Economic freedom

The world remains on a path toward greater liberty, according to the 2004 Index of Economic Freedom released today. The Index measures economic freedom in 10 categories, ranging from fiscal burdens and government regulation to monetary and trade policy.

In this 10th anniversary edition of the Index, published each year by the Heritage Foundation and Wall Street Journal, Europe continued an important trend begun last year, with seven more countries exhibiting an increase in freedom than exhibited a decline.

North America and Europe are now home to seven of the world's 10 most liberal economies (Luxembourg, Ireland, Estonia, United Kingdom, Denmark, Switzerland and the United States).

Eight European countries improved in monetary policy scoring and none declined in this year's Index.

The region's second-freest economy, Ireland, has a 12.5 percent corporate rate which beats the European Union average of 30 percent by a wide margin, and makes the Celtic Tiger a major draw for foreign investment.

According to the Index, however, the most impressive European performance, as measured by improvement, goes to the Slovak Republic for its "reduced taxes, liberalised prices, accelerated pace of privatisation and restructured banking sector." The Index notes that "foreign investment has increased and the banking sector is dominated by foreign capital."

Worldwide, the Index shows that economic freedom has improved in 75 countries, declined in 69 countries and remained the same in 11. Of the 155 countries observed, 16 are now classified as "free," 55 are "mostly free," 72 are "mostly unfree," while 12 remain "repressed."

Source: Mary Anastasia O'Grady, Free Markets, Free People, Wall Street Journal, January 9, 2004; based on Marc A. Miles, Edwin J. Feulner, Jr.,Mary Anastasia O'Grady and Ana I. Eiras, 2004 Index of Economic Freedom, Heritage Foundation and Wall Street Journal, January 2004.

For text (WSJ subscription required)
http://online.wsj.com/article/0,,SB10736106211487300,00.html?mod=opinion%5Fmain%5Fcommentaries

For more on 2004 Index of Economic Freedom http://www.heritage.org/research/features/index/

For more on International Institutions and Growth http://www.ncpa.org/iss/int/

FMF Policy Bulletin/13 January 2004