he 2010 Index of Economic Freedom covers 183 countries around the world, ranking 179 of them with an economic freedom score based on 10 measures of economic openness, regulatory efficiency, the rule of law, and competitiveness. The basic principles of economic freedom emphasized in the Index are individual empowerment, equitable treatment, and the promotion ofcompetition. The results of the 2010 Index include the following: • Four Asia–Pacific economies continue to lead the world in economic freedom. Hong Kong maintains its position as the world’s freest economy, a distinction it has enjoyed for 16 consecutive years. Singapore remains close, ranked as the world’s second freest economy. Australia and New Zealand, ranked 3rd and 4th this year, have solidifiedtheir position at the top of the rankings. As in 2009, a total of seven economies have attained “free” status in the Index rankings, although the composition
of this group has changed a bit, with Switzerland moving in and the United States dropping out. • Every region continues to maintain at least one of the top 20 freest economies, but there has been noticeable reshuffling within this highlyranked group. With its economic freedom score dropping by 2.2 points, Iceland’s ranking slid to near the bottom of the top 20, while Switzerland moved up three places to 6th place. The United Kingdom is now out of the top 10. Nine of the 20 freest economies are European, led by Ireland, Switzerland, and Denmark. Six of the top 20 are from the Asia–Pacific region, and two are from North America.The U.S. dropped two spots in the rankings and now trails Canada. The other regions are represented by one country each: Chile (South and Central America/Caribbean region); Mauritius (Sub-Saharan Africa region); and Bahrain (Middle East/North Africa region). Mauritius recorded impressive progress and is now ranked as the world’s 12th freest economy.
• The positive relationEconomic FreedomPromotes Greater Prosperity ship between economic freedom and prosperity is GDP per Capita, in Constant 2000 U.S. Dollars (Logarithmic Scale) confirmed yet again in the $100,000 Each dot represents a 2010 Index. Gross domesnation in the Index of tic product per capita is Economic Freedom much higher in countries $10,000 that score well in the Index. The positive relationship holds true at alllevels of $1,000 economic freedom but becomes even more dramatic as economic freedom $100 ine increases. Chart 1 shows a Correlation = 0.67 dL en R2 = 0.4489 Tr strong positive relationship between the level of $10 economic freedom and 10 30 50 70 90 GDP per capita. 2010 Index of Economic Freedom Score • Economic freedom improves the overall Sources: Terry Miller and Kim R. Holmes, 2010 Index ofEconomic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), quality of life, promotes at www.heritage.org/index; World Bank, World Development Indicators Online, at http://publications.worldbank.org/WDI (November 10, 2009). political and social progress, and supports enviChart 1 heritage.org ronmental protection. The 2010 Index provides strong evidence thateconomic freedom has far- gained strong momentum in some countries— reaching positive impacts on various aspects of and with far-reaching effects. Exactly half of the human development. Economic freedom corre- major economies curtailed economic freedom lates with poverty reduction, a variety of desir- to some degree through various interventionable social indicators, democratic governance, istmeasures. Perhaps more significant for the and environmental sustainability. long-term progress of economic freedom, the other half did not. With respect to the economic crisis of 2008– • As a result of increasing government 2009, the evidence in the Index supports several interference in economic activity in many preliminary conclusions:1 countries, overall progress toward greater • Countries...