile the Index, the editors measured 157 countries across 10 specific factors of economic freedom. The higher the score, the lower the level of government interference. All countries were graded on a scale of 0 to 100.

The 10 freedoms measured are: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom. Ratings in each category are averaged to produce the overall Index score.

This year's Index aims to be the most precise measure of economic freedom ever published. The editors fine-tuned a methodology first employed last year to grade each economy in the world. "The methodology has been vetted with an academic advisory board and should now even better reflect the details of each country's economic policies," they write.

Worldwide, the average rating for economic freedom held essentially steady "while progressing more slowly than one might hope," the editors write. Of the 157 countries ranked, only seven are classified as "free" (a score of 80 or higher). Another 23 are "mostly free" (70-79.9). The bulk of countries-103 economies-are either "moderately free" (60-60.9) or "mostly unfree" (50-50.9). Some 24 countries have "repressed" economies, with total freedom scores below 50 percent.

This is the 14th consecutive year The Heritage Foundation and The Wall Street Journal have published the Index. It's edited by Kim Holmes, Heritage's vice president for foreign affairs, Edwin Feulner, Heritage's president, and Mary Anastasia O'Grady, a member of the Journal's editorial board and editor of the "Americas" column.

Copies of the 2008 Index (410 pp., US$24.95) can be ordered at heritage.org/index or 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.

About The Wall Street Journal
The Wall Street Journal, the flagship publication of Dow Jones & Company is the world's leading business publication. Founded in 1889, The Wall Street Journal has a print and online circulation of nearly 2.1 million, reaching the nation's top business and political leaders, as well as investors across the country. Holding 33 Pulitzer Prizes for outstanding journalism, The Wall Street Journal provides readers with trusted information and knowledge to make better decisions. The Wall Street Journal print franchise has nearly 750 journalists world-wide, part of the Dow Jones network of nearly 1,800 business and financial news staff. Other publications that are part of The Wall Street Journal franchise, with total circulation of 2.6 million, include The Wall Street Journal Asia, The Wall Street Journal Europe and The Wall Street Journal Online at WSJ.com, the largest paid subscription news site on the Web. In 2007, the Journal was ranked No. 1 in BtoB's Media Power 50 for the eighth consecutive year. The Wall Street Journal Radio Network services news and information to more than 280 radio stations in the U.S.

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