HONG KONG LEADS WORLD, REGION IN ECONOMIC FREEDOM, 2013 INDEX SHOWS
HONG KONG, JAN. 10, 2013—The Asia-Pacific region is home to the world’s freest economy—and its most repressed. For the 19th consecutive year, Hong Kong maintained its top position, while North Korea languishes at the bottom, according to the 2013 Index of Economic Freedom, published annually by The Wall Street Journal and The Heritage Foundation.
Launched in 1995, the Index evaluates countries in four broad areas of economic freedom: rule of law; regulatory efficiency; limited government; and open markets. Based on its aggregate score, each of 177 countries graded in the 2013 Index was 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).
Asia-Pacific, which declined slightly in economic freedom overall, is home to the Index’s top four economies but also has the highest number of “repressed” economies. South Korea and Sri Lanka moved into the “mostly free” and “moderately free. Kyrgyz Republic and Samoa, unfortunately, slipped to become “mostly unfree”
The region’s overall economic freedom score may be below the world average of 59.6, but Asia Pacific continues to score higher than the world averages in four of the 10 economic freedoms related to limited government and regulatory efficiency: fiscal freedom, government spending, business freedom and labor freedom.
Lower government spending has produced a regional spending score that is almost four points better than the world average. The region’s labor freedom score beats the world average by about five points.
India and China are ranked 119th and 136th, respectively, in the world, and both remain unfree. “The foundations for long-term economic development continue to be fragile in the absence of effectively functioning legal frameworks,” the editors write. “Progress with market-oriented reforms has been uneven and has often backtracked under the influence of those with a political interest in maintaining the status quo.”
The world average score of 59.6 was only one-tenth of a point above the 2012 average. Since reaching a global peak in 2008, the editors note, economic freedom has continued to stagnate. The overall trend for last year, however, was positive: Among the 177 countries ranked in the 2013 Index, scores improved for 91 countries and declined for 78. On the plus side, average government spending scores improved. Unfortunately, this was matched by a decline in regulatory efficiency, as a number of countries hiked minimum wages and tightened control of labor markets.
The 2013 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for International Trade and Economics; Kim Holmes, Ph.D., Heritage’s Distinguished Fellow; and Edwin J. Feulner, Ph.D., Heritage’s president. Copies of the Index (494 pages, $24.95) may be ordered online at www.heritage.org/index or by calling 1-800-975-8625. The full text, including charts and graphs, is available online.