In the wake of the global recession, the average level of economic freedom around the world dropped for the first time in decades, according to a new study released by the Fraser Institute, a public policy think-tank.
This year’s report shows that economic freedom experienced its first global downturn in a quarter century, with the average score falling to 6.67 in 2008 (the most recent year for which data is available) from 6.74 in 2007. Of the 123 countries with economic freedom rankings dating back to 1980, 88 (71.5 percent) saw their rankings decrease while only 35 (28.5 percent) recorded increases.
“In response to the economic decline of 2008, many countries opted for perverse credit expansion and regulatory policies, damaging economic freedom and hindering future growth,” says Fred McMahon, Fraser Institute vice-president of international policy research.
“Even in the wake of recession, the quality of life in nations with free and open markets is vastly superior to that of countries with government-managed economies.”
The report ranks Hong Kong number one, followed by Singapore and New Zealand.
Zimbabwe once again has the lowest level of economic freedom among the 141 jurisdictions included in the study, followed by Myanmar, Angola, and Venezuela.
The Economic Freedom of the World report uses 42 different measures to create an index ranking countries around the world based on policies that encourage economic freedom.
The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property.
Economic freedom is measured in five different areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labor, and business.
Research shows that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms, and longer life spans. This year’s report also contains new research showing the impact of the economic freedom on rates of unemployment and homicide.
“Commitment to economic freedom is a common theme among the world’s most prosperous nations. While residents of these countries enjoy the highest standards of living and the most personal freedoms, people in countries at the bottom of the rankings are typically impoverished and subject to oppressive governments that recognize few—if any—individual rights or freedoms,” says McMahon.
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