Singapore has taken the top spot in the Economic Freedom of the World Index 2023, according to a report published by the Fraser Institute on September 19, 2023. This achievement comes as Hong Kong drops to second place due to restrictive Chinese government policies, resulting in a significant reshuffling of the rankings.
The Economic Freedom of the World Index, which provides comprehensive data from 2021, indicates that Hong Kong's decline to second place, with a total score of 8.55 points, allowed Singapore to claim the highest position with a slight increase to 8.56 points. While Singapore's score remains similar to the previous year, it stands significantly higher than most countries worldwide.
Since 1996, the report has tracked countries with open and growth-friendly policies, considering factors such as stringent property rights protection, effective anti-corruption enforcement, favorable tax rates, and transparent environments. Additionally, Singapore's embrace of global trade, a dynamic financial sector, and other progressive measures have contributed to its top ranking.
The report cites the Chinese government's imposition of new barriers to entry, restrictions on foreign labor, and increased business costs as key factors leading to Hong Kong's decline. Furthermore, military interference, diminishing judicial independence, and a lack of impartiality in courts contributed to a further drop in Hong Kong's score.
Following Singapore and Hong Kong in the rankings are Switzerland, New Zealand, the United States, Ireland, Denmark, Australia, the United Kingdom, and Canada. On the other end of the spectrum, the lowest-ranking countries include the Republic of Congo, Algeria, Argentina, Libya, Iran, Yemen, Sudan, Syria, Zimbabwe, and Venezuela.
The Economic Freedom Index is based on 45 data points and incorporates a Gender Legal Rights Adjustment to measure gender equality in economic freedom. It assesses economic freedom in five broad areas:
1. Size of government: Increased government expenditure, taxation, and government-controlled segments reduce individual choices and economic freedom.
2. Legal system and property rights: Protection of individual and property rights is crucial for a robust government, as the safety of citizens and their property is essential for economic freedom.
3. Sound money: High inflation negatively impacts a country's economy, making sound money essential to safeguard property rights and enable long-term financial planning.
4. Freedom to trade internationally: The freedom to engage in international trade, buy, sell, and form contracts is a fundamental aspect of economic freedom, hindered by government-imposed trade costs or barriers.
5. Regulation: Government regulations, both domestic and international, limit the right to exchange, gain credit, hire, operate a business, and work freely, curbing economic freedom.
The study encompasses approximately 165 jurisdictions, analyzing historical empirical data from 2000 to 2019, enabling scholars to assess cross-country economic freedom differences and changes over several decades. The report highlights that greater economic freedom correlates with higher well-being, including greater productivity, economic growth, income levels, reduced poverty, lower corruption, and fewer conflicts.
The authors of the 2023 Economic Freedom of the World report are James Gwartney, a professor of economics at Florida State University; Robert Lawson, a clinical professor in economics and director of the Bridwell Institute for Economic Freedom at Southern Methodist University; and Ryan Murphy, a research assistant professor at SMU Cox School of Business.
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