According to the Vancouver (Canada)-based public policy research organisation Fraser Institute’s latest report titled “Economic Freedom of the World (EFW) 2024 Annual Report, Hong Kong Special Administrative Region (SAR), People’s Republic of China, with ratings of 8.58, has reclaimed title as the world’s largest freest economy from Singapore, which has been ranked at 2nd position with overall score of 8.55.
- In EFW 2023, Hong Kong dropped from 1st position to 2nd position for the 1st time since the inception of the EFW index in 1970.
- India has improved its ranking by 3 places, from 87th (In EFW 2023) to 84th (in EFW 2024) with the overall ratings of 6.58.
- Switzerland ranked at 3rd position with an overall score of 8.43, followed by New Zealand (with ratings of 8.39), the United States of America (USA) (with ratings of 8.09), ranked at 4th and 5th position respectively.
About EFW 2024 Annual Report:
i.This latest edition of EFW index is based on data from 2022, the most recent year with comparable statistics across 165 jurisdictions.
ii.The EFW index is developed to measure the degree to which institutions and policies of the countries allow people to make their own economic choices.
iii.The report has used 45 data points, which are further organised into 5 main areas such as: size of the government, legal system and property rights, sound money, freedom to trade internationally, and regulation.
- It has also used a Gender Legal Rights Adjustment to assess for the extent to which women have different levels of economic freedom compared to the men.
iv.Most of the data in EFW index received from external sources such as the International Monetary Fund (IMF), the World Bank Group , or the World Economic Forum (WEF).
Top 5 Countries in 2024 EFW Annual Report:
| Rank | Country | Overall Ratings |
|---|---|---|
| 1 | Hong Kong Special Administrative Region (SAR), People’s Republic of China | 8.58 |
| 2 | Singapore | 8.55 |
| 3 | Switzerland | 8.43 |
| 4 | New Zealand | 8.39 |
| 5 | The United States of America (USA) | 8.09 |
| 84 | India | 6.58 |
Key Highlights:
i.According to the report, the global average economic freedom ratings for all jurisdictions increased from 6.19 to 6.80 between 2000 and 2019. However, the global economic freedom had decreased to 6.56 in 2022, reversing more than a decade of progress.
- Globally, economic freedom declined for a third straight year after more than a decade of gains.
ii.Among the 5 main areas of the EFW index, Hong Kong ranked at 1st spot in “freedom to trade internationally” and “regulation”. While, it placed at 3rd spot globally for “sound money”, 21st for “legal system and property rights” and 45th in “size of the government”.
iii.Denmark and Ireland (tied at 6th position), Canada (8th ), Australia and Luxembourg (tied at 9th position) are among the top 10 highest scoring nations.
iv.Rankings of other major economies: Japan (11th), Germany (16th), Taiwan (19th), Korea (32nd), France (36th), Italy (5th), Mexico (65th), among others.
v.Venezuela with the ratings of 3.02, ranked lowest in the rankings, followed by Zimbabwe (3.53),Sudan (4.11), Syrian Arab Republic (4.28) and Algeria (4.46) ranked at 164th, 163rd , 162nd and 161st position respectively.
- Other Bottom 5 Countries: Myanmar (160th), Argentina (159th), Iran (158th), Libya (157th) and Yemen (156th).
vi.The report highlighted the two largest declines in ratings between 2021 and 2022 were Ukraine (-0.94) and Moldova (-0.63). Both these nations have either been invaded (Ukraine) or threatened militarily(Moldova) by Russia.
India-Specific:
i.India(84th) ranked second highest among BRICS nations i.e. Brazil (85th), Russia (119th), China (104th) and South Africa (81st).
Note: BRICS is an acronym of 5 major emerging economies namely, Brazil, Russia, India, China and South Africa.
ii.India ranked at 25th position in size of the government area, with ratings of 7.73.
- India secured 71st position and 87th position in Legal System and Property Rights (ratings of 5.29), Sound Money (ratings of 7.51) respectively.
iii.India performed worse in two areas of the EFW index: in “Regulation” area ranked at 102nd position (with ratings of 6.17) and in “Freedom to Trade Internationally” ranked at 126th position with ratings of 6.18.
Other Key Findings:
i.As per the report, 1% of the population in the most economically free places experiences extreme poverty (living on less than USD 2.15 per day), while for the least-free places, 30% of the population experiences extreme poverty.
ii.In least economically-free countries, the infant mortality rate is 9 times greater than in the freest places.
iii.The report observed that people in the freest places reported about 40% more satisfaction with their lives compared to people living in least economically-free places.
iv.The report highlighted that the freest places score more than 50% better on the Environment Performance Index (EPI), which ranks the countries based on climate change performance, environmental health, compared with least economically free places.
v.As per the report, among the jurisdictions in the top quartile of economic freedom, Gross Domestic Product (GDP) per person was USD 52,877 in 2022, while GDP per person in the least economically free places was USD 6,968.
