Hong Kong is again the world’s freest economy, according to the 2017 Index of Economic Freedom from the Heritage Foundation (HF).
The report notes that Hong Kong has demonstrated a high degree of economic resilience and remains one of the world’s most competitive financial and business hubs.
The high-quality legal framework, which provides effective protection of property rights and strong support for the rule of law, continues to be a cornerstone of strength for this dynamic city.
There is little tolerance for corruption in the city, and government integrity is buttressed by a high degree of transparency.
Regulatory efficiency and openness to global commerce strongly support entrepreneurial activity. Interaction with China has become more intense through strengthened financial and other noneconomic linkages, and Hong Kong is by far the most significant transit point for exports and imports to and from China. Finishing second in the ranking is Singapore.
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 world economy is “moderately free,” with another rise in economic liberty leading to a fifth annual global increase, according to the editors of the report.
The world average score of 60.9 is the highest recorded in the 23-year history of the Index.
Forty-nine countries, the majority of which are developing countries, but also including countries like Norway and Sweden, 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.
The Most Free
1. Hong Kong
3. New Zealand
8. United Arab Emirates
The Least Free
180. North Korea
177. Rep. of Congo
174. Equatorial Guinea
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).