Economic Freedom of the World - 2018 - Cover

2018

By James D. Gwartney, Robert A. Lawson, Ryan H. Murphy, Pál Czeglédi, Rosemarie Fike, Fred McMahon, & Carlos Newland

The foundations of economic freedom are personal choice, voluntary exchange, and open markets. As Adam Smith, Milton Friedman, and Friedrich Hayek have stressed, freedom of exchange and market coordination provide the fuel for economic progress. Without exchange and entrepreneurial activity coordinated through markets, modern living standards would be impossible.

Potentially advantageous exchanges do not always occur. Their realization is dependent on the presence of sound money, rule of law, and security of property rights, among other factors. Economic Freedom of the World seeks to measure the consistency of the institutions and policies of various countries with voluntary exchange and the other dimensions of economic freedom.

The report is co‐​published by the Cato Institute, the Fraser Institute in Canada and more than 70 think tanks around the world.

Hong Kong and Singapore retain the top two positions with a score of 8.97 and 8.84 out of 10, respectively. The rest of this year’s top scores are New Zealand, Switzerland, Ireland, United States, Georgia, Mauritius, United Kingdom, Australia, and Canada.

It is worth noting that the United States returned to the top 10 in 2016 after an absence of several years. The rankings of other large economies in this year’s index are Germany (20th), Japan (41st), Italy (54th), France (57th), Mexico (82nd), Russia (87th), India (96th), China (108th), and Brazil (144th). The 10 lowest‐​rated countries are: Sudan, Guinea‐​Bissau, Angola, Central African Republic, Republic of Congo, Syria, Algeria, Argentina, Libya, and lastly Venezuela.

Nations in the top quartile of economic freedom had an average per capita GDP of US$40,376 in 2016, compared to $5,649 for bottom quartile nations. Moreover, the average income of the poorest 10% in the most economically free nations is almost twice the average per capita income in the least free nations. Life expectancy is 79.5 years in the top quartile compared to 64.4 years in the bottom quartile, and political and civil liberties are considerably higher in economically free nations than in unfree nations.

Latest Issues