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Friday, February 02, 2007

 
The Envelope, Please VIII

The Index of Economic Freedom 2007 is out.

Its methodology has been revamped - see here for detailed explanation. The 1.00-5.00 scoring scale has been replaced by a much easier-to-understand percentage figure. Also, the ten factors that make up economic freedom have been modified slightly. This is the old list:

  1. Trade policy
  2. Fiscal burden
  3. Government intervention in economy
  4. Monetary policy
  5. Capital flows and foreign investment
  6. Banking and finance
  7. Wages and prices
  8. Property rights
  9. Regulation
  10. Black market

This is the new:

  1. Business freedom
  2. Trade freedom
  3. Fiscal freedom
  4. Freedom from government
  5. Monetary freedom
  6. Investment freedom
  7. Financial freedom
  8. Property rights
  9. Freedom from corruption
  10. Labor freedom

The first eight factors are the same, just named differently. "Regulation" gives way to "Freedom from government corruption," which makes sense since regulation is a subset of factor 3. The black market is also a reflection of government intervention, so it gives way to labor freedom.

The ten freedoms are also weighted differently. Under the old system some categories carried more weight than others; now they are given equal weight. This radically affects Estonia's standing - once in the top 10, it now ranks 12th with a score of 78.1%. It is still the highest-ranked former Communist nation, and ranks fifth among European nations, surpassed by the UK (81.6%), Ireland (81.3%), Luxembourg (79.3%), and Switzerland (79.1%).

The top ten:

  1. Hong Kong (89.3%)
  2. Singapore (85.7%)
  3. Australia (82.7%)
  4. United States (82.0%)
  5. New Zealand (81.6%)
  6. United Kingdom (81.6%)
  7. Ireland (81.3%)
  8. Luxembourg (79.3%)
  9. Switzerland (79.1%)
  10. Canada (78.7%)

The bottom ten:

  1. North Korea (3.0%)
  2. Cuba (29.7%)
  3. Libya (34.5%)
  4. Zimbabwe (35.8%)
  5. Burma/Myanmar (40.1%)
  6. Turkmenistan (42.5%)
  7. Congo, Rep. of (43.0%)
  8. Iran (43.1%)
  9. Angola (43.5%)
  10. Guinea-Bissau (45.7%)

Hyperlinks embedded in country names lead to individual reports on those countries.

The Democratic Republic of Congo (the former Zaire), Iraq, Montenegro and Serbia are not rated.

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