Greece has climbed four positions in the Global Index of Economic Freedom since 2019, but that move places the country in 78th place out of 165, according to the Fraser Institute’s annual report on Global Economic Freedom.
The report was released Tuesday in Greece and Cyprus by the Center for Liberal Studies.
The 2021 annual report published by the Fraser Institute summarized the methodology and objective of the index as follows:
“The index published in Economic Freedom of the World measures the extent to which countries’ policies and institutions support economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, the freedom to enter and compete in markets, and security of person and private property.
“Forty-two data points are used to construct a summary index, as well as an adjustment for gender-related legal rights to measure the extent to which women have the same level of economic freedom as men. The degree of economic freedom is measured in five broad areas.
These five areas are size of government, legal system and property rights, strength of currency, freedom to trade internationally, and jurisdictions.
Economic freedom in Greece still has a long way to go
Greece is the lowest ranked country in the European Union according to the index. The country averaged 7.15 out of 10 points, sandwiched between Kyrgyzstan in the 77th and North Macedonia in the 79th. In the last published report, which covered the year 2018, Greece was positioned at 82. Cyprus was miles away from Greece, ranked 24th.
One of the crucial reasons Greece ranks so low is its huge public sector relative to its population, which places it 146th on the government size index.
The country was also 142nd for labor market regulation, 86th for regulation and 79th for business regulation. The main feature of the country was in the area of credit market regulation, where it is in 22nd place. Greece was also relatively high in other rankings, including 56th for legal system and property rights, 57th for freedom of international trade and 67th for soundness of its money.
Greece’s lowest year ever on the index was 2015, when the country reached 96th place on the list.
“Wealth is mainly generated in one way – that is, the efficient distribution of resources. This requires transactions in open and competitive markets operating within an institutional framework that guarantees the principles of justice and promotes economic growth, ”said the research director of the Center for Liberal Studies, Aristides Hatzis.
“Greece remains the most closed economy country in the EU, with an ineffective institutional framework. Despite the bold reforms of recent years, we remain last in the EU because our competitors are opening their own markets faster and improving their institutions. Unless that changes, we shouldn’t have high expectations for the future, ”Hatzis warned.