Index: Economic Freedom Expands in U.S. For 2nd Consecutive Year

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Index: Economic Freedom Expands in U.S. For 2nd Consecutive Year

U.S. takes second place in the Americas region, trailing Canada; Americas region logs an overall decline in economic freedom

Jan 25, 2019 2 min read

WASHINGTON, JAN. 25, 2019—Economic freedom declined globally over the last year, but it expanded in the United States, according to the just-released 2019 Index of Economic Freedom, the 25th edition of the annual report. 

The U.S. logged an overall score of 76.8, a 1.1-point gain over its score in the 2018 Index, due to tax cuts and a significant improvement in its “government integrity” score, which measures such things as cronyism and corruption.

The United States, which remains second in the “Americas” region behind Canada, jumped six spots in the global rankings from last year’s edition, from No. 18 to No. 12.

However, there are still some problem areas for the U.S., which has yet to regain its spot in the global top 10. The Index editors recorded modest declines in its scores for fiscal health, labor freedom, monetary freedom and trade freedom. 

“New protectionist policies that have raised tariffs and disrupted established manufacturing supply chains are just beginning to affect consumer prices and investment decisions,” the editors warn.

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 2019 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 Americas region has no “free” economies. Three (Canada, United States, Chile) are “mostly free.” Five (Ecuador, Suriname, Bolivia, Cuba, Venezuela) are “repressed.” The remaining 24 are either “moderately free” or “mostly unfree.” Seven of its 32 economies improved in the 2019 Index, while 23 declined and two were unchanged.

Across the region, economies have expanded at an average rate of 1.5 percent over the past five years. The regional average rate of unemployment is 6.9 percent. The average inflation rate has dropped significantly, to 4.4 percent, but the average level of public debt—the highest in the world—has climbed to 75.5 percent of GDP.

The Index groups the world’s countries into five regions: the Americas, Asia-Pacific, Europe, Middle East/North Africa and Sub-Saharan Africa. Individual rankings and write-ups for each country can be found online at heritage.org/index/ranking.

The 2019 Index was edited by Ambassador Terry Miller, Director of Heritage’s Center for International Trade and Economics; Anthony B. Kim, the Center’s Research Manager; and James M. Roberts, the Center’s Research Fellow for Economic Freedom and Growth. 

An interactive version of the Index, including full text, charts and graphs is available online at heritage.org/index. A hard-copy version totaling 474 pages may be downloaded there, as well.

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