2007 Index of Economic Freedom

The Heritage Foundation has published the 2007 Index of Economic Freedom, measures and ranks 161 countries across 10 specific freedoms, including tax rates and property rights [a description of the 10 freedoms is below the fold].

The 10 Most Free Countries (and their freedom scores) are:

1. Hong Kong (89.3%)
2. Singapore (85.7%)
3. Australia (82.7%)
4. United States (82.0%)
5. New Zealand (81.6%)
6. United Kingdom (81.6%)
7. Ireland (81.3%)
8. Luxembourg (79.3%)
9. Switzerland (79.1%)
10. Canada (78.7%)

The three highest scores for the U.S. are:

• Business Freedom (94.5%)
• Labor Freedom (92.1%)
• Property Rights (90.0%)

The three lowest scores for the U.S. are:

• Freedom from Government (67.5%)
• Freedom from Corruption (76.0%)
• Trade Freedom (76.6%)

The 10 Economic Freedoms. Overall economic freedom, defined by multiple rights and liberties, can be quantified as an index of less abstract components. The index we conceive uses 10 specific freedoms, some as composites of even further detailed and quantifiable components.

• Business freedom is the ability to create, operate, and close an enterprise quickly and easily. Burdensome, redundant regulatory rules are the most harmful barriers to business freedom.
• Trade freedom is a composite measure of the absence of tariff and non-tariff barriers that affect imports and exports of goods and services.
• Monetary freedom combines a measure of price stability with an assessment of price controls. Both inflation and price controls distort market activity. Price stability without microeconomic intervention is the ideal state for the free market.
• Freedom from government is defined to include all government expenditures—including consumption and transfers—and state-owned enterprises. Ideally, the state will provide only true public goods, with an absolute minimum of expenditure.
• Fiscal freedom is a measure of the burden of government from the revenue side. It includes both the tax burden in terms of the top tax rate on income (individual and corporate separately) and the overall amount of tax revenue as portion of GDP.
• Property rights is an assessment of the ability of individuals to accumulate private property, secured by clear laws that are fully enforced by the state.
• Investment freedom is an assessment of the free flow of capital, especially foreign capital.
• Financial freedom is a measure of banking security as well as independence from government control. State ownership of banks and other financial institutions such as insurer and capital markets is an inefficient burden, and political favoritism has no place in a free capital market.
• Freedom from corruption is based on quantitative data that assess the perception of corruption in the business environment, including levels of governmental legal, judicial, and administrative corruption.
• Labor freedom is a composite measure of the ability of workers and businesses to interact without restriction by the state.