Index of Economic Freedom: Singapore ranks first, India 26th in Asia-Pacific


Singapore tops the world rankings for the second year in a row in the latest Economic Freedom Index released last week by conservative US think tank The Heritage Foundation.

Singapore increased its overall score by 0.3 points to 89.7 mainly due to an improvement in the public expenditure score. Singapore’s score is well above regional and global averages.

The world top 5 is completed by New Zealand in second place with 83.9 points, Australia in third (82.4 points), Switzerland in fourth place with 81.9 points and Ireland (81 , 4 points).

Regarding the major economies, the United Kingdom is 7th (78.4 points), the United States is ranked 20th with a score of 74.8 points, Japan 23rd (74.1 points), Germany is 29th (72.5 points) and China is number 107 with 58.4 points.

This is the first time the index has been released since the COVID-19 pandemic has changed lives as well as global economies and the score reflects to a small extent how governments have responded to the health crisis. 184 countries were covered in the study this time and the study period is from July 2019 to June 2020.

The biggest news generated by the “Economic Freedom Index 2021″, however, was not the ranking or the impact of COVID-19 on scores, but the fact that the Heritage Foundation decided to exclude Hong Kong from its ranking. ranking for the very first time. Hong Kong was at the top of the list for 25 of the previous 26 years before the current year.

The Heritage Foundation said the reason for excluding Hong Kong is that the Special Administrative Region and its economic policies are now under Beijing’s direct control. Dr Edwin J. Feulner, founder of the Heritage Foundation, wrote in the Wall Street Journal that the city’s ties to Beijing are increasingly “forged in steel” and that “the traditions of English common law , freedom of expression and democracy have weakened considerably ”.

The Foundation added that Hong Kong’s freedom to invest has been undermined by political and social unrest dating back to 2019.

A spokesperson for the Hong Kong government’s financial secretary, however, expressed “deep disappointment” at the decision to speak to Reuters. He continued, “The decision is neither justified nor justified. It does not do justice to (Hong Kong).” The spokesperson also said that the claim that the city’s economic policies are controlled by Beijing is “ill-conceived and simply false.”

He added that the assessment was “politically biased” and that Hong Kong’s core economic competitiveness, including the free movement of capital, remains under the “one country, two systems” governance formula put in place in 1997 when the city went from British to Chinese. to reign.

Singapore, on the other hand, remains the only country in the world considered economically free in every index category, although its indicator scores for fiscal health and financial freedom have just crossed the threshold of the highest category. .

The index classifies 12 indicators ranging from property rights to financial freedom into four categories: rule of law, size of government, regulatory effectiveness and open markets. The small island nation of Singapore improved or maintained its score on all 12 indicators, except for monetary freedom and judicial efficiency which declined slightly, but its scores in these two indicators are still exceptionally high compared to most other countries.

“The foundations of Singapore’s economic resilience and competitiveness include strong protection of property rights and effective enforcement of anti-corruption laws,” said Anthony Kim, Research Director at the Heritage Foundation and Editor-in-Chief. from the index, to the Straits Times, Singapore. “An effective government provides good public services with low tax rates. The regulatory environment is flexible and transparent, encouraging dynamic business activity. A strong tradition of openness to global trade and investment has long boosted productivity while facilitating the emergence of a more dynamic and competitive financial system. sector.”

The Heritage Foundation’s Index of Economic Freedom is an annual guide published to measure progress in promoting economic freedom which it believes brings greater prosperity. The Foundation also believes that “the ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater wealth per capita, human development, democracy and the eradication of poverty”.

In addition, citizens of free or predominantly free countries “enjoy incomes more than double the world average and more than six times higher than those of repressed economies.”

Overall, Asia-Pacific countries generally scored below the global average in seven of the 12 indicators: property rights, judicial efficiency, government integrity, monetary freedom, commercial freedom, freedom of investment and financial freedom.

In the 2021 index, India placed in the middle of the pack among Asia-Pacific countries, ranking 26th out of 40 countries, with 56.5 points. Globally, the Foundation ranks the Indian economy 121st among the freest countries. Although its overall score is unchanged, improvements have been made to Freedom of Business. This was offset by declines in judicial efficiency and other scores.

The report commented that: “The Indian economy remains in the middle of the mostly non-free category. A move towards greater economic freedom would require substantial and far-reaching reforms. By law, the government should increase financial freedom and reform the tax code, the investment regime and the labor code.

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