January 20, 2010 | News Releases on Index of Economic Freedom
It's the 16th straight year that Hong Kong has earned the number-one ranking. No other economy has ever surpassed it. Three other economies in the Asia-Pacific region also made the Index's top 10, Singapore (2nd), Australia (3rd) and New Zealand (4th).
The Index reflects data compiled in 10 key categories and tells a crucial story. Economic freedom is vital. "Gross domestic product per capita is much higher in countries that score well in the Index," the editors write. "The positive relationship holds true at all levels of economic freedom, but becomes even more dramatic as economic freedom increases."
The Asia-Pacific region proves that, even as it remains a study in contrasts. "Four of the world's 10 freest economies are in this region," the authors write, "yet most other economies in the region remain 'mostly unfree.'"
The region is home to nine economies which the Index classifies as "repressed." Turkmenistan and Burma fall into this category, as does North Korea, the world's least-free economy.
Hong Kong and Singapore both saw their scores decline slightly this year, but remain the toast of the world when it comes to economic freedom. Hong Kong enjoys top scores in four of the 10 economic freedoms, while Singapore grants private firms the most flexibility in hiring and firing workers.
Australia moved up to third in the world in economic freedom, just ahead of New Zealand, which the editors laud for setting "the standard for clean, corruption-free government."
Thirteen Asian economies improved their scores in the 2010 Index, while 27 lost ground. The region's average level of economic freedom is below the world average, but the editors predict this could eventually change if two economic giants press on with economic reform.
Both India and China are ranked as "mostly unfree." Progress is slow, but "it should be noted that economic freedom has been improving gradually in India and China over the years," the editors write.
The 2010 Index examined 183 economies, although four of these could not be graded because of insufficient data. Levels of economic freedom in 10 categories were rated on a scale of 0 to 100. The higher the score, the lower the level of government interference in the marketplace.
The 10 freedoms measured are: business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom. Ratings in each category are averaged, then totaled to produce the overall Index score.
Worldwide, the average rating for economic freedom dropped slightly this year, down 0.1 point from 2009. This is only the second time in the history of the Index that average scores for countries measured in successive years have declined
Of the economies ranked, only seven are classified as "free" (a score of 80 or higher). Another 23 are classified as "mostly free" (70-79.9). Most of the economies ranked--113--are either classified as "moderately free" (60-60.9) or "mostly unfree" (50-50.9). The other 36 economies are classified as "repressed," with total freedom scores below 50 percent.
The 2010 Index was edited by Ambassador Terry Miller, Director of Heritage's Center for International Trade and Economics, and Dr. Kim Holmes, Heritage's Vice President for foreign affairs. Copies of the 2010 Index (485 pp., US $24.95) can be ordered at heritage.org/index or by calling 1-800-975-8625. Additionally the full text, charts and graphs, is available via the Internet at www.heritage.org/index.
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