Media release: South Africa 105 among 159 jurisdictions

15 September 2016
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15 September 2016

Global economic freedom up slightly; South Africa ranks 105 among 159 jurisdictions

Johannesburg—South Africa ranks 105 out of 159 countries and territories included in the Economic Freedom of the World: 2016 Annual Report, released today by the FMF in conjunction with Canada’s Fraser Institute.

Last year, South Africa ranked 93.

“South Africa has steadily lost ground on the EFW rankings,” said FMF Director, Temba Nolutshungu. “It is tragic that a country ranked 42nd in the world in 2000, just outside the top 25% of countries in the world, should have fallen 63 places in the rankings in 15 years to a point where it now ranks in the bottom 35%. Studies have shown that there is a significant though not immediate correlation between economic freedom, economic growth and human welfare so a steady and dramatic decline in economic freedom in the country should not be taken lightly. It is time for government policy to start taking the country in the other direction – towards economic freedom, high growth, a high demand for labour, prosperity and justice for all.”

Hong Kong again tops the index, continuing its streak of number one rankings, followed by Singapore, New Zealand, Switzerland, Canada, Georgia, Ireland, Mauritius, and United Arab Emirates. Australia and the United Kingdom tied for 10th.

“Hong Kong is still number one, but because democracy is the best safeguard of freedom, if China, which ranks low in economic freedom, encroaches on Hong Kong, we can expect Hong Kong’s ranking to fall,” said Fred McMahon, the Dr Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute.

The 2016 report was prepared by James Gwartney, Florida State University; Robert A. Lawson, Southern Methodist University; and Joshua Hall, West Virginia University.

It is based on data from 2014 (the most recent year of available comparable data) and measures the economic freedom (levels of personal choice, ability to enter markets, security of privately owned property, rule of law, etc.) by analysing the policies and institutions of 159 countries and territories.

“Economic freedom leads to prosperity and a higher quality of life, while the lowest-ranked countries are usually burdened by oppressive regimes that limit the freedom and opportunity of their citizens,” McMahon said.

The 10 lowest-ranked countries are: Iran, Algeria, Chad, Guinea, Angola, Central African Republic, Argentina, Republic of Congo, Libya and lastly Venezuela. Some despotic countries such as North Korea and Cuba can’t be ranked due to lack of data.

Other notable rankings include Germany (30), Japan (40), France (57), Russia (102), India (112), China (113) and Brazil (124).

According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives.

For example, countries in the top quartile of economic freedom had an average per-capita GDP of US$41,228 in 2014, compared to US$5,471 for bottom quartile nations.

Moreover, the average income in 2014 of the poorest 10 per cent in the most economically free countries (US$11,283) dwarfed the overall average income in the least free countries (US$5,471). And life expectancy is 80.4 years in the top quartile of countries compared to 64 years in the bottom quartile.

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 nations and territories. It’s the world’s premier measurement of economic freedom, measuring and ranking countries in five areas: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour and business. 

South Africa’s scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):

§                Size of government: changed to 5.54 from 5.55 in the last year’s report

§                Legal system and property rights: changed to 5.79 from 5.81

§                Access to sound money: changed to 8.04 from 8.17

§                Freedom to trade internationally: changed to 6.71 from 7.04

§                Regulation of credit, labour and business: changed to 7.11 from 7.15

“It is unusual for a country’s scores in every economic freedom component to decline from one year to the next as South Africa’s has done between 2013 and 2014,” said FMF director Eustace Davie. “Another dubious ‘achievement’ by South Africa is a 63 place drop (42 to 105) in the economic freedom rankings in the past 15 years. The only countries that achieved larger declines during the same period were Argentina 121 (35 to 156) and Venezuela 65 (94 to 159),” he said.

International Rankings

Hong Kong has the highest level of economic freedom worldwide, with a score of 9.03 out of 10, followed by Singapore (8.71), New Zealand (8.35), Switzerland (8.25), Canada (7.98), Georgia (7.98), Ireland (7.98), Mauritius (7.98), United Arab Emirates (7.98), Australia (7.93), and United Kingdom (7.93).

Other notable countries include the United States (7.75), Germany (7.55), Japan (7.42), Russia (6.66), India (6.50) and China (6.45).

About the Economic Freedom Index

Economic Freedom of the World measures the degree to which the policies and institutions of countries support economic freedom. This year’s publication ranks 159 countries and territories. The report also updates data in earlier reports in instances where data has been revised.

See the full report at www.freetheworld.com

Check out our Economic Freedom of the World video here

For more information on the Economic Freedom Network, datasets, and previous Economic Freedom of the World reports, go to www.freetheworld.com.

www.EFWdata.com is a digital tool that allows you to evaluate and analyse the data across three dimensions: countries, time and statistics.


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