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Economic Freedom 2013

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Cuando recibí, el 10 de enero, aviso del nuevo informe de la Heritage sobre libertad económica en el mundo, Index of Economic Freedom 2013, escribí este tuit: ‏


About The Index

When institutions protect the liberty of individuals, greater prosperity results for all.

Economist Adam Smith formed this theory in his influential work, The Wealth of Nations, in 1776. In 2013, his theory is measured – and proven – in the Index of Economic Freedom, an annual guide published by The Wall Street Journal and The Heritage Foundation, Washington’s No. 1 think tank.

For over a decade, The Wall Street Journal and The Heritage Foundation, Washington’s preeminent think tank, have tracked the march of economic freedom around the world with the influential Index of Economic Freedom. Since 1995, the Index has brought Smith’s theories about liberty, prosperity and economic freedom to life by creating 10 benchmarks that gauge the economic success of 185 countries around the world. With its user-friendly format, readers can see how 18th century theories on prosperity and economic freedom are realities in the 21st century.

The Index covers 10 freedoms – from property rights to entrepreneurship – in 185 countries.

Frequently Asked Questions

Q.1. What is economic freedom?

Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself. Read Chapter 1 – Economic Freedom: Global and Regional Patterns by Ambassador Terry Miller and Anthony B. Kim.

Q.2. What are the benefits of economic freedom?

Studies in this and previous editions of the Index of Economic Freedom demonstrate important relationships between economic freedom and positive social and economic values such as per capita income, economic growth rates, human development, democracy, the elimination of poverty, and environmental protection. For further information, see especially:

Q.3. How do you measure economic freedom?

We measure ten components of economic freedom, assigning a grade in each using a scale from 0 to 100, where 100 represents the maximum freedom. The 10 economic freedoms are grouped into four broad categories or pillars of economic freedom:

  1. Rule of Law (property rights, freedom from corruption);
  2. Limited Government (fiscal freedom, government spending);
  3. Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and
  4. Open Markets (trade freedom, investment freedom, financial freedom).

Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms. Detailed information about the methodology used to score each component is contained in the appendix.

Q.4. Which components of economic freedom are most important?

In the Index of Economic Freedom, the ten components of economic freedom are weighted equally in determining country scores. For a country considering economic reforms, those components on which it scores the lowest are likely to be the most important in terms of providing significant opportunities for improving economic performance.

Q.5. What is your period of study?

For the 2013 Index of Economic Freedom, the authors generally examined data for the period covering the second half of 2011 through the first half of 2012. To the extent possible, the information considered for each factor was current as of June 30, 2012. It is important to understand, however, that some factors are based on historical information. For example, the monetary policy factor is a 3-year weighted average rate of inflation from January 1, 2009, to December 31, 2011. Other factors are current for the year in which the Index is published. For example, the taxation variable for this Index considers tax rates that apply to the taxable year 2012.

Q.6. Can I access the data online?

The Heritage Foundation’s website offers an interactive edition of the Index rankings and scores (Explore the Data). This feature allows anybody to rank countries by a specific factor (e.g. how well does my country score solely in terms of its trade policy?); it also allows users to see how economic freedom changed in a particular country or particular region since 1995, when the Index started

The socalled HEAT MAP permite comparar, de dos en dos, cualquiera de los 144 países del informe con cualquier otro.




Hong Kong and Singapore top Index; United States remains 10th

WASHINGTON, JAN. 10, 2013—“The global advance toward economic freedom has ground to a halt,” according to the editors of the 19th annual Index of Economic Freedom, released today by The Heritage Foundation and The Wall Street Journal.

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.

Hong Kong and Singapore finished first and second in the rankings for the 19th straight year. Australiaand New Zealand ranked third and fourth, and Switzerland fifth. Canada finished sixth, despite slipping a half point, while Chile took seventh place and moved more than half a point toward greater economic freedom. Mauritius, the only Sub-Saharan country to rank among the top 10, was eighth with an overall score of 76.9. Denmark finished ninth, just ahead of the United States, which remains in tenth.

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 an 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).

There are 10 specific categories: property rights, freedom from corruption, fiscal freedom, government spending, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, and financial freedom. Scores in these categories are averaged to create an overall score.

