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