Since its inception in 1995, the index—an annual global study that compares countries’ entrepreneurial policy environments—has measured a nation’s commitment to limited government and free enterprise by evaluating four critical policy pillars, including the rule of law, fiscal health, and regulatory efficiency.
Over time, the index has documented measurable progress as the cause of freedom has swept the globe, empowering everyday families and workers to thrive and to hold their political authorities accountable.
As Kevin Roberts, president of The Heritage Foundation, succinctly notes in the preface to this year’s index, “Economic freedom is not a gift, however. It must be re-earned every generation. This is the challenge we now face.” (The Daily Signal is the news outlet of The Heritage Foundation.)
That timely message is critically relevant to America and the rest of the world, now more than ever.
Here are five key conclusions that can be drawn from the 2023 index.
- Economic freedom has suffered a global setback. The world economy, taken as a whole, has become “mostly unfree.” Regrettably, the global average economic freedom score has fallen from the previous year’s 60 to 59.3—the lowest it has been over the past two decades. Globally, fiscal soundness has deteriorated significantly. Rising deficits and mounting public debt in many countries have undermined and will likely further undercut their overall productivity growth and ultimately lead to economic sluggishness, rather than vibrant growth.
- Within the top 10 rankings, a notable reshuffling has taken place. Singapore maintained its status as the world’s freest economy for three consecutive years. Switzerland is now the world’s second-freest economy, followed by Ireland, and Taiwan has moved up to the No. 4 slot. Taiwan has achieved its highest economic freedom rating ever in the 2023 index. Both New Zealand and Australia lost their top-tier economic freedom status, with the latter no longer among the world’s 10 freest economies. New Zealand, recording its second-worst economic freedom score in the 29-year history of the index, has fallen into a “mostly free” economy.
- Especially notable is the continuing decline within the “mostly free” category of the United States, whose score plummeted to 70.6, its lowest level ever in the history of the index. The U.S. now has the world’s 25th-freest economy. The major factor in the erosion of America’s economic freedom is excessive government spending, which has resulted in mounting deficit and debt burdens. The United Kingdom has also recorded a significant retreat in its economic freedom, becoming only a “moderately free” economy. With its score of 69.9, Britain recorded its lowest rating ever. The size and scope of the state have expanded dramatically since 2020, and significant reforms are needed to place the U.K. economy back on a solid path of recovery.
- As a “repressed” economy, Communist China is ranked 154th out of the 176 countries whose economic freedom the index rates. The country’s low rating indeed exposes a badly flawed economic and political governance model. That has been exacerbated over the past five years as the authoritarian political ideology and loyalty to the Chinese Communist Party and its leader, Xi Jinping, have increased. China’s economic freedom deficit has long distorted markets beyond its borders. The CCP has been working to constrain freedom not only within its own borders, but in nations around the world. There is still time for America and its willing allies to counter China’s malign anti-freedom influence on other nations, but that window is quickly closing. Washington cannot win the battle of ideas and diplomacy without being proactive on this critical front.
- As documented once again in the 2023 index, economic freedom correlates significantly with overall well-being, which includes such factors as health, education, the environment, innovation, societal progress, and democratic governance. On these critical public policy implications, it should be remembered that economic freedom—not the environmental, social, and governance (ESG) agenda—makes America and the world cleaner, safer, and better governed. The true path to ensuring environmental, social, and governance improvements lies in focusing on policies that enhance economic freedom.
From a broader policy perspective, as previous editions of the index have explained, economic freedom is not a dogmatic ideology. Economic freedom is valuable as an end in itself and is a vital component of human dignity, autonomy, and personal empowerment. Just as important, however, is the fact that economic freedom provides a proven formula for economic progress and success.
Indeed, the 2023 Index of Economic Freedom demonstrates once again that by conserving and building on what works, and by rewarding a culture of accountability, hard work, and fair competition, countries can revitalize and accelerate their progress against difficult challenges and chart greater economic resilience.
As Roberts unambiguously sums it up in his preface to the 2023 index:
The world and America are at a crossroads. They must choose between the narrow path of self-governance, human dignity, and ordered liberty, or the broad path of an economy run by the managerial elite with no room for dissent or responsibility. One path leads to prosperity, and the other leads to ruin.
The findings and reminders that the 2023 Index of Economic Freedom present are the foundation for that discussion.
This piece originally appeared in The Daily Signal