According to a ranking compiled by the Heritage Foundation, Hong Kong has yet again retained its position as the world’s freest economy, followed by Singapore, Australia, New Zealand and Switzerland.
The conservative think tank maintained the list according to economic criteria such as rule of law, regulatory efficiency, government spending, fiscal freedom, labour freedom, freedom from corruption and free market policies.
The Foundation’s 2012 report claimed that economic freedoms across the world have declined over the past year as many countries attempted – without success – to spend their way out of recession.
“Most of that decline is due to a large increase in government spending worldwide,” Edwin Feulner, president of the Heritage Foundation, said in an interview.
“Governments have justified this spending as a necessity to restart economic growth but it hasn’t worked. We think it’s time to give the market a chance to show what it can do,” he added.
Economic freedoms registered an increase in Asia and sub-Saharan Africa whereas meeting a disappointing decline in Europe and North America. Countries like the US, Canada and Mexico – countries in North American region – experienced the sharpest drop of 1.3-point loss.
The report noted that sovereign debt crisis in Europe threatens growth while citing Greece?s Index score which declined the most, plunging nearly five points to 55.4. It also added that many of Greece?s European neighbours also suffered from exploding government budgets; 37 of the 43 European countries ranked in the Index lost ground in the spending category.
Hong Kong, while retaining its top ranking for the 18th consecutive year, is facing serious challenge from Singapore as it closes the gap, according to Edwin Feulner, president of the Heritage Foundation.
The United Arab Emirates stood at 35th position in the moderately free category with an overall score of 69.3 points and 1.5 positions better from last year. Bahrain got the best rank among the Middle Eastern countries with 12th position, two places after the US, with an overall score of 75.2 but down 2.5 positions from 2011 index.
Libya and Iran fared the worst this year with 171st and 176th positions in the listing and were ranked in the ‘repressed’ category. War torn countries like Afghanistan, Somalia, Iraq and Sudan were not ranked in The Heritage Foundation 2012 Index of Economic Freedom.