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Saturday, January 14, 2012

Index of Economic Freedom 2011

Index of Economic Freedom 2011

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Economic freedom fosters economic development more than the expansion of welfare programs. World again in 2011 the index recorded a reduction of economic freedom.
To Switzerland in 2011 remains the country with the highest European and world's fourth-highest economic freedom. The annual report shows the 2011 Index of Economic Freedom, published in Switzerland by the Liberal Institute.Worldwide, the index fell from 6.67 to 6.64. The trend is mainly due to the counterproductive budgetary, monetary and regulatory responses of governments to the indebtedness crisis. The U.S. is slipping due to its policy of 6on the 10th Place from the ranking.
Hong Kong turns out once more as the country with the world's highest economic freedom, followed by Singapore and New Zealand. The bottom of the rankings this year is Zimbabwe, there is very little to show the economies of Venezuela and Myanmar.
The economic freedom index assesses political conditions of a country, based on 42 indicators and calculate such a ranking of the countries surveyed. The economic freedom of a country is measured in five areas: (1) scope of state activity, (2) the rule of law and security of private property, (3) stability of the currency, (4) international trade and freedom (5) of regulation.
Analyses based on the economic freedom index shows that economic freedom not only develops a positive impact on earnings and economic growth of a country, it also contributes to a reduction of poverty. Life expectancy, civic participation and the equality of the sexes according to the UNDP Gender Inequality Index show a positive correlation with economic freedom.
"The positive effect of liberal conditions for sustainable economic development can not be overlooked. This should be reflected not only in development aid policy, in Europe the course must "be corrected, commented Prof. Christian Hoffmann, Research Director of the Liberal Institute.

Economic development goals call for freedom

For the first time the 2011 report examined the impact of economic freedom relative to the effects of welfare state intervention. A strengthening of economic freedom has therefore a strong correlation not only with a rising per capita income and economic growth, they also correlates positively with life expectancy, the average level of education and health care of citizens. In contrast, no positive association between international expansion of welfare entitlements and the economic development of a country to be determined.
The authors stress that should be aligned with the priorities both in development cooperation as well as in the economic policy of the West on these results. In the wake of recent financial and debt crises of the 2011 index recorded a sharp decline of economic freedom, especially among the world's growth markets. In Europe, Germany has a further decline in economic freedom.Not least, China and India have significant setbacks.
"The current index of economic freedom draws a bleak picture. The blind state expansions of recent years must be terminated when the global development should not be jeopardized. Only a return to low government spending and thus a strengthening of the private sector can again "create wealth, according to Pierre Bessard, director of the Liberal Institute.

Ranking of Switzerland and international comparison

Switzerland was given in this year's report, the following ratings (each on a scale of 1 to 10, with 10 being the highest value of economic freedom is): the scope of state activity: slight improvement to 6.94 from 6.90 last year, the rule of law and security of private property: unchanged at 8:44; stability of currency: further decline to 9.29 by 9.40 in the previous year, international free trade: a decline to 6.64 (previous year: 6.75); of regulation: increased to 8.29 to 8.07 in the previous year .
Among the 10 most economically free countries in the world can be found next to Hong Kong (9.01 of 10 possible points), Singapore (8.68), New Zealand (8.20) and Switzerland (8.03) and Australia (7.98 ), Canada (7.81), Chile (7.77), Britain (7.71), Mauritius (7.67) and the United States (7.60).
Among the other major economies, Germany ranked No. 21 (7.45), Japan No. 22 (7.44), France number 42 (7.16) and Italy, course 70 (6.81). Concern is that large growth markets like India (94 / 6,40) and China (92 / 6.43) lost during the period of economic freedom. Also Brazil (102 / 6.19) and Russia (81 / 6.55) move still in the lower middle of the index and have considerable catching up to do.
Since 1990, some states could significantly improve their conditions: Uganda increased in that time, his score of 3.00 to 7.10, 3.52 to 7.35 climbed from Zambia. The citizens of Nicaragua (6.76 by 2.96), Albania (7.54 of 4.24) and Peru (7.29 of 4.13) could benefit from a significant increase in economic freedom.
A striking lack of economic freedom have also in 2011, especially many developing countries on the African continent. Even the poorest 10% of the residents of the economically freest countries are twice as rich as the average population of this year's laggards: Zimbabwe (4.08), Myanmar (4.16), Venezuela (4.28), Angola (4.76) , the Democratic Republic of Congo (4.84), the Central African Republic (4.88), Guinea-Bissau (5.03), the Republic of Congo (5.04), Burundi (5.12), Chad (5.32 ) and Algeria (5.36).
Download Report: 
Economic Freedom of the World (234 pages, PDF)

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