Index of Economic Freedom-2017

  • India has ranked a dismal 143rd in an annual index of economic freedom by a top American think-tank, behind its several South Asian neighbours including Pakistan.
  • The progress on market-oriented reforms has been “uneven” as per the index.
  • The Heritage Foundation in its Index of Economic Freedom report said despite India sustaining an average annual growth of about 7 per cent over the past five years, growth is not deeply rooted in policies that preserve economic freedom.
  • Putting India in the category of “mostly unfree” economies, the conservative political think-tank said progress on market-oriented reforms has been “uneven”.
  • Also, India’s overall score of 52.6 points is 3.6 points less than that of last year, when India was ranked 123rd.
  • Hong Kong, Singapore and New Zealand topped the index.
  • Among South Asian countries, only Afghanistan (163) and Maldives (157) were ranked below India. Nepal (125), Sri Lanka (112), Pakistan (141), Bhutan (107), and Bangladesh (128) surpassed India in economic freedom.
  • The think-tank, however, credited Prime Minister Narendra Modi with “reinvigorating” India’s foreign policy
  • India is a significant force in world trade, the report noted, but corruption, underdeveloped infrastructure, and poor management of public finance undermine overall development.
  • China with a score of 57.4 points – an increase of 5.4 points compared to previous year – was placed at 111 position. The United States was ranked 17 with 75.1 points.
  • The world average score of 60.9 is the highest recorded in the 23-year history of the index. Forty-nine countries – the majority of which are developing countries, but also including countries such as Norway and Sweden – achieved their highest-ever index scores.

For much of human history, most individuals have lacked economic freedom and opportunity, condemning them to poverty and deprivation.

Today, we live in the most prosperous time in human history. Poverty, sicknesses, and ignorance are receding throughout the world, due in large part to the advance of economic freedom. In 2017, the principles of economic freedom that have fueled this monumental progress are once again measured in the Index of Economic Freedom, an annual guide published by The Heritage Foundation, Washington’s No. 1 think tank.

For over twenty years the Index has delivered thoughtful analysis in a clear, friendly, and straight-forward format. With new resources for users and a website tailored for research and education, the Index of Economic Freedom is poised to help readers track over two decades of the advancement in economic freedom, prosperity, and opportunity and promote these ideas in their homes, schools, and communities.

The Index covers 10 freedoms – from property rights to entrepreneurship – in 186 countries.

The 2017 Index — the 23nd edition—includes:

  • Updated economic freedom scores and macroeconomic data for 186 economies.
  • Easy-to-read cross-country comparisons that highlight why economic freedom matters.
  • Three informative chapters that explore topics of particular relevance to today’s policy debates, including the harm of anti-competitive regulatory policies and protectionism, an in-depth look at work in the shadow economy, and a fresh approach to improving the targeting and effectiveness of development programs.
  • Online tools like customized comparison charts and an interactive heat map.

What is economic freedom?

Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please. In economically free societies, governments allow labor, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.

What are the benefits of economic freedom?

Economic freedom brings greater prosperity. The Index of Economic Freedom documents the positive relationship between economic freedom and a variety of positive social and economic goals. The ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater per capita wealth, human development, democracy, and poverty elimination.

How do you measure economic freedom?

We measure economic freedom based on 12 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom:

  1. Rule of Law (property rights, government integrity, judicial effectiveness)
  2. Government Size (government spending, tax burden, fiscal health)
  3. Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
  4. Open Markets (trade freedom, investment freedom, financial freedom)

Which components of economic freedom are most important?

The Index of Economic Freedom considers every component equally important in achieving the positive benefits of economic freedom. Each freedom is weighted equally in determining country scores. Countries considering economic reforms may find significant opportunities for improving economic performance in those factors in which they score the lowest. These factors may indicate significant binding constraints on economic growth and prosperity.

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