For the 18th consecutive year, Hong Kong maintained its position as the world’s
freest economy, according to the 2012 Index of Economic Freedom, published annually
by 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 179 countries was classified either 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).
Hong Kong scored 89.9 on the 1-100 scale, highest worldwide. Singapore, which
has ranked second all 18 years, scored 87.5. Australia and New Zealand ranked
third and fourth, respectively, enabling the Asia-Pacific region to account
for the four highest-ranked countries.
The world average score of 59.5 was two-tenths of a point below the 2011 average
and the second-lowest score recorded over the past 10 years. Among the 179 countries
ranked, scores improved for 75 countries and declined for 90. Others did not
change.
Hong Kong’s score improved following a recent government plan to rebate excess
revenue to citizens. However, Index editors expressed concern that recent policy
changes in Hong Kong, particularly the implementation of a minimum wage, had “moved
Hong Kong modestly in the direction of a more bureaucratic and politicized economy”.
Rankings for economic freedom in some countries, including the United States,
declined following massive government spending initiatives. Other countries
improved their scores with efforts to broaden tax bases, lower rates and combat
inflation.
Asia Pacific, although home to the four highest-ranked countries, scored 57.5
as a region. Despite this improved score, Asia-Pacific finished fifth among
the six geographic groupings surveyed. The gain over 2011 was helped by Taiwan,
which scored higher in six of 10 categories of economic freedom measures, finishing
at 71.9 for 18th place, ahead of Macau.
Overall, 27 of the 41 Asia-Pacific countries were classified as “mostly unfree”
or “repressed.” Three of the 11 lowest-ranked countries are in the region, including
North Korea, which, unsurprisingly, ranks as the world’s least-free economy. Rankings declined
for China and Japan, the region’s two largest economies. China dropped because
of state control of the economy; Japan because of increased government spending,
in part a response to the earthquake and tsunami that afflicted the country.
The Heritage Foundation noted that Index results continued to demonstrate that
when countries adopt policies leading to high scores, they also enjoy prosperity,
economic security and success. In the United Nations’ assessment of what it
calls poverty intensity, mostly free and moderately free countries have only
a third the number of people in this position as do mostly unfree and repressed
countries.
The top one-fifth of countries in advancing economic freedom grew at an average
rate of 3.7%. The bottom fifth grew 2.1%.
LAWANDTAX-NEWS.COM
