Wallace Chan expands on Hong Kong’s highest level of economic freedom in Economic Freedom of the World: 2009 Annual Report

Hong Kong continues its reign as the most economically free region on the globe, as it once again is ranked number one in the Economic Freedom of the World: 2009 Annual Report, released by independent research organization the Fraser Institute. Singapore is ranked second, followed by New Zealand, Switzerland and Chile. Zimbabwe once again has the lowest level of economic freedom among the 141 jurisdictions included in the study, followed by Myanmar, Angola, and Venezuela.

The annual peer-reviewed economic freedom report uses 42 different measures to create an index ranking 141 countries around the world based on policies that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property. Economic freedom is measured in five different areas: (1) size of government; (2) legal structure and security of property rights; (3) access to sound money; (4) freedom to trade internationally; and (5) regulation of credit, labor and business. This year’s report also includes new research that examines the likely impact of the global recession on levels of economic freedom. It suggests that economic freedom may decline in the short-term in response to crises, but over a longer time economic freedom has a tendency to increase after a banking crisis.

“Opponents of economic freedom are blaming the global recession on the operation of markets and hoping to use it as an excuse for a vast expansion in government. But even in recession, the quality of life in nations with free and open markets is vastly superior to that of nations with government managed economies,” said Fred McMahon, Fraser Institute director of trade and globalization studies. “To successfully navigate the global financial crisis, nations must focus on policies that support the principles of economic freedom. By choosing this path, the current crisis will be reversed and fade into history. But if we learn the wrong lessons and choose reforms and policies inconsistent with economic freedom, our destiny will be like the generation of 1930; we will face a decade of stagnation and decline.”

Hong Kong retains the highest level of economic freedom, with a score of 8.97 out of 10. Other top scorers are: Singapore (8.66), New Zealand (8.30), Switzerland (8.19), Chile (8.14), United States (8.06), Ireland (7.98), Canada (7.91), Australia and the United Kingdom (7.89), and Estonia (7.81). Hong Kong’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: 9.29 • Legal structures and security of property rights: 8.16 • Access to sound money: 9.51 • Freedom to trade internationally: 9.58 • Regulation of credit, labour and business: 8.31 “Economic freedom is the key building block of the most prosperous nations.” McMahon said.

Wallace Chan is the Coordinator of Chinese Affairs at the Fraser Institute.

Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom. The annual report is published in conjunction with the Economic Freedom Network, a group of independent research and educational institutes in over 70 nations. The 2009 report is based on data from 2007, the most recent year for which comprehensive data is available. The full report is available at www. fraserinstitute.org.