The top four jurisdictions with the most economic freedom — Hong Kong, Singapore, New Zealand, and Switzerland — have placed the same in the Canada-based Fraser Institute’s 2016 “Economic Freedom of the World Report” as they did in 2015. Venezuela is also once again in last place in the world. For the first time, though, Canada has tied for fifth place in the index, along with Georgia, Ireland, Mauritius, and the United Arab Emirates. The Fraser Institute warns, however, that “a growing government, substantial tax increases, and encroaching regulations threaten Canada’s ranking in the coming years.”
This year’s “Economic Freedom of the World Report” is generated with data from 2014, the most recent year for which statistics are available to compare the 159 countries and territories around the world that are included in the index.
“Since then, the provincial Ontario government and new governments in Alberta and at the federal level have increased taxes significantly and introduced stifling regulations on industry and business that jeopardize the gains in economic freedom Canada has made,” the Fraser Institute reports.
There is a stark disparity in economic activity, income levels, and even life expectancy between countries at the top and bottom of the list. “Countries in the top quartile of economic freedom (such as Singapore, Canada and Chile) had an average per-capita GDP of US$41,228 in 2014, compared to US$5,471 for bottom quartile countries (such as Venezuela, Iran and Zimbabwe),” the institute explains. Similarly, countries in the top quartile have an average life expectancy of 80.4 years, compared to only 64 years in the bottom quartile.
“Economic freedom is simply the ability of individuals and families to make their own economic decisions free of interference from overly ambitious governments or crony capitalists — it’s arguably the best measure of the extent to which markets shape the economy,” wrote Fraser Institute analysts Fred McMahon and Ben Eisen in an analysis for the Financial Post. “Hundreds of research articles have used the Fraser measure to explore the effects of economic freedom. When people are free economically, other freedoms often follow. Economic freedom has been found to promote growth and prosperity and other positive outcomes such as higher levels of tolerance and democracy. Just try to think of a prosperous economy (at least one not based on found resource wealth) or a stable democracy in a country without free markets.”
The United States maintained its 16th-place position from both its 2014 and 2015 rankings, although the country's level of economic freedom has seen a sharp decline from earlier years.
“Throughout the period from 1970 to 2000, the United States ranked as the world’s freest OECD nation (generally the third freest economy overall behind only Hong Kong and Singapore),” the report explains. “The chain-linked summary rating of the United States in 2000 was 8.65. By 2005, the US rating had slipped to 8.22. The slide has continued. The 7.73 chain-linked rating of the United States in 2013 was more than 0.9 of a unit lower than the 2000 rating. Thus, the decline in economic freedom in the United States has been more than three times greater than the average decline found in the OECD.”
Atlas Network partners throughout the world are working to increase economic freedom at all levels of government, creating new opportunities and hope for families that struggle to make ends meet. The Fraser Institute's "Economic Freedom of the World Report" serves as a guide for reform — and a reminder that freedom is the engine that creates wealth and prosperity for all socioeconomic classes.