For Immediate Release
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INDEX: ECONOMIC FREEDOM EXPANDS IN EUROPE DESPITE “UNCERTAIN TIMES”
WASHINGTON, JAN. 14, 2014—Europe gained economic freedom last year thanks to its strong institutions, but its progress is hampered, in part, by the growth in government spending, according to the 2014 Index of Economic Freedom, published annually by The Heritage Foundation.
The region’s score is still above world averages, but the Index editors note that Europe “has been undergoing tumultuous and uncertain times,” such as the sovereign debt crisis affecting the eurozone.
“Europe’s overall economic freedom rating remains undermined by weak scores in the management of public spending, reflecting the cost of expanding government services and transfer payments that plainly hinder both productivity growth and dynamic job creation,” Index editors wrote.
Still, the region is home to 10 of the world’s 20 freest economies. Eighteen countries, including Germany, Sweden, Poland, Norway, Austria, Georgia, Romania, the Czech Republic, Lithuania, Latvia, Bulgaria, and Macedonia, recorded their highest ever economic freedom scores in the 2014 Index.
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 an aggregate score, each of 178 countries graded in the 2014 Index is 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).
Economic freedom grew in 34 countries in Europe, with Switzerland reaching an all-time high score of 81.6. This contributed to the region’s 0.5-point gain in overall score. Meanwhile nine countries -- including France, Spain, Finland, Hungary and Croatia -- lost economic freedom.
In the European region, 36 of 43 countries scored-- 83 percent -- rank as “moderately free” or “mostly free.” Europe has one “repressed” economy: Ukraine.
Switzerland again is rated as the only “free” economy in Europe and moved up to rank fourth in the world. Ireland rose to ninth globally, and Denmark earned the designation as the world’s 10th freest economy.
Greece -- embroiled in a sovereign debt crisis -- barely moved within the “mostly unfree” category. The scores of Cyprus and Malta fell by at least one point. And the Slovak Republic had the worst drop of all European nations (2.3 points) in the 2014 Index.
All told, Europe exceeds the world average in eight of 10 categories, with margins of 14 or more points in property rights, freedom from corruption, investment freedom, business freedom and financial freedom.
The world average score of 60.3—seven-tenths of a point above the 2013 average—is the highest average in the two-decade history of the Index, the editors note. Forty-three countries, including Singapore and Sweden, achieved their highest scores yet in the 2014 Index. Among the 178 countries ranked, scores improved for 114 countries and declined for 59. Four recorded no score change.
The 2014 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for International Trade and Economics; Anthony B. Kim, senior policy analyst in the Center for International Trade and Economics; and Kim Holmes, Ph.D., Heritage’s Distinguished Fellow. Copies of the Index (490 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.
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.