2017 Index of Economic Freedom: U.S. Score Declines Further as World Average Increases


2017 Index of Economic Freedom: U.S. Score Declines Further as World Average Increases

Feb 15, 2017

The United States is now ranked 17th in economic freedom, it's lowest score ever. Photo: iStock

The world economy is “moderately free,” with another rise in economic liberty leading to a fifth annual global increase, according to the editors of the 2017 Index of Economic Freedom, released today by The Heritage Foundation.

The world average score of 60.9 is the highest recorded in the 23-year history of the Index. Forty-nine countries, including China and Russia, achieved their highest-ever Index scores. Among the 180 countries ranked, scores improved for 103 countries and declined for 73 (16 of which recorded their lowest Index scores ever). Since the inception of the Index in 1995, average scores have increased by over 5 percent.

Five economies earned the Index’s designation of “free” (scores of 80 or above), while the next 87 are classified as “mostly free” (70-79.9) or “moderately free” (60-69.9). Yet the number of economically “unfree” economies remains high: 65 are considered “mostly unfree” (50-59.9) and 23 are “repressed” (scores below 50).

“Per capita incomes are much higher in countries that are more economically free,” the editors write. “Economies rated ‘free’ or ‘mostly free’ in the 2017 Index generate incomes that are more than double the average levels in other countries, and more than five times higher than the incomes of people living in ‘repressed’ economies.”

The United States saw its Index score decline yet again (down 0.3 point to 75.1, its lowest score in Index history). Although it remains “mostly free,” it is ranked No. 17 globally and is the third-freest economy in the Americas region (behind Canada, which is in 7th place globally, and Chile, which is 10th). “Large budget deficits and a high level of public debt have contributed to the continuing decline in America’s economic freedom,” the editors write.

Hong Kong and Singapore each logged increases in their Index scores, finishing first and second in the rankings for the 23rd consecutive year. Five other frequent top 10 finishers -- New Zealand (3rd globally), Switzerland (4th), Australia (5th), Estonia (6th) and Canada -- also improved their scores. A surprise newcomer to the top 10, the United Arab Emirates, improved its Index score by 4.3 points to take the 8th spot. Ireland (9th) and Chile (10th) saw their scores dip, but still managed to round out the global top 10.

The Most Free

1. Hong Kong

2. Singapore

3. New Zealand

4. Switzerland

5. Australia

6. Estonia

7. Canada

8. United Arab Emirates

9. Ireland

10. Chile

The Least Free

180. North Korea

179. Venezuela

178. Cuba

177. Rep. of Congo

176. Eritrea

175. Zimbabwe

174. Equatorial Guinea

173. Timor-Leste

172. Algeria

171. Djibouti

Launched in 1995, the Index evaluates countries in four broad policy areas that affect economic freedom: rule of law; government size; regulatory efficiency; and open markets. There are 12 specific categories: property rights, judicial effectiveness, government integrity, tax burden, government spending, fiscal health, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, and financial freedom. Scores in these categories are averaged to create an overall score.

Based on an average score, each of 180 countries graded in the 2017 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).

The Index groups the world’s countries into five regions: the Americas, Asia-Pacific (home to nine of the 20 most-improved countries), Europe, Middle East/North Africa and Sub-Saharan Africa (with the most countries recording notable score declines). Individual rankings and write-ups for each country can be found here.

The 2017 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for Free Market and Regulatory Reform; and Anthony B. Kim, research manager and senior policy analyst in the Center for Free Market and Regulatory Reform. Copies of the Index (474 pages, $24.95) may be ordered online or by calling 1-800-975-8625. The full text, including charts and graphs, is also available online.