Economic Freedom of the World Index 2016
The United Kingdom ranks 10th out of 159 countries and territories included in the Economic Freedom of the World: 2016 Annual Report released today by the Institute of Economic Affairs in conjunction with Canada’s Fraser Institute. The UK’s ranking is unchanged from last year’s.
Commenting on the report’s findings, Professor Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, said:
“While the UK’s global economic freedom ranking is reasonable, there are important areas where the economy could be liberalised. Government is too big thus hampering prosperity and economic well-being. In particular, the government should reverse its apparent intention to raise spending, dramatically increase the minimum wage and impose more burdens on companies hiring employees.
“Two other features of the index are also of note. The US is no longer a leader when it comes to economic freedom. It ranks below the UK, New Zealand, Australia, Ireland and even Canada. No doubt the decline in economic freedom in the US is one reason for its poor performance in recent years. Furthermore, those countries that were once held up as exemplars by the left such as Venezuela and Brazil, are suffering terrible economic and social outcomes as economic freedom has declined. Socialism fails wherever it is tried. Those who believe in economic freedom should hold to account those who supported the regimes that governed those countries.”
Hong Kong again tops the index, continuing its streak of number one rankings, followed by Singapore, New Zealand, Switzerland, Canada, Georgia, Ireland, Mauritius and the United Arab Emirates. Australia and the United Kingdom tied for 10th.
“Hong Kong is still number one, but because democracy is the best safeguard of freedom, if China, which ranks low in economic freedom, encroaches on Hong Kong, we can expect Hong Kong’s ranking to fall,” said Fred McMahon, Dr. Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute.
The report is based on data from 2014 (the most recent year of available comparable data) and measures the economic freedom (levels of personal choice, ability to enter markets, security of privately owned property, rule of law, etc.) by analysing the policies and institutions of 159 countries and territories.
Other notable rankings include Germany (30), Japan (40), France (57), Russia (102), India (112), China (113) and Brazil (124).
The 10 lowest-ranked countries are: Iran, Algeria, Chad, Guinea, Angola, Central African Republic, Argentina, Republic of Congo, Libya and lastly Venezuela. Some despotic countries such as North Korea and Cuba can’t be ranked due to lack of data.
According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives.
For example, countries in the top quartile of economic freedom had an average per-capita GDP of US$41,228 in 2014, compared to US$5,471 for bottom quartile nations.
Moreover, the average income in 2014 of the poorest 10 per cent in the most economically free countries (US$11,283) dwarfed the overall average income in the least free countries (US$5,471). And life expectancy is 80.4 years in the top quartile of countries compared to 64 years in the bottom quartile.
See the full report at www.freetheworld.com
The United Kingdom’s scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):
- Size of government: changed from 6.15 in last year’s report to 6.19 in this year’s report
- Legal system and property rights: changed from 7.81 to 7.83
- Access to sound money: changed from 9.72 to 9.75
- Freedom to trade internationally: changed from 8.09 to 8.28
- Regulation of credit, labour and business: changed from 7.62 to 7.59
Commenting on the report’s individual data, Philip Booth said:
“If the UK wants to retain its position within the top ten economically free countries, more needs to be done to cut red tape for businesses, liberalise labour markets and especially reduce the size of government. Marginal tax rates and the share of government spending in national income are far too high.”
Notable countries include the United States (7.75), Germany (7.55), Japan (7.42), Russia (6.66), India (6.50) and China (6.45).
Notes to editors:
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About the Economic Freedom Index
Economic Freedom of the World measures the degree to which the policies and institutions of countries support economic freedom. This year’s publication ranks 159 countries and territories. The report also updates data in earlier reports in instances where data has been revised. You can view the Economic Freedom of the World video here.
The 2016 report was prepared by James Gwartney, Florida State University; Robert A. Lawson, Southern Methodist University; and Joshua Hall, West Virginia University.
The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 nations and territories. It’s the world’s premier measurement of economic freedom, measuring and ranking countries in five areas: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour and business.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.