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Economic freedom rises slightly worldwide while United States sinks to historic low

Tuesday, September 18, 2012

Annual report co-authored by Beloit College  economics professor Joshua Hall

MEDIA CONTACT: Hilary Dickinson at dickinsonh@beloit.edu or 608-363-2849

The United States is ranked 18th out of 144 countries included in the Economic Freedom of the World: 2012 Annual Report, released today by the Fraser Institute in Canada and the Cato Institute in the United States.  

Last year, the United States ranked 12th.

The United States, long considered a champion of economic freedom among large industrial nations, continues its protracted decline in the global rankings, according to the report, which was co-authored by Joshua Hall, the Elbert H. Neese, Jr. Professor of Economics at Beloit College. This year, the U.S. plunged to its lowest-ever ranking of 18th, down from 10th in 2008 and second overall in 2002. Much of this decline is a result of higher spending and borrowing on the part of the U.S. government.

Globally, however, the average economic freedom score rose slightly to 6.83 in 2010, the most recent year available, after plummeting to its lowest level in nearly three decades with a score of 6.79 in 2009.

“The United States and governments around the world have expanded both the scale and scope of government in response to the Great Contraction and the American and European debt crises, reducing economic freedom in the short term and prosperity over the long term,” Hall said.  

Economic freedom is important, Hall and his co-authors say, because research shows that people living in countries with high levels of economic freedom enjoy greater prosperity, higher levels of political and civil liberties, and longer life expectancies.

International Rankings

Hong Kong offers the highest level of economic freedom worldwide, with a score of 8.90 out of 10, followed by Singapore (8.69), New Zealand (8.36), Switzerland (8.24), Australia and Canada (each 7.97), Bahrain (7.94), Mauritius (7.90), Finland (7.88), Chile (7.84).

The rankings and scores of other large economies include: United States (18th), Japan (20th), Germany (31st), Korea (37th), France (47th), Italy (83rd), Mexico (91st), Russia (95th), Brazil (105th), China (107th), and India (111th).

Venezuela has the lowest level of economic freedom among the 144 jurisdictions measured. Myanmar, Zimbabwe, Republic of Congo, and Angola round out the bottom five nations.

About the Economic Freedom of the World report

The annual peer-reviewed Economic Freedom of the World report is produced by the Fraser Institute, Canada’s leading public policy think-tank, in cooperation with independent institutes in more than 85 nations and territories.

It is the premier measurement of economic freedom, using 42 distinct variables to create an index ranking countries around the world based on policies that encourage economic freedom.

Economic freedom is measured in five different areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labor, and business. The full report is available at www.freetheworld.com.

For more information, click here.