The new Heritage Foundation/Wall Street Journal report on economic freedom is out, and the findings couldn’t be more straightforward. “The countries with the most economic freedom also have higher rates of long-term economic growth and are more prosperous than are those with less economic freedom,” the report says.
Overall, the world is economically freer than it was a year ago, according the authors of the report. Of the 157 countries graded in the 2006 Index of Economic Freedom, 99 improved their overall scores, compared to 51 whose scores worsened and five that remained unchanged. Overall, 20 are classified as “free,” 52 as “mostly free,” 73 as “mostly unfree” and 12 as “repressed.”
Hong Kong and Singapore finished 1st and 2nd in the rankings for the 12th straight year. Ireland overtook Luxembourg and Estonia and moved up to No. 3, and Iceland moved up three spaces to No. 5, where it is tied with the United Kingdom. The United States improved enough to re-enter the top 10 after falling out last year for the first time ever. It’s tied for 9th worldwide with Australia and New Zealand.
The links between countries that embrace economic freedom and prosperity are long established. Those in countries with “mostly unfree” or “repressed” economies earn 70 percent less than those in countries with “mostly free” economies, the Index editors say. And those in “free” economies enjoy a per capita income more than twice what those in “mostly free” economies earn.
The countries that showed the most improvement were led by Pakistan, Romania and the Kyrgyz Republic. Iran, Italy and Guinea showed the biggest declines.