January 12, 2012
HONG KONG , JAN. 12, 2012—For the 18th consecutive year, Hong Kong maintained its position as the world’s freest economy, according to the 2012 Index of Economic Freedom, published annually by The Wall Street Journal and The Heritage Foundation.
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 its aggregate score, each of 179 countries was 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).
Hong Kong scored 89.9 on the 1-100 scale, highest worldwide. Singapore, which has ranked second all 18 years, scored 87.5. Australia and New Zealand ranked third and fourth, respectively, enabling the Asia-Pacific region to account for the four highest-ranked countries.
The world average score of 59.5 was two-tenths of a point below the 2011 average and the second-lowest score recorded over the past 10 years. Among the 179 countries ranked, scores improved for 75 countries and declined for 90. Others did not change.
Hong Kong’s score improved following a recent government plan to rebate excess revenue to citizens. However, Index editors expressed concern that recent policy changes in Hong Kong, particularly implementation of a minimum wage, had “moved Hong Kong modestly in the direction of a more bureaucratic and politicized economy.”
Rankings for economic freedom in some countries, including the United States, declined following massive government spending initiatives. Other countries improved their scores with efforts to broaden tax bases, lower rates and combat inflation.
Asia Pacific, although home to the four highest-ranked countries, scored 57.5 as a region. Despite this improved score, Asia-Pacific finished fifth among the six geographic groupings surveyed. The gain over 2011 was helped by Taiwan, which scored higher in six of 10 categories of economic freedom measured, finishing at 71.9 for 18th place, ahead of Macau.
Overall, 27 of the 41 Asia-Pacific countries were classified as “mostly unfree” or “repressed.” Three of the 11 lowest-ranked countries are in the region, including North Korea, which ranks as the world’s least-free economy. Rankings declined for China and Japan, the region’s two largest economies. China dropped because of state control of the economy; Japan because of increased government spending, in part a response to the earthquake and tsunami that afflicted the country.
Index results continued to demonstrate that when countries adopt policies leading to high scores, they also enjoy prosperity, economic security and success. In the United Nations’ assessment of what it calls poverty intensity, mostly free and moderately free countries have only a third the number of people in this position as do mostly unfree and repressed countries.
The top one-fifth of countries in advancing economic freedom grew at an average rate of 3.7 percent. The bottom fifth grew 2.1 percent.
The 2012 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for International Trade and Economics; Kim Holmes, Ph.D., Heritage’s vice president for foreign policy studies and director of the Davis Institute for International Studies; and Edwin J. Feulner, Ph.D., Heritage’s president. Copies of the Index (484 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, is available online.
About The Wall Street Journal
The Wall Street Journal, the world’s leading business publication, has more than 2 million subscribers and is the largest U.S. newspaper by total paid circulation. The franchise, with a global print audience of 3.5 million, also includes The Wall Street Journal Asia and The Wall Street Journal Europe. The Wall Street Journal Online at WSJ.com is the leading provider of business and financial news and analysis on the Web, attracting more than 1 million subscribers and 32 million visitors per month worldwide.WSJ.com is the flagship site of The Wall Street Journal Digital Network, which includes MarketWatch.com, Barrons.com, AllThingsD.com and SmartMoney.com. The Journal holds 34 Pulitzer Prizes for outstanding journalism, and, in 2011, was ranked No. 1 in BtoB’s Media Power 50 for the 12th consecutive year.
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.
(Please go to http://www.heritage.org/index/images/pressphotos/2012/pressphoto.jpg for a hi res downloadable photo.)
Thomas A. Saunders III (right), chairman of The Heritage Foundation, and Heritage President Edwin J. Feulner (left) present the 2012 Index of Economic Freedom to the Hon. Donald Tsang, chief executive, Hong Kong Special Administrative Region, Jan. 12 in Hong Kong.