Freedom is still the winning formula
For 15 years, the Wall Street Journal and the Heritage Foundation have been measuring countries' commitment to free-market capitalism in the "Index of Economic Freedom." The 2009 Index provides strong evidence that the countries that maintain the freest economies do the best job of promoting prosperity for all citizens, says co-editor Terry Miller.
However, for the first time, the Index also correlates economic freedom with important societal values like poverty reduction, human development, political freedom and environmental protection. The linkages are robust, with economically freer countries performing significantly better on every indicator of well-being, says Miller.
Those tempted to abandon the free market and capitalism in the current crisis need to look carefully at the record of countries moving down that path, suggests Miller:
In 2009, Zimbabwe lost the most economic freedom, dropping 6.7 points and falling to next-to-last place as a result of deficit spending, the expropriation of land and resources and government support of favoured enterprises.
Venezuela recorded the second largest drop, losing 4.8 points due to price controls, currency devaluation, nationalisations and the corruption of Hugo Chávez's Bolivarian socialism.
Hong Kong and Singapore are once again the freest economies in the world, followed in the rankings by Australia, Ireland and New Zealand.
The United States slipped one spot to sixth place because of increases in both tax revenue and government spending as a percentage of gross domestic product (GDP).
Yet, Azerbaijan, Armenia, Georgia, Bosnia and Herzegovina, Moldova, Lithuania and Romania have all gained at least 20 points of economic freedom. Per capita GDP in these countries has grown at an average annual rate of 7.4 per cent over the past decade.
Source: Terry Miller, Freedom Is Still the Winning Formula, Wall Street Journal, January 13, 2009; based upon: Terry Miller and Kim R. Holmes, eds., 2009 Index of Economic Freedom, Heritage Foundation, January 2009.
For text: http://online.wsj.com/article/SB123180425194675361.html
For 2009 Index: http://www.heritage.org/index.
For more on Economic Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=17
FMF Policy Bulletin/ 20 January 2009
Publish date: 28 January 2009
The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.