January 27, 2015
WASHINGTON, JAN. 27, 2015—The average level of economic freedom in the Middle East and North Africa remains about the same as last year, with economic and political policies that hamper development prevalent in the region, according to the 2015 Index of Economic Freedom, published by The Wall Street Journal and The Heritage Foundation.
Structural and institutional problems abound throughout the region,” the editors write, “and private-sector growth continues to lag far behind levels needed to provide adequate jobs for growing populations.” Average unemployment is close to 25 percent.
Most of the 15 countries graded in the Middle East/North Africa region are in the “moderately free” or “mostly unfree” categories, with two repressed (Iran and Algeria) and four “mostly free” (Bahrain, United Arab Emirates, Qatar, and Israel, whose 2.1-point gain lifted it into the “mostly free” category). Bahrain remained the region’s top performer in the Index at No. 18, despite a 1.7 point loss, and an overall score of 73.4 points. Morocco posted a 1.8-point rise in its score, pulling it into the ranks of the “moderately free.”
Launched in 1995, the Index evaluates countries in four broad policy areas that affect economic freedom: rule of law; limited government; regulatory efficiency; and open markets. There are 10 specific categories: property rights, freedom from corruption, fiscal freedom, government spending, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, and financial freedom. Scores in these categories are averaged to create an overall score.
Scores in the Middle East for business freedom -- the lack of which, the editors note, helped ignite the “Arab Spring” protests -- declined for 11 of the 18 countries in the region (three of which are not graded in the 2015 Index due to ongoing violence and unrest). Costly subsidies on energy and food also strain budgets across the region and prevent sustainable economic development. Moreover, the editors point out, “many governments in the region continue to rely on lavish subsidies to quell social and political unrest.”
One high point, however, is Israel, which achieved its highest Index score ever. It recorded improvements in six of the Index’s 10 categoriess, including the management of government spending, trade freedom, labor freedom and fiscal freedom. “Broad, sustained improvements in property rights and the regulatory sectors over the past five years have propelled Israel into the ranks of the ‘mostly free’ for the first time,” the editors write. Egypt, despite being “mostly unfree,” posted a 2.3-point gain -- fueled by gains in investment freedom, monetary freedom and labor freedom -- which reverses five years of steady decline.
The world average score of 60.4 is only one-tenth of a point above the 2014 average, but represents a 2.8-point overall improvement since the inception of the Index in 1995. Thirty-seven countries, including Taiwan, Israel, Poland and Colombia, achieved their highest-ever Index scores. Among the 178 countries ranked, scores improved for 101 countries and declined for 73.
The 2015 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for Trade and Economics and Center for Data Analysis; and Anthony B. Kim, senior policy analyst in the Center for Trade and Economics. Copies of the Index (492 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.