The world’s most-improved country is Georgia, which saw its score rise 2.8 points, giving it an overall score of 72.2 and a place among the world’s “mostly free” economies. Although Zimbabwe continues to rank among the least free of the 177 countries rated, it once again showed one of the biggest gains in economic freedom. Belize’s Index score declined the most, plunging nearly five points to 57.3.

The Index also studies economic freedom on a regional basis. In the 2013 Index, only Europe and North America advanced. Economic freedom in the other regions — South and Central America/Caribbean, Middle-East/North Africa, Sub-Saharan Africa and Asia-Pacific — declined or remained largely unchanged.

The Asia-Pacific region dominates both the top and the bottom of the rankings. Hong Kong, Singapore, Australiaand New Zealand finished 1-2-3-4 respectively worldwide. North Koreais ranked last in the world and Burma, the Solomon Islands, Uzbekistan, Turkmenistan and Timor-Leste all rank 160th or worse.

Europe, the second-freest region and the world’s most improved, narrowed the gap with North America in the 2013 Index. The scores of 32 countries improved, while just nine lost economic freedom. Switzerland continues to be the only “free” economy in the region, which has only two “repressed” economies that score below 50: Ukraine and Belarus.

Five European countries had notable changes in status: Georgia, Norwayand the Czech Republic became “mostly free” economies. Cyprus dropped 2.8 points into the “moderately free” category, while Italyregained that status. Estoniaand Polandalso were among the world’s 10 most improved.

North America continues to be the world’s freest region, though Mexico was the only economy that improved its Index score over the last year. The region boasts two “mostly free” economies (Canada and the United States) and one “moderately free” economy (Mexico). It leads the world in terms of rule of law, regulatory efficiency and open markets, but is getting worse where government spending is concerned.

South and Central America/Caribbean experienced the sharpest drop — a 0.6-point loss. All but nine countries in scored as “mostly unfree” or “moderately free.” Five countries changed status over the year. Bolivia and Haitidropped from “mostly unfree” to “repressed.” Belize and the Dominican Republic fell from “moderately free” to “mostly unfree.” The Bahamas stood out as the only country in the region to improve in classification, becoming “mostly free.”  Economic freedom continued to decline last year in the Middle East/North Africa region. The region’s 0.3-point loss likely would have been greater had grading been possible for Libya and Syria, the editors note. Bahrain remained the region’s top performer in the Index by gaining 0.3 points, and defended its spot at No.12 in the world with an overall score of 75.5 points. Egypt lost 3.1 points, leaving it tied for the third-largest decline in the world.

Sub-Saharan Africa’s overall level of economic freedom “remains weaker than that of any other region,” the Index editors write. A majority of nations in this region either fall into the Index’s “mostly unfree” or “repressed” categories. Indeed, 15 of the world’s 33 repressed economies are in Sub-Saharan Africa, and 22 are in the next lowest, “mostly unfree.”

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.

Executive Highlights

  • Countries with higher levels of economic freedom substantially outperform others in economic growth, per capita incomes, health care, education, protection of the environment, and reduction of poverty, according to data collected for the 2013 Index of Economic Freedom.
  • Regrettably, the results also indicate that economic freedom is not advancing strongly. Only 31 countries have increased their economic freedom scores by 1 point or more over the past year, and 35 registered declines of that magnitude. The average world economic freedom score increased only 0.1 point, reflecting policy stagnation that in turn is reflected in lower world growth rates.
  • Government spending scores improved somewhat on average, heralding serious efforts in many countries to halt the rapid budget growth that accelerated during the financial crisis and recession. By contrast, regulatory efficiency declined as countries attempted to stem growing unemployment by increasing minimum wages or otherwise tightening labor market controls. The failure of those policies was evident in many countries around the globe.
  • Five emerging economies have notably improved economic freedom in recent years, surviving the global economic turmoil with sustained positive growth rates: Colombia, Indonesia, Jordan, Poland, and the United Arab Emirates. With a cumulative score improvement of 3.5 points or more, each of these countries has achieved five consecutive years of improving economic freedom and turned the global economic crisis into an opportunity to upgrade its economic system.
  • On the other hand, two advanced economies and one developing country have registered five consecutive years of declining economic freedom: the United States, Ireland, and Equatorial Guinea. Each has recorded a cumulative score decline of 5 points or more since 2008. All have suffered from substantial declines broadly across the 10 components of economic freedom, particularly in the areas of the rule of law and limited government.
  • The importance of political stability to economic freedom and prosperity is illustrated this year by the suspension of Libya and Syria from the Index rankings. Ongoing conflicts in those two countries have made it impossible to gather the necessary data to grade all aspects of their economic freedom, and it is obvious that economic development has ground to a halt at least temporarily in both countries.

Measuring Freedom around the World

By Alan W. Dowd (The American, AEI)

18/3/2013 03:00

The new Human Freedom Index reminds us there is much work to do to restrain the leviathan and expand liberty in the twenty-first century — at home and abroad.

Existing attempts to measure economic freedom have long been imperfect — blurring various definitions of freedom, using subjective rather than objective measures, and either failing to account for economic freedom or focusing exclusively on it. That helps explain the rationale behind the Fraser Institute’s new book, Towards a Worldwide Index of Human Freedom.

The book represents a major step toward developing an overarching Human Freedom Index (HFI). Produced in partnership with the Liberales Institut in Germany and the Cato Institute in the United States, the book is edited by the Fraser Institute’s Fred McMahon, who explains that the goal of the HFI “is to measure the degree to which people are free to enjoy classic civil liberties — freedom of speech, religion, individual economic choice, and association and assembly — in each country surveyed.” As suggested by the title, this is a work in progress; we are moving towards a human freedom index. McMahon notes that later this year, he and his team will present another version of the index that incorporates helpful feedback on the first draft… MORE

A Good Half-Century and a Bad One: What Will the Next 50 Years Be Like?

01/01/2014 03:00

The world today is more secure, prosperous, and free than it was 50 years ago, but an effective Western alliance is vital if we’re going to sustain that progress.

This year we begin to commemorate a series of horrific centennials — anniversaries of one of the great catastrophes of modern history, World War I.

Looking back over the century that has passed since then, the world has changed remarkably. World War I was just the first of a series of calamities that made the next 50 years without any doubt the bloodiest half-century in human history.

And yet, the last half-century has been a very different story. The world today is more secure, prosperous, and free than it was 50 years ago.

In many ways, one could say that the challenge facing the world today is how to avoid the calamities of World War I and its aftermath and to continue the progress of the last 50 years. That very progress confronts us with new challenges, particularly the challenge of incorporating a new set of powerful countries into the international system. But even though many non-Western countries are becoming increasingly important and powerful, Western leadership is still critical in this new and more complicated world.

A Better World after 50 Years: More Secure, More Prosperous, and More Free

It may seem strange to assert that the world today is more secure, prosperous, and free than it was 50 years ago, given the many problems that beset it at present.

As 2014 begins, we see the U.S. economy still struggling from the effects of the financial collapse, while Europe’s economy is in worse shape. The fall of dictatorships in the Arab world has the whole Middle East in turmoil. Syria, most disastrously, is in the third year of a bloody civil war that is spilling over into neighboring countries. Further east, the futures of both Iraq and Afghanistan are still in doubt and the possibility of an Iran with nuclear weapons looms over the Persian Gulf and the entire Middle East. As if that weren’t enough, North Korea — a rogue state armed with nuclear weapons — is now headed by a 30-year-old ruler who seems to feel the need to prove his manhood by shelling South Korean islands.

So how can one possibly say that the world today is more secure, prosperous, and free than 50 years ago?

Well, first, recall that just a little more than 50 years ago, on October 22, 1962, President Kennedy announced to the world that the Soviet Union was installing nuclear-armed missiles on the island of Cuba.

That was a terrifying time. For almost a week, we weren’t sure we would be alive to see the next week, whether the world as we knew it might come to an end in a nuclear holocaust. Then, on October 28, with the announcement that the Soviets were withdrawing their missiles from Cuba — along with the secret agreement, revealed only many years later, that the United States would withdraw its missiles from Turkey — that crisis came to an end. But for the next 30 years, the spectre of a nuclear exchange in which the civilized world could be destroyed in a matter of hours hung over the world… MORE


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