November 12, 2002

Index of Economic Freedom

Note: Due to economic or political instability, Angola, Burundi, the Democratic Republic of Congo (Kinshasa), Iraq and Sudan weren't ranked.

FREE
1
Hong Kong
2
Singapore
3
Luxembourg
New Zealand
5
Ireland
6
Denmark
Estonia
United States
9
Australia
United Kingdom
11
Finland
Iceland
Netherlands
Sweden
15
Switzerland
MOSTLY FREE
16
Bahrain
Chile
18
Canada
19
Austria
Belgium
Germany
22
Bahamas
Cyprus
24
Barbados
United Arab Emirates
26
El Salvador
27
Norway
Taiwan
29
Italy
Lithuania
Spain
32
Portugal
33
Israel
Latvia
35
Botswana
Cambodia
Czech Republic
Japan
Uruguay
40
France
Kuwait
Thailand
43
Trinidad and Tobago
44
Armenia
Bolivia
Costa Rica
Hungary
Madagascar
Panama
Qatar
South Africa
52
South Korea
Malta
Namibia
55
Belize
56
Greece
Guatemala
Jamaica
Mexico
Oman
Peru
62
Jordan
Philippines
Slovenia
Uganda
66
Poland
Slovak Republic
68
Argentina
Morocco
Saudi Arabia
Tunisia
MOSTLY UNFREE
72
Brazil
Colombia
Malaysia
Mali
Mauritius
Mongolia
Nicaragua
Swaziland
80
Central African Republic
Honduras
Ivory Coast
Senegal
Sri Lanka
85
Dominican Republic
Guinea
Kenya
Mauritania
89
Cape Verde
Croatia
Gabon
92
Guyana
Moldova
94
Algeria
Burkina Faso
Lebanon
Macedonia
Mozambique
99
Djibouti
Gambia
Indonesia
Pakistan
Paraguay
104
Albania
Azerbaijan
Benin
Bulgaria
Cameroon
Egypt
Kyrgyz Republic
Lesotho
Tanzania
113
Chad
Fiji
Georgia
Ghana
Niger
118
Ecuador
119
Bangladesh
Ethiopia
India
Kazakhstan
Nepal
Turkey
Venezuela
Zambia
127
China
128
Equatorial Guinea
Haiti
Togo
131
Malawi
Rwanda
Ukraine
Yemen
135
Republic of Congo (Brazzaville)
Russia
Vietnam
138
Romania
139
Bosnia
140
Nigeria
Sierra Leone
142
Guinea-Bissau
143
Suriname
Syria
Tajikistan
REPRESSED
146
Iran
Turkmenistan
148
Burma
149
Uzbekistna
Yugoslavia
151
Belarus
Libya
153
Laos
Zimbabwe
155
Cuba
156
North Korea


INDEX OF ECONOMIC FREEDOM

Good News for Europe
And bad news for Latin America.

BY MARY ANASTASIA O'GRADY
Tuesday, November 12, 2002 12:01 a.m. EST

In the 2003 Index of Economic Freedom, released today by the Heritage Foundation and The Wall Street Journal, the big story is Europe. Six of the 10 freest economies in the Index are in North America or Europe and half of all "free" economies are in Europe. European politicians may cling to the rhetoric of socialism, but on much of that continent, economic liberty is gaining ground.

This year, economic freedom has advanced throughout the world; every region has improved. World-wide, 74 countries have better scores, 49 have worse scores, and 32 have scores that are unchanged. Of the 156 countries numerically graded in the Index, 15 are classified as "free," 56 as "mostly free," 74 as "mostly unfree," and 11 as "repressed." (The full rankings are here.)

In Europe, capital-friendly Luxembourg is the freest economy, ranking third in the world. Croatia, Slovenia and Iceland made the most dramatic improvements. Scandinavia, previously most noted for its socialism, has continued a trend toward more freedom, with four out of five economies there ranked as "free." Competitive tax rates have helped Ireland maintain its title as the Celtic tiger and a "free" economy.

The most impressive European story, though, may be Estonia, which ties for sixth place--out of 161 countries--with the U.S. and Denmark. In an essay in this year's Index, former Prime Minister Mart Laar details the country's journey toward freedom, highlighting the importance of property rights and the rule of law.

Eleven Latin American countries improved their score this year, and 10 worsened, making it the worst-performing region. Chile dropped out of the Top 10 ranking. Hong Kong is the freest economy in the world and Asia has four economies in the Top 10. But most of the world's repressed economies are also in Asia.

Why any of this should matter is clear in an analysis between freedom and prosperity. Economically free countries tend to have higher per capita income than less free countries. For instance, while Hong Kong's GDP per capita in 2000 was $24,218, Iran's was $1,649. "Free" countries in 2000 had an average per capita income of $26,855, while "mostly free" countries had slightly less than half that. This demonstrates that while some liberalization brings rewards--"mostly unfree" economies averaged only $3,229 in per capita income--the gains from full liberalization are far more impressive.

Ms. O'Grady, who edits The Wall Street Journal's "Americas" column, is the co-editor, with Gerald P. O'Driscoll Jr. and Edwin J. Feulner, of the 2003 Index of Economic Freedom